BIA/Kelsey Revises Deals Forecast Upward

The media adviser expects U.S. spending on deals -- including daily deals, instant deals and flash sales -- to grow from $873 million in 2010 to $4.2 billion in 2015. In March, the firm had pegged 2015 deals spending at $3.9 billion.
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BIA/Kelsey today revised its U.S. deals forecast upward, reflecting growth in the number of users of deals sites and greater specialization among those sites.

The media adviser expects U.S. spending on deals -- including daily deals, instant deals and flash sales -- to grow from $873 million in 2010 to $4.2 billion in 2015, representing a 36.7% compound annual growth rate (CAGR). In March, the firm had pegged 2015 deals spending at $3.9 billion, with a 35.1% CAGR.

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The revenue forecast for the industry has been also been revised upward to $2 billion from the original report’s $1.2 billion.

BIA/Kelsey sited a bigger increase in the number of registrants for deals services, growth in the number of “active” users, greater specialization of deals sites, and an increase in the number and average price of transactions as the factors for the revised report.

“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,” BIA/Kelsey vice president and chief economist Mark Fratrik said in a statement. “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.”

Groupon and LivingSocial continue to lead a growing marketplace of 600-plus players, which include destination sites, white-label providers working with local media, vertical players, mobile/location-based providers, flash sales sites, exchanges and aggregators, BIA/Kelsey said.

“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.”

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