• by Erik Sass  @eriksass1, July 26, 2011

Newspaper publishers are scrambling to get into the group discount business, both through partnerships with existing players and new proprietary services, which they launch themselves. Gannett Co. has launched DealChicken, a group discount platform drawing on the company's considerable local sales force.

DealChicken actually had a soft launch in Phoenix, where it was tested before rolling out to nine other markets this week. Currently, DealChicken is available in 10 markets, including Cincinnati, Detroit, Indianapolis, Knoxville, Nashville, Phoenix, Reno, Rochester, St. Louis and Washington, DC.

Gannett expects to introduce the service to over 40 additional markets by the end of the year.

David Payne, Gannett's senior vice president and chief digital officer, stated: "Our people on the ground know the markets, the communities, and their respective needs, and only Gannett can provide merchants with the local media support necessary to create a multi-dimensional marketing strategy that includes daily deals."

For example, marketing efforts during the test phase in Phoenix included exposure on azcentral.com, Channel 12 and the Arizona Republic.

In March, an industry forecast from the Local Offer Network, which aggregates daily deals, predicted that the U.S. group buying marketplace should increase from $1.1 billion in 2010 to $2.7 billion in 2011.

While a few big players still dominate the field -- most notably Groupon and LivingSocial -- analysts agree that it remains highly competitive as new players emerge at the local, regional and national level. According to LON, the 117 new deal sites launched in the first quarter of 2011 alone.

The appeal for consumers is obvious, as LON calculates participants saved an estimated $1.2 billion in 2010, rising to perhaps $3 billion in 2011. Businesses may balk at the terms of group discount sites, however, as they forfeited about $1.8 billion through these deals.