yipit

One common question surrounding the Daily Deal space is whether the discount percentages and deal services’ margins will hold at scale. We’ll handle some of the issues surrounding compression/expansion in later posts, however, one trend that makes us excited are special events being organized by the Daily Deal services that feature several local businesses. Some recent examples in NYC:

St. Patty’s Day Pub Crawl by Groupon
Price: $15 (63% discount)
Sold: 1,015

Taste of 7th St by Scoop St
Pricing: $18 (49% off)
Sold: 1,000+

Tastes of the Village: East by TheDealist
Pricing: $16 (50% off)
Sold: 399 (currently active)

We expect to see more of these types of deals, as they are advantageous for both the Deal Services and Local Businesses:

The Businesses promote these event to their own customers. When a merchant is featured on a Daily Deal service, they often avoid promoting  the discount their existing customer base so as not to cannibalize their own pricing. Special events, however, are an “upsell” to its current customers, meaning businesses are more likely to help in promoting the deal (see Luke’s Lobster’s tweet, who participated in Scoop St’s Taste of 7th St festival).

PR Opportunity. Structured as events, these deals are more news and blogworthy.

Multiple venues participate, meaning multiple hooks to convert the consumer. If an individual recognizes just one participating venue, there is still a compelling reason to purchase a ticket to the event.

Ticket pricing is flexible. Because the Daily Deal services organize these events, they are effectively the merchants themselves, and have the flexibility to set pricing (and discount) accordingly.

The relationships are higher value. The relationship a Daily Deal Service creates with the local businesses in forming the event can be leveraged in creating future deals as well, that many individually feature that business. >