BIA/Kelsey Revises Deals Forecast Upward Slightly, Due to More Entrants, Rapid Market Expansion and Growing Consumer Adoption
Analysts will present the updated five-year outlook for deals at this week's NAB Radio Show in Chicago and next week's DMS '11: The Summit for Small-Business Advertising in Denver
CHANTILLY, Va. (Sept. 13, 2011) - BIA/Kelsey, adviser to companies
in the local media industry, today released
an update of its U.S. deals forecast, first issued in March. The firm
expects U.S. consumer spending on deals (including daily deals, instant
deals and flash sales) will grow from $873 million in 2010 to $4.2
billion in 2015, representing a 36.7 percent compound annual growth
rate (CAGR). In March the firm had pegged 2015 deals spending at $3.9
billion, with a 35.1 percent CAGR.
Compared with the earlier forecast, this update indicates only a
slight increase overall by 2015. However, revenues for 2011 have been
revised upward significantly to $2 billion from the $1.2 billion originally
estimated in March.
“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,” said
Mark Fratrik, BIA/Kelsey vice president and
chief economist. “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.”
Among the factors underlying this revised forecast are:
- 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
- Growth in the number of registered users who are “active” (e.g.,
- 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.
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.
Groupon and LivingSocial continue to lead a growing marketplace of 600-plus
players, which include destination sites, white-label providers working with
local media such as directory companies, newspapers, and radio and television
operators; vertical players; mobile/location-based providers; flash sales sites;
exchanges; and aggregators.
“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,” said
Peter Krasilovsky, vice president and program director, Marketplaces, BIA/Kelsey. “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.”
BIA/Kelsey’s updated Deals Forecast (2010-2015) is available to clients
of the firm’s advisory
services. For more information on becoming a client,
contact Steve Passwaiter at (703) 802-2973 or firstname.lastname@example.org.
Deals at DMS ’11 and NAB Radio Show
BIA/Kelsey analysts will highlight details from this new forecast at DMS ’11:
The Small-Business Advertising Summit, Sept. 20-22, Denver. Day 2 of the conference
features a session titled, “SMBs and Deals: The Next Wave,” which
will include SMBs discussing their deals experience. More information about
DMS ’11, including the complete agenda, list of speakers and companies
attending, is available online at www.biakelsey.com/DMS2011.
In addition, BIA/Kelsey’s Fratrik will present the forecast to attendees
of NAB Radio Show tomorrow during a panel discussion titled, “What’s
the Real Deal with Daily Deals.” His presentation will focus on specific
revenue opportunities related to deals for broadcasters in small to midsize
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. Additional information is available at www.biakelsey.com,
on the company’s Local
Media Watch blog, Twitter (http://twitter.com/BIAKelsey)
and Facebook (http://www.facebook.com/biakelsey).
For more information contact: