Deal of The Day - Marketing

Marketing

Most businesses which run one-day deals via daily deals websites consider it a marketing activity rather than a means of generating profit. When the deep discount and payout to the deal of the day site is taken into account, the business running the promotion can often be left with insufficient revenues to reach profitability. The benefit for businesses is exposure of their product or service to a large number of customers in a short period. There is evidence of significant exposure value (increase in sales because of exposure received) from running a one-day deal.

Often, those who purchase a daily deal are “price-sensitive deal-seekers” who are less apt to return to the business in the future without continued discounts. However, studies have shown that for small businesses and start-up companies, daily deals can result in a substantial 30% lift in profits compared to baseline levels. A survey of businesses who ran daily deals in the past year revealed that more than half (55.5%) profited on their daily deal promotion, whereas just over a quarter (26.6%) lost money. The remainder (17.9%) broke even. Beyond mere exposure, businesses hope to capitalize on the long-term lifetime value of new repeat customers, representing a shift from traditional marketing and advertising. While the primary purpose of deal of the day sites is as an e-commerce platform, they can also serve as marketing and media platforms.

A study of small businesses revealed that on average, daily deals spending is the single largest expenditure in a company’s marketing budget at 23.5% which translates to average annual spending on daily deal programs of $46,530. These numbers compare to other marketing expenditures such as e-mail promotions (16.1% or $31,878) and on-line search advertising through programs such as Google Adwords (14.7% or $29,106).