The short answer is almost nothing. Many journalists have argued that consumers have soured on “deals” in the wake of the well-publicized struggles at Groupon and LivingSocial, which just laid off 10% of its workforce.
But it’s not true. Consumers love deals.
Deals are evergreen; just look at last weekend with Black Friday and Cyber Monday (etc.). US consumers are as deal-crazy as they ever have been. One could even argue that they are now so conditioned to look for deals, coupons and savings that most won’t buy without some incentive.
What’s changed from 2010-2011 and its daily deal mania is that consumers have grown weary of the “daily deals” style push e-mail model featuring a lot of items that aren’t particularly relevant or interesting. Once consumers have a couple of negative experiences with deals they become far more selective and are often reluctant to “go there” again.
Furthermore the well-publicized struggles of some merchants that used deals have made it more difficult for many deal purveyors to bring new merchants into the system. There’s an analogy between daily deals and social media: most small merchants don’t know how to “work” the system particularly well.
But consider this: as people are writing the epitaph for daily deals VC firm Andreessen Horowitz just pumped $85 million (yes $85 million) into “daily deals” site Zulily. Zulily could equally be characterized as a marketplace for moms and kid-related items. In that context it emerges as a highly targeted channel, now in excess of 10 million members, for merchants and brands selling to that audience.
Zulily also uses push email but it offers much more “relevant” inventory for its member population.
Beyond this there’s the Nimble Commerce model (or Local Offer Network), which turns deals into display advertising and distributes it across a broader ad network. Deals could equally be shown in search results (and are sometimes). In these other contexts, consumers who are interested in the promotions can act without feeling like they’re being spammed with unwanted offers.
Regardless the deal survivors all need to get smarter about structuring and delivering deals. That is happening and will continue to happen. But the struggles of daily deal publishers really says nothing about consumer interest in saving money.
As another piece of evidence to validate that assertion, look at recent research from Nielsen, xAd and Telmetrics. The question leading to the graphic above was: what would make you click on a mobile ad? The answers above were the top three.
This research pretty clearly shows what makes a mobile ad interesting to consumers: local relevance, a familiar brand — and/or some appealing offer.