3 ways to enhance daily deal services

The daily deal business continues to attract the attention of publishers, brand marketers and other service providers. Hearst entered the market last week, as did Time Warner and AT&T, while American Express announced a discount deals partnership with Facebook.

Discount offers and other social commerce offerings represent “a brand new way to connect some of our advertisers with our most trusted asset — our users,” Rob Houghlin, publisher and chief revenue officer of Hearst’s Car and Driver and Road & Track titles, told All Things D. “Advertisers … want to offer special products to consumers who want it. It’s a platform of credibility first and value second.”

BIA/Kelsey predicts daily deal revenues could generate as much as $6.1 billion in gross revenues by 2015. As the market evolves, so will the tools and platforms that enable these services. My colleague Ellie Behling writes about the different ways publishers can get started in the deals space. Here are three areas where new tools can help publishers differentiate their offerings:

Administration

Publishers will need better tools to help their audience sift through the growing pile of daily deal offerings, and help merchants manage the deals they’re offering. Scheduling is one issue that requires better tools, in part to keep local businesses from being overwhelmed by coupon holders when a new deal launches.

Last week, Schedulicity introduced Deal Manager, an online scheduling service that helps “appointment-based” businesses – a hair salon, for instance – better manage their discount offerings. Better management will help businesses avoid getting overwhelmed by coupon redeemers. For providers of deal services, preventing backlogs will help improve yield management.

Analytics

Capturing and analyzing the data that drive daily deals will benefit consumers and publishers alike. Jonty Kelt, CEO of Group Commerce, which is providing the white label platform behind Hearst Magazines’ new offerings, wrote about the importance of defining the right metrics – beyond revenues – in a recent post for Mashable:

“Enthrallment with revenue leads to a critical misunderstanding — namely, that the relative success of a deal can best be measured by the number of deals sold (and revenue generated). While revenue is an important indicator in any industry, it’s also frequently among the most deceptive.”

Instead, Kelt is promoting a “send-to-conversion” rate that measures how well a group of people responds to an offer:

“This is a classic ecommerce metric that has been previously used to evaluate send-to-targeted lists for coupons, emails and other uses, and is now providing invaluable insight into analyzing the performance of deals. The STC calculation has been and continues to be widely used to monitor the effectiveness of group deals.”

A variety of tools are emerging to help publishers track key elements of discount services. Monster Offers, a mobile banking solutions company, recently launched its Hyper-Local Daily Deal Reporting Program, which provides syndicated reports that analyze local deals, sales and trends in major marketplaces and identify opportunities for deal providers within unique vertical markets, such as newspapers. Monster’s predictive analytics will enable providers to customize deal offerings to maximize revenue and profits, the company claims.

Targeting

Mass market offerings make up 75 percent of all deals, according to deal aggregator The Deal Map. This creates a significant opportunity for more targeted offerings based on an audience’s  location or interests – offerings that may fall into the sweet spot of local news or niche B2B publishers.  

Targeted deal services will for the most part require customized platforms. Groupon competitor Tippr, for example, licenses its daily deal technology as a white-label platform that publishers can customize to suit a particular audience. Business Insider summed up the opportunity:

Publishers, especially those operating in well defined niches, can offer deals that are more consistently relevant to their readers than deals on a general mailing list like Groupon's, leading to much better conversion rates. Many local newspapers have already started offering daily deals, on their own or through partnership with Groupon clones.

Mobile offers another targeting opportunity, of course. Some see location-based services as the Holy Grail of deal services, delivering on the “right place/right time” promise that most marketers seek. Dealmap says mobile deals are approaching 32 percent of the deal space, according to TechCrunch, with Web deals accounting for 61 percent of daily deal offers and email offers coming in at 2 percent.

There’s still plenty of room for improvement in the mobile space. “Showing your phone to redeem a deal sucks,” Tristan Walker, Foursquare’s director of business development, said at last week’s Deals 3D conference. “We wanted to completely fix it and make it completely seamless, frictionless and magical.”

Foursquare’s recently announced partnership with American Express does not require consumers to redeem coupons or transact with their phones at participating merchants. Users simply have to check in at the merchant where they make a purchase to receive a credit to their Amex account.