Electronic Retailer - October 2011 - 37

GUEST VIEWPOINT

BY JAFFER ALI

Get Your Piece of the Daily Deal Pie
rental revenue. Email list revenue also has all but disappeared. Add the decline in third-party membership revenues that are eating into your bottom line, and this creates further incentive to explore how you can get a piece of the daily deal pie. The question before all marketers, including TV direct response marketers, is how they can extend their brand and maximize the value of their database of buyers. Creating a daily deal to send to your buyers is one way to add significant dollars to your bottom line and extend your brand. So what are your options?

No doubt about it, the online daily deal space is red hot. Here are just a few data points to prove the point: • Annual revenue for the daily deal space is projected to eclipse $6 billion within the next four years. • Groupon sales rose from $33 million in 2009 to $760 million in 2010. • Groupon filed for an IPO with a projected valuation of $25 billion. • Living Social is filing for an IPO with a projected valuation of $10 billion-$15 billion. • Amazon has placed its bets by purchasing Woot for more than $100 million, as well as investing $175 million into Living Social. • There are presently more than 1,500 different daily deal sites. It is a worthwhile question to ask: How can marketers enter this growing industry? I believe the projections for the industry are conservative. Consumers love daily deals that help them stretch their budgets during recessionary times. PulseTV.com has been sending out a daily deal to consumers since 2007. It has grown from 25,000 subscribers to more than 5 million customers who receive a deal-of-the-day offer via email. If you are a TV direct response marketer, then you probably have experienced declining list

Do it Yourself
Understand that your database of buyers belongs to you. You have an extraordinary opportunity to remarket to your customers using one of the lowest costing forms of communication ever devised: email. Groupon has 83 million subscribers worldwide, of which 19 percent have actually made a purchase. You can enter this sector simply by having your buyers subscribe to a daily deal email. You then have the right to contact these buyers via email. The pros of mailing a daily deal to your database of buyers are that you can liquidate overstock and diversify your revenue stream beyond TV, but you do not have to share revenues with a partner. It also gets you out of relying solely upon a hit-driven business model. But there are issues to consider that make this approach difficult. Unless you are offering a real deal, you will not be successful. Once someone becomes an online deal-of-the-day consumer, they brutally price check offers. They also are more sensitive to S&H than TV offers. Generous discounts are critical to a successful daily deal program. Liquidating your products through a daily deal program can ruffle a few feathers with your retail clients. If they are selling the latest TV product near the suggested retail price and suddenly it appears in your daily deal email at a 50 percent discount off the retail price, they can get testy. You also must offer a minimum of five offers per week. Since you most likely do not have 260 37

October 2011 | electronicRETAILER

Electronic Retailer - October 2011

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