By CATEY HILL
Our inboxes are now so flooded with sales pitches from various daily deal sites -- really, another discount on pole-dancing classes? -- that companies are having to experiment with new tactics to grab consumers' attention.
Roughly 600 companies are now firing off deals each day, up from just a handful only a few years ago. And consumers are expected to spend nearly $2 billion on these deals this year, a 55% jump over 2010, according to market research firm BIA/Kelsey. "There's a lot of competition in the space, so these companies are looking for new and different ways to reach consumers," says Mark Fratrik, the chief economist and vice president of BIA/Kelsey. Among these new methods: deals via mobile phone and announced on local radio, instant deals that customers can use the same day and deals on practical items like diapers and groceries, he says.
Here's a look at some of these new offers, and the pros and cons of each.
Those who buy the discounts offered on daily deal sites used to have to wait a day or more before taking advantage of the offer. Not anymore. Earlier this year, Groupon launched "Groupon Now!," which offers deals that can be accessed often within the same hour they're purchased. On Wednesday, "Groupon Now!" in New York offered $20 worth of food at restaurant Mango Fusion Thai for $9 and $10 worth of cupcakes for $6 at Butter Lane Cupcakes (both offers were only good through 10 p.m.). LivingSocial offers a similar service, called "Instant Deals." These kinds of deals are just the tip of the iceberg, says Jack Vonder Heide, president of market research firm Technology Briefing Centers. Consumers will soon get more instant, location-specific deals on their GPS-enabled smartphones, he says. "If you're in the grocery store, you could get a deal sent to you immediately via text about a deal in the store right then," he says.
Pros/cons: As with all such discounts, there is the opportunity of savings, and often on items one may not have purchased without the offer, says Vonder Heide. The time limit encourages a "buy now" mentality, as consumers don't want to lose out on the opportunity, says Lars Perner, an assistant professor of clinical marketing at the University of Southern California.
As fun as it might be to try a three-course dinner at that new bistro downtown or a hot-stone massage at a new luxury spa, for many Americans, these luxuries just aren't in the budget, even when they're discounted. The daily deal sites are catching on -- and are now offering deals on essentials like groceries. In April, Groupon offered consumers in San Francisco and Minneapolis a deal to buy a sampler pack of General Mills products, which included cereal, cereal bars and cookie mix, for $20. LivingSocial recently partnered with Whole Foods to sell $20 worth of groceries for $10. Fratrik says to expect more of this. Grocery stores have inventory with expiration dates that "a lot of times gets wasted," he says. But a daily deal could drive consumers into the store to pick up those soon-to-expire items for a deal, he says.
Pros/cons: These "practical" deals have the potential to save you money on things you might really need, says Vonder Heide. However, as with the instant deals, the tight time limits on these can still spur consumers to buy non-essentials.
More ways to access deals
With the vast majority of deals being sent out via email, companies are hoping to stand out more by taking to the airways and mobile phones. Starting October 24th, LivingSocial's daily deals will be announced each day on more than 500 Clear Channel radio stations across 90 cities. And from cell phone companies to daily deal sites, companies are dipping their toes into the daily deal app market as well. T-Mobile launched an Android app, called More for Me, in June that aggregates local daily deals; LivingSocial recently launched its Android app that same month, and smaller deal site Spreebird, which is owned by Local.com, announced its new deal app last week. The daily deals movement "started with email, but consumers started to get inundated with deal emails, so companies are trying new things" says Vonder Heide. "We'll see more of this."
Pros/cons: For those who are sick of the dozens of daily deal emails flooding your inbox, an app might be a less irritating way to receive deals, as you only open the app when you feel like shopping for a deal. The radio ads might be helpful as they often run during your morning drive into work, so you have the whole day to act on them (or not), says Perner. But radio ads and apps and emails and the other ways companies will likely try to reach you "might cause consumer fatigue," Perner says.