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Martin Tobias

Daily Deal Predictions for 2012

Martin Tobias Editorial - 12/20/2011-15:40 PM

From delayed IPOs, to buyouts, burnouts, layoffs and more, 2011 proved to be a volatile year for the daily deal industry. The business model for profitable group buying remains out of reach for many, and the industry is racing to figure out where to place their bets for growth. Publishers, merchants and business owners want to know what’s next in the social commerce space.

After the phenomenal maturation of the daily deal industry seen in 2011, a new paradigm will usher in programs that merge content with a seamless deal delivery experience. The industry focus will evolve from deal sites and daily emails to other messaging formats, providing relevant deals where, when and how consumers want them. The year 2011 was just Phase One of group buying. Phase Two begins in 2012. Here are some predictions for what portends to be another technologically eventful year in group buying, and reasons why publisher may stand to gain the most.

200 “Groupon Clones” Will Bite The Dust As Consolidation Mode Takes Off

With more than 600 companies currently operating in the group buying space, industry consolidation is going to become a very real threat to many daily deal sites. According to Yipit.com, over 170 deal sites failed in 2011. Next year the trend will continue as large companies purchase smaller rivals and other generic deal brands go belly up. Over 200 of the ‘me-too’ deal sites may close their doors within the first six months of the New Year. Meanwhile, publishers and niche sites that have found a way to integrate daily deals into their existing content, rather than just photocopying Groupon’s model, will not only survive but thrive.

2012 Is The Year of the White Label

White-label providers will reign supreme in 2012. According to Yipit research, this year white labels exhibited a transaction volume of 5-10 percent, but next year it may double as much as 20 percent. Media companies, niche bloggers and digital content creators have credible brands, local sales forces and engaged audiences–critical components that large horizontal sites spend hundreds of millions to grow. The only piece these companies are missing is the technology on which to build a deal site. In the year ahead, white label technologies will allow publishers to prevail after the Groupons of the world have exhausted their resources acquiring new customers and finding new merchants.

Big Branded Sites’ Futures Lies In Instant Contextualized Deals 

2012 will be the year big brand sites, which source hundreds of deals to large audiences with diverse interests, establish a profitable business model. But profits will only follow the ability to tailor content, matching the right customer with the right merchant. Simply put, the daily space will be dominated by the players who understand how to effectively merge content and commerce into a seamless experience, allowing consumers access to relevant deals anywhere and at any time. In 2012, Groupon and LivingSocial will make massive investments in their mobile capabilities, while Google, Facebook and other major audience aggregators will extend their commitment to the integration of location, advertorial, mobile and contextual commerce.

The future group buying landscape will be marked by consolidation, significant developments in offer targeting and the introduction of new deal delivery technology. This year’s success sets the stage for other daily deal players to be taken seriously and carve out a niche of the market for their own. 2011 is not the ending for daily deal industry; rather, it’s merely the beginning.

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. A Seattle entrepreneur and venture capitalist, Tobias has 25 years combined experience in the venture capital and technology industries, sits on several boards and is involved in numerous charities through the Martin Tobias Foundation. His Twitter handle is @MartinGTobias .

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