BIA/Kelsey Raises 2011 Daily Deal Revenue Number – Extended Forecast Thru 2015

BIA/Kelsey, a premier resource and media research firm, has dramatically increased its forecasted outlook for daily deal revenues for 2011. You may recall in their earlier March forecast, BIA was anticipating revenues for the year to come in around $1.2 billion. Now the Chantilly, Virginia based think tank sees a continuation of accelerated revenues for 2011 as over 600 daily deal sites have entered the space. BIA suggests that the daily deal market will produce just under $2 billion for 2011 revising their previous forecasts up by almost 67% from March. It’s interesting to note that the $2 billion number for this year is something we, at Daily Deal Media, touched on in June as a possibility.

The main factors for such a dramatic increase in 2011 revenue numbers are as follows :

* A bigger increase in the number of registrants for deals services. Market leaders Groupon and LivingSocial have expanded quickly and many more participants have entered this arena, including vertical sites and local media companies (either in cooperation with Groupon and LivingSocial or through white-label firms)

* Growth in the number of registered users who are “active” (e.g., buying coupons).

* Greater specialization of deals sites (both vertically and by neighborhood), better targeting capabilities and continued marketing of these services will lead to more activity by registered users.

* Increase in the average number of transactions, resulting from more efficient providers of these services and expansion of the types of products and services being offered (e.g., more travel deals).

* Rise in the average price per transaction, owing to general inflation and the attempt by some providers to offer more valued services at higher margins.

Forward looking projections aren’t as dramatic as this year’s. For example, their 2015 revenue projection based on consumer spending was $3.9 billion. Their latest revision targets the $4.2 billion level representing just under an 8% increase from their March estimates. Mark Fratrik (BIA/Kelsey vice president and chief economist) had this to say :

“Even as more consumers sign up for deals programs and awareness grows and new markets are entered, we see a ceiling on how many deals consumers will buy, and their overall interest level in deals. With that said, a strong foundation has already been created in the promotional ecosystem of this young industry. We believe daily deals reinforce other advertising and that related services, like instant deals and flash sales, will significantly boost income for key players.”

Daily Deal Media has continually reported that Groupon and LivingSocial lead the pack as number 1 and 2. Lately it seems as though Groupon is pulling away from LivingSocial not only by an increase in sales, but also by stealing market share from LivingSocial. That being said, Peter Krasilovsky (vice president and program director, Marketplaces, BIA) stated that “it’s worth noting that the deals market continues to grow, despite the recent departure of Facebook and others that may not have been well-equipped to invest the time and money necessary to participate in such a crowded market. We expect to see local media companies leverage their existing promotional, sales and other local assets to play a significant role in this industry, alongside today’s deals leaders Groupon and LivingSocial.”

Keep following us at Daily Deal Media as we keep you in the loop and up to date as we continue down the daily deal highway.

About BIA / Kelsey:

BIA/Kelsey advises companies in the local media space through consulting and valuation services, research, Continuous Advisory Services and conferences. Since 1983 BIA/Kelsey has been a resource to the media, mobile advertising, telecommunications, Yellow Pages and electronic directory markets, as well as to government agencies, law firms and investment companies looking to understand trends and revenue drivers. BIA/Kelsey’s annual conferences draw executives from across industries seeking expert guidance on how companies are finding innovative ways to grow.

Source :  www.biakelsey.com