This document discusses daily deal sites and their impact on local businesses. It notes that daily deal revenue is on pace to reach $1 billion in 2010 and $2 billion in 2011. While small businesses initially loved the zero-risk model, issues around lack of customer data and low-quality customers have emerged. The document predicts that deals will evolve to include more social promotions and live offers to engage customers. Distribution will become more ubiquitous across maps, search, social media and apps. Self-serve deal creation will expand to more platforms to make daily deals more mainstream.

1. Refining the GroupOn
“Blunt Instrument”
Local Social Summit
November 18, 2010

2. Topics
• The Daily Deal Phenomenon
• Small Business Viewpoint
• Daily Deals: Fast Forward
• Local Media Playbook

3. Straw Poll
Which best describes your view of Daily Deals?
A. It’s an over-hyped model that is great for desperate
times, but it’s not sustainable
B. It’s a foundational shift, that is a BIG part of the future
of local shopping

4. Daily Deal Phenomenon
• Gross Revenue pacing at ~$1B, $2B 2011
– GroupOn fastest growth tech company, ever
– $600M from a few thousand local SMB’s
• 150-200 daily deal sites, 400+ deals/day
– Every local media co entering in some form
– Scaling internationally
• 40K+ businesses in deal distribution queue
• 15+ startups aggregating deals

5. The Success Formula
• Struck a chord of pent-up consumer desire
– Get out again, without the expense of 2008
– Hip to save, remove the embarrassment of coupons
– “Group” key to concept/brand, now tangential
• Struck a chord of SMB local lead frustration
– Complexity & mediocrity of media and search
– Zero risk model
• Perfect storm of timing (economy, social) + brand

6. SMALL BUSINESS VIEWPOINT

7. SMB Love Fest?

8. Lead Generation
Success
Pre-paid Customers
Zero Risk
Deep Margin Cut
Drive By Customer
Quantity
& Timing Control
SMB Viewpoint
We Love This We Hate This
No Customer List

9. Deal Design: Refinement, Complexity, Noise

10. DAILY DEALS: FAST FORWARD

11. SMB Social Marketing & Deals
• Consumers follow businesses
for special treatment
• Deals/customer special events as
mainstream social participation
• Emerging picture:
– Brand/conversationalists (edge)
– Lead marketing (scale)
– Value-added intermediation
(mainstream)
RazorFish October 2009 Study

12. Key Shifts in Process
Promotion
Types & Use
Cases
Distribution
Self-serve

13. Deals Morph with Mobile & Social:
Live Social Marketing
• Promotion Use Case Expansion
– Casual offers: enticements to visit
– Events & activity announcements
– Social offers: friends/neighbor behavior
– Return visit loyalty
– Networked appointment bookings
• Real Time, Any Time: Yield Management
– Live publishing
– Mobile search & personalized discovery

14. Deal Distribution: Silo > Ubiquity
• Live Search Tags
• Live Display Feed/Ads
• Daily Deal Campaigns
• API: Consumer Apps/Sites
• Feed Distribution
to Maps, Search,
Social, LBS Partners
• API/Dev Programs

15. Self-serve Aims for Mainstream
• GroupOn
• Facebook Deals
• Google Places Offers
• Foursquare
• Yelp
• Twitter?
• Closely ;)
Dashboard
Remote Control

16. The Big Ideas
• Pre-paid purchase model could
be foundational
• Live social marketing can evolve
to yield management for local.
• Offer content is a new shopping
content layer, akin to Reviews.

17. Local Media Playbook?
Value-added Aggregation of
Local Offers.
Search Tags. Live Offer Display. Website Widget.
Package to Your Strengths.
1. Zero in on Social Promotion
2. Package & Simplify Distribution
3. Instigate the SMB Social Graph

18. Thank You!
Perry Evans
Closely, Inc.
perry.evans@closely.com
Twitter: @perryevans
Mobile: +303-550-1205