A Trillion Dollar IndustryJim Moran | @jdmoran | blog.yipit.com

Deals 3D: Monday, July 18

DAILY DEALS TODAY

The Daily Deal Stack

MERCHANTS

CO

NSUMERSMerchant Services

SOON…Merchant Agencies

Consumer Services

White Label Publishers

Vertical Deal Sites

Data

Exchanges

Aggregators

Daily Deal Sites

New Multi-Billion Dollar Industry

Industry Leaderboard

SUSTAINABLE?

High Repeat Rate

43% of daily deal merchants in May had run

at least one prior deal

Shifting Ad Spend

Reducing Other Advertising Spend After Running Daily Deal

Yes 43%No 57%

Data from Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.

High Merchant Satisfaction

Would You Use a Daily Deal Site for Another Promo-tion?

Yes 93%No 7%

Data from Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.Groupon’s reports repeat interest at 97% (grouponworks.com)

Breakage Rate ≤20%

Recent data on Groupon is consistent: (i) breakage of 10% (TechCrunch, 8/14/10), and (ii) 20% redemption in month 1 and 15% redemption in month 12 (Chicago Tribune 8/16/10).

Profitable at 19% Retention

Assumptions from industry research and Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.

Merchant Profitability Per Voucher

Drivers Gross Profit / VoucherDeal Assumptions Existing CustomersDeal Value $50 Revenue from Groupon $2.2

Deal Discount 50% Revenue from Overage1 1.1Deal Price $25 Revenue from Existing Customers 3.2Overage % 14% Less: COGS 3.4Commission % 40% Less: Cannabalized GP 1.8Cost of Goods Sold % 40% GP from Existing Customers ($2.0)Credit Card Fee % 2.5%

GP from Breakage $2.9Buyer Mix AssumptionsUnredeemed (Breakage) % 20% New CustomersCurrent Customer % 20% Revenue from Groupon $8.6

New Customer % 60% Revenue from Overage1 4.2Revenue from Existing Customers 12.8

Repeat Visitor Assumptions Less: COGS 13.7

Conversion to Repeat %23 19% GP from Existing Customers ($0.9)Repeat Visits 3Vouchers per Customer 1.5 New Repeat CustomersCurrent Customers Already Going % 25% Revenue from Repeat Customers $13.0

Less: COGS 5.2GP from Existing Customers $7.8

Incremental GP / Voucher $7.9

FROM BILLIONS TO TRILLIONS

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Much Larger Than Local Advertising

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Trillion Dollar Industry

Increase Penetration- Global expansion- Demographic expansion- Channel Expansion

Daily Deals

Increase Share of Wallet- Reduce Friction: Credit Cards, mobile- Personalization- Expand Categories- More Merchants

1%

% of Consumers

% of Total Spend1%

One Scenario

HOW?

Daily Deals Today

&

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Beyond Email

>50% of clicks from Yipit’s now through web users

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More Categories

Total Urban Daily Deal PenetrationClothing & Services $120,907 $675 0.56%Entertainment 188,756 422 0.22%Healthcare 219,105 231 0.11%Food 446,622 370 0.08%Transportation 536,510 132 0.02%Rent & Mortgage 1,183,074 0 0.00%Insurance & Pensions 383,469 0 0.00%Other 359,358 38 0.01%Total $3,437,801 $1,869 0.05%

$ in Millions - Source: Bureau of Labor Statistics, DOL

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Not Just Discounts

~ 1 in 4 offers aren’t “deals”

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National Brands

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Beyond “Prepay”

Groupon Now!LivingSocial Instant

ScoutMobBlackboardEats

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Frictionless Redemption

WHO WILL WIN?

Google

Amazon

Everyone

MERCHANTS

CO

NSUMERSMerchant Services

SOON…Merchant Agencies

Consumer Services

White Label Publishers

Vertical Deal Sites

Data

Exchanges

Aggregators

Daily Deal Sites

ABOUT YIPIT

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Data Product OverviewIndustry-wide Reach- Tracking 500+ Competitors across

all major North American markets

Comprehensive Deal Database- 100,000+ historical deals- 20,000+ new deals per month

A Powerful and Versatile Tool - Source new, high-quality merchant

leads- Analyze past offers to optimize

merchandizing- Track performance of competitors

30+ Current Partners

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Recognized Industry ExpertiseSpeakers at Industry Conferences Expert Commentary

Asked for Advice by Major Companies

THANK YOU

Thank You

blog.yipit.com@jdmoran