Will Data Define Deals 2.0?

Handcuffed by the SEC-mandated “quiet period” since June, Groupon finally found a way to slow the media siege earlier this month. By tweaking its signature deal counter to show an estimate instead of the exact number of deals sold, the deals giant clamped down on a major source of fodder for its critics: third-party sales projections.

Industry data has become a commodity in the young, explosive deals space, with aggregators like Yipit selling reports on industry trends. For the most part, the data is publicly available. Aggregators use bots to scrape hundreds of deals sites, indexing the thousands of deals distributed each day across vertical, geography, and, until recently, number of deals sold, City Pockets CEO Cheryl Yeoh told Street Fight recently in an interview.

The industry data, which Yipit began selling publicly in June, is used mostly within the space as a competitive analysis tool, allowing deal companies and potential investors to gain a broader understanding of consumer trends.

“In addition to selling this data back to deal sites for competitive analysis tool, [Yipit] is providing it as a lead-generation tool as well,” explains Yeoh, who will be giving a short presentation about the deals space at the Street Fight Summit this week. “Sites are buying this data to target merchants who have a history of running daily deals.”

As far as revenue is concerned, industry reports are small potatoes. Although Yipit’s data business is reportedly bringing in the lion’s share of the company’s revenue, many industry experts believe this kind of data will serve more as a brand-building and PR tool than as a viable monetization strategy.

The emergence of data about daily deals indicates a major step in the maturation process of the space. David Stirling, CEO of local market analytics firm MVue, says he was struck early on by the absence of analytics in the deal space: ”Our first reaction to the [daily deals] phenomenon was, ‘Where the heck are the analytics?’ For the big guys, it was just a massive land grab — get feet on the street, sign up subscribers, and get as many merchants on board — then, eventually, analyze things.”

Stirling says the current daily deals model, in which every customer is treated alike, is antithetical to basic principles in local merchant marketing. “At some point,” he adds, “daily deal marketing and this core principle will have to get aligned.”

It appears that tomorrow’s deal data will center on tracking and analyzing consumers from online discovery to offline redemption and back online with retention campaigns.

Targeting and measurement — held by many as the future of the space — will depend on a sophisticated, data-intensive business infrastructure. Broad industry-level data should continue to serve as an indicator of overall industry trends, but it appears that tomorrow’s deal data will center on tracking and analyzing consumers from online discovery to offline redemption and back online with retention campaigns.

Companies like Groupon have already begun building out these networks. In July, the daily deals giant acquired little-known CRM tool Zappedy for $10.2 million. The Chilean startup built a platform through which companies can track online-to-offline commerce by plugging into existing payment databases.

Adility CEO Thomas Cornelius views the Zappedy acquisition as a major move for Groupon: “As a deals site, you already have the credit card which was used for the purchase, you can now take these merchant records and match these against the credit card of the customer. And with that you can figure out the overall spend of the new customer that I brought to merchant A, and then can show the merchant that this deal actually worked.”

Group buying is not a fundamentally complex technology. Its innovation was to bring the point-of-sale from in-line to online, subsequently separating payment from exchange of goods or services. As the deals space consolidates, and mid-level players with thin business infrastructures like BuyWithMe fizzle out, the major players will be tasked with building an amphibious data network that will require massive technological innovation.

Stirling, a veteran of CRM and data management, says the deals space can be lumped into a larger category of consumer incentives, ranging from mobile payments to loyalty programs. “The whole area relies on the ability to match the right incentive to the right consumer at the right time with the right vehicle – do the math, you’re talking about trillions of permiatations,” he explains. “The challenge is figuring out how to keep it simple.”

Steven Jacobs is an associate editor at Street Fight. He will be moderating a panel on Tuesday about LBS at the Street Fight Summit.