Daily Deal Sites Raised $1.7 Billion in First Half of 2011: Report

By Beecher Tuttle July 14, 2011

Who would have ever thought that bringing coupons to the Internet would help create a multi-billion dollar industry? Groupon and Living Social to name just a couple.

The daily deal industry has blown up in the last year, with the number of companies specializing in Web-based coupons growing from 70 to more than 350 during that period, according to the 2011 Daily Deal Investment Index released this week.

During the last six months alone, daily deal websites have raised more than $1.69 billion in venture capital funding, including $950 million for Groupon, which is set to go public later this year. VC firms and private investors have poured funding into a total of 22 of these companies since Jan. 1.

The daily deal obsession is far from a domestic phenomenon. China currently houses more than 1,000 of these outfits, with Europe and South America not falling too far behind.

"Despite a conservative approach from many investors, as daily deals companies build scale and expand reach, they are finding support from the investor community," Boyan Josic, CEO of Daily Deal Media, noted in the Index. "We see no signs of the market slowing down as an increasing number of sites test the market, helped by low barriers to entry."

To celebrate the explosive growth of daily deals, CreditScore.net recently put together an infographic that details the history of the coupon and where it is today.

Coca-Cola is credited with the first ever coupon for a free soda for anyone who would help promote the beverage during 1888. It took around 50 years for coupons to really take off as a known concept. By 1965, half of all American families were using coupons.

Currently, digital deals outsell physical coupons by 10 to 1. The researchers speculate that 48 percent of active Internet consumers will take advantage of a digital coupon or daily deal in 2011. More than 40,000 daily deals were offered in the first quarter of 2011.

The industry is expected to generate around $1.25 billion in revenue by the end of the year, up 43 percent from 2010.

Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves

TechZone360 Contributor

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