Here - ABLE BC

If you own a pub, chances are you’ve considered
using a daily deal website to attract more
customers. Perhaps you’ve already run a daily
deal offer (or a few) and survived to tell about it.
While daily deals sound like an ingenious way to
build your business - through massive exposure
to drive lots of people into your establishment -
the concept may have passed its peak having left
many pubs burnt in its wake. It has also changed
your customers’ buying behaviour forever (at least
until the next fad).
The daily deal phenomenon started in 2007 when
Andrew Manson, Groupon’s founder, noticed
that a social group he was in charge of was very
active in organizing groups to take advantage
of local businesses’ group deals. In 2008, he
launched Groupon, which started the group
buying craze that eventually evolved into the
daily deal concept.
The Rise of the Daily Deal
At its height, group buying was huge; proving that
cash-strapped, post-recession consumers loved
discounted deals. In 2010, Groupon erroneously
turned down a $6 billion ownership offer from
Google, despite the fact that it hadn’t actually yet
made a profit. The website had plans to launch its
own IPO to go public on the stock market.
Today, the company is worth less than Google’s
initial offer, but may actually turn a profit for
the first time in 2013. It has been busy using its
revenue to cover overhead, marketing, growth,
and acquiring smaller companies.
Many copycat competitors have popped up using
the daily deal model. Consumers can choose from
at least ten daily deal websites in Vancouver alone,
and there have been many more sites started, but
they were weeded out by the marketplace.
Why Did Daily Deals Have Such a Meteoric
Rise?
Daily deal site operators, confident in their
ability to market to large audiences, saw dollar
signs. Vendor businesses - particularly pubs and
restaurants where there is high customer turnover
- thought the concept would be good for a large
infusion of cash and for finding new customers.
Common reasoning for using a daily deal has
been: “If I show them a good time and they like the
food, they’ll come back for more. Hopefully they’ll
even tell their friends who also love bargains.”
Sound familiar?
Customers - the true winners of the daily deal
game (except when the deal is sold out) - are
driving the daily deal industry; however, this
exposure to a plethora of deals has now created
a much savvier consumer.
The main advantage of using a daily deal site
is that your pub will get exposure to a highly
desirable demographic. The numbers tell the tale:
• 60% of daily deal site users are between 18 to
34 years old.
• The next biggest demographic is 35 to 55 years
old.
• 68% of all online shoppers subscribe to one
daily deal site.
• 46% subscribe to two.
• Most people who bought a daily deal ended
up buying at least three over the past year.
Now that we’ve matured into the fifth year of
daily deals, a lot has changed since the early days.
When daily deals first came out, most businesses,
particularly spas and restaurants, didn’t realize
the true cost of running a daily deal campaign,
and many of those vendors couldn’t afford to run
them. Worse, many thought these were a source
of additional revenue.
Today, many restaurant associations strongly
caution against daily deal sites, concerned that
these coupons devalue the industry as a whole.
Unfortunately, many owner/operators work alone
or are new to daily deal sites and still use them.
You can also add “desperate to stay afloat” owners
into that mix as well.
Consumers are now trained to look for businesses
that offer the best (i.e. cheapest) deal. In the past,
a vendor could expect a coupon user to spend
20 - 30% over the value of the coupon; now,
consumers are careful to only order the bare
minimum to get the deal.
The Split Revenue Model - How Daily Deals Work
The concept of the daily deal is relatively simple. A daily deal site offers to sell your gift certificate or
menu item at a discount, usually at 50% (or more) off the regular price. The site gets half the money
from the sale of the coupon, with the other half going to you. This essentially means you are selling
your regular service at 25%, which often means a loss to the business owner.
The biggest advantage to doing a daily deal offer is the massive exposure your brand could get with
the right daily deal site. Consider the loss to be a marketing expense.
The Publican
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