Outlook for ‘Deals’ Still Strong, BIA/Kelsey Says

Company tweaks its forecast for that sector
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Company tweaks its forecast for that sector

U.S. consumer spending on “deals” will increase from $873 million in 2010 to $4.2 billion in 2015, a 36.7 percent compound annual growth rate, according to an estimate from research firm BIA/Kelsey.

The company has tweaked an earlier March estimate upward, citing “more entrants, rapid market expansion and growing consumer adoption.”

“Compared with the earlier forecast, this update indicates only a slight increase overall by 2015. However, revenues for 2011 have been revised upward significantly to $2 billion from the $1.2 billion originally estimated in March.”

Deals services are led by names like Groupon and LivingSocial (while Facebook notably departed), but BIA/Kelsey said the sector has some 600 players, including destination sites, “white-label” providers working with local media such as radio stations; directory companies; mobile/location-based providers; and flash sales sites.

Vice President and Chief Economist Mark Fratrik stated, “Even as more consumers sign up for deals programs and awareness grows and new markets are entered, we see a ceiling on how many deals consumers will buy, and their overall interest level in deals. With that said, a strong foundation has already been created in the promotional ecosystem of this young industry. We believe daily deals reinforce other advertising and that related services, like instant deals and flash sales, will significantly boost income for key players.”