Why Local Media Can Dominate Daily Deals

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Matt Coen is a guest author. To submit a guest post, click here.

Pundits have been quick to predict the demise of daily deals following the recent news that Facebook and Yelp have scaled back their entries into the market, and that Groupon has delayed its IPO. Rather than buy into this hype, local media need to view this moment as an opportunity to double down and consolidate their positions to capitalize on this important new revenue stream.

While the deals industry is clearly going through a shakeout, revenue around deals is still growing at an impressive pace. According to a new forecast by industry research group, BIA/Kelsey, U.S. consumer spending on deals will have grown from its 2010 level of $873 million to $4.2 billion in 2015, representing a 36.7 percent compound annual growth rate. Even conservative estimates suggest that deals will continue to be a major source of growth for the local advertising category for years to come.

While Groupon and LivingSocial got off to blistering starts, deals programs administered by local media companies are catching up, and in some cases, surpassing the national players within their local markets. With deals, media companies are strategically placed in the middle of the online transaction business. By continuing to connect buyers and sellers in their local markets, they can carve out a significant revenue stream moving forward. Local media need to play their cards right and continue to invest in their programs to be well positioned for success and longevity in the deals industry.

There are several advantages local media have over other players in the space. Here are the three most important:

Loyal Audiences and Established Brands
Unlike their competitors, local media companies do not need to embark on multimillion-dollar advertising campaigns to establish themselves. They already command large and relevant audiences that are interacting with their brands every day. In addition, they can grow their email and social databases in a more cost-efficient manner than national deals sites can.

Local Sales Teams
Local media outlets employ sales forces that have existing relationships with local merchants and that can operate on a more efficient scale than national sites. In some cases, larger deals sites rely solely on phone sales to reach local merchants. Local media companies have feet on the street with sales reps that live and work in the markets where they operate. In a competitive space like daily deals, there is no substitute for their local knowledge and relationships.

Multimedia Promotional Reach
Media outlets can offer merchants wider, more robust promotional offerings than the one-dimensional email promotions of national deals sites. They have the ability to customize deals packages featuring front-page placements, on-air mentions, website banner ads, e-blasts and editorial integration such as interviews with local merchants on news programs or in print features. These unique promotional options add thousands of dollars in value and are already making local media the preferred choice of many advertisers to run their deals.

Time to Double Down and Win
Local media’s winning combination of established brands with built-in audiences, connected sales forces and unmatched promotional reach have positioned them for major gains in the deals space. But this outcome is not guaranteed and local media will have to act decisively to secure their positions. Specifically, they will need to invest in their sales forces and find creative ways to grow their email databases – such as contests and other promotions.

Local media companies should be encouraged that this shakeout in the deals industry has left them in such a favorable position. They need to take advantage of this moment or risk missing out on a major source of revenue for years to come.

Matt Coen is the president and co-founder of Second Street, a leading provider of private-label online promotions platforms for media companies and brands, based in St. Louis, Mo.


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