Build-Your-Own Daily Deal Solutions

By now, we all know that daily deal fever is sweeping the globe faster than an alien virus in a bad Shyamalan movie. According to research firm BIA/Kelsey, the deal-a-day market is expected to grow from $873 million last year to $1.24 billion in 2011.

That number will more than double by 2015 to hit $3.9 billion.

As group buying continues to grow at a dizzying pace, it is evolving into an essential marketing tool for media publishers and merchants alike.

But, rather than partnering with giant sites like Groupon or Living Social, smart publishers are launching their own branded daily deal sites through white-label software programs. And with two of the most important ingredients for deal-site success already in place - an engaged audience and established advertiser relationships - publishers just need the technology required to get a group-buying program launched and a new revenue stream running.

In contrast, big consumer deal sites have invested hundreds of millions of dollars in building their subscriber base. In Q1 alone, Groupon spent $180 million on online marketing to acquire customers. And with no targeted content to draw a focused audience, the group-buying Goliath and sites like it are largely attracting transient bargain-hunters. In fact, according to a study by Rice University, only a third of Groupon customers spent beyond the deal value and just 20 percent said they returned to pay full-price. Ultimately, giant deal sites simply don't provide enough repeat business to make these promotions sustainable in the long run.

On the flip side, local and niche media publishers offer merchants a focused, high-affinity audience. Subscribers to these smaller deal programs come first for the quality targeted content that they crave, such as foodie news, beauty tips or local culture. And, because of the site's expertise in its space, subscribers trust the publisher to feature deals on only the best products and services.

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Deal Sites to Watch:

WhereYouShop: A deal site that differentiates itself by providing not just access to daily deals via email, but through a searchable database of deals. Users pre-define their shopping areas (work, home and in-between) through a rather unique user interface and when new deals are added to their area, only then are those users notified via email. Currently available only in Chicago and surrounding suburbs, new cities are scheduled to be added in 2012.

Yipit: Track nearly 700 active deal providers in over 50 cities in North America including Groupon, LivingSocial, BuyWithMe, Tippr, Yelp and others and recommends the best of the daily deals to users based on their preferences. Yipit also offers an API for developers interested in building applications on top of the Yipit platform.

These are the customers that merchants want to attract, because these are the customers who come back and pay full price. To put it in numbers, local and niche publishers offering deals in context via a white-label model bring an average return per email (RPE) of up to $1.00; Groupon's RPE sits at $0.20. Big sites may have millions of subscribers, but it's the targeted publishers whose audiences buy and, more importantly, become repeat business.

And, just as local and niche publishers provide more value to merchants, so do white-label programs offer a better option for publishers. When executed well, these programs reinforce brand loyalty of audiences, provide additional options for advertisers, and open new revenue streams for publishers.

BELO Corp., one of the nation's largest pure-play, publicly traded television companies, is a prime example. BELO recognized the advantage it had in its dedicated fan base and the operating sales team needed to power a deal program. By partnering with a white-label daily deal solution, BELO was able to quickly launch branded daily deals in select television markets.

Within two weeks of its initial launch in San Antonio, BELO's Yollar.com was expanding at up to 3 markets per week and was live in a total of 17 cities across the country within 6 months.

Having partnered with a white-label program, BELO had the flexibility to build offers that better fit the brand and could be tied into the rich local content already on its websites. The partnership also allowed BELO to offload the staffing requirements of a full team of copywriters and graphic designers, scheduling and production, merchant accounts payable functions and live customer service. Today, the white-label platform powering Yollar deals continues to handle all the tedious work of the deal program so BELO can keep doing what it does best: creating great content.

With an established loyal audience, reputable merchant ties and a more solid financial foundation, publishers are seeing profits and brand loyalty skyrocket with the integration of a daily deal component. Groupon may have been the pioneer in the group-buying race, but publishers are in a prime position to take the daily deal model to the next level.

About the Author:

Martin Tobias is founder and CEO of TIPPR, a premier provider of group-buying solutions and the flagship PoweredByTippr, a white-label platform that enables publishers to create successful group-buying services.