• by Rich Razgaitis , April 28, 2011

As daily deals go mainstream, group commerce initiatives are becoming a key component of most publishers' Web sites as a way to generate new revenue and retain their existing audience. The New York Times' new venture, TimesLimited, and Kiplinger's Little Luxuries are examples of publishers trying to take full advantage of the benefits that deal commerce can bring.

And while launching a deal offering and ensuring that it's a success takes time and resources, creating a residual revenue stream with deals and increasing repeat Web traffic is absolutely worth the short-term investment.

Consumers love deals, and daily deal site usage continues to grow. BIA/Kelsey estimated, as of March 2011, there were 178 cities with group-buying sites reaching 102 million U.S. consumers. And this number is expected to increase as more vertical niche players and hyper-local sites emerge to cater to individual needs.

Similarly, merchants are also embracing deals. Set to transform local advertising, deal commerce has already been accepted as a key ad vehicle for local merchants because of its largely risk-free pay-for-performance model. Deals complement other online and traditional programs and resonate well with merchants, as they only pay for an offer once a customer walks in their door.

Given the interest by both consumers and merchants, a lot is at stake for publishers and they must move quickly to serve and capture their audience with deals. Consumers will likely only subscribe to a finite number of deal services. By waiting, publishers will have missed the window for launching a daily deal service under their own brand. This could be a major misstep, as a deal commerce offering provides an ideal platform to encourage users to return to a publisher's Web site to consume core content offerings.

So, what should a publisher know before investing in a deal commerce platform? First off, this isn't a flash-in-the-pan moneymaker. A long-term commitment is required for success.

Publishers that typically fare best with a deal commerce platform receive more than 500,000 unique visitors monthly with a brand that carries credibility. This allows for a large enough subscriber base to generate a profit. Any vertical publisher -- e.g., science, cooking, finance -- can jump in the game and carve out a unique service that offers a variety of deals.

While the daily deals model is often replicated, it is not an effort publishers should embark on solo. It is paramount that publishers choose a deal platform partner carefully and consider a few key attributes:

1. A steady deal flow To create a national daily deal offering -- required for most publishers -- dozens of offers in dozens of markets are needed. Ensure that your partner has sales reps nationally and can supply a consistent number of deals.

2. Exceptional deal quality Deals should come from premium local merchants with valuable discounts for consumers and high-enough margins for publishers to generate a revenue stream.

3. A white-label platform A white-label platform helps offload some of the heavy lifting of a deal commerce platform and allows publisher deal pages and vouchers to be branded as their own. Brand affinity is what creates a sense of trust -- and ultimately, conversions -- from subscribers to buyers.

4. Ownership of email addresses and residual revenue A deal partner should allow publishers to retain customer ownership including email addresses and recurring revenue related to future purchases. Without this, there isn't much opportunity for a viable long-term revenue stream.

5. Flexibility to sell deals once established Once a publishers' deal platform is stable and has accumulated a larger subscriber base, a deal platform partner should provide its publisher with the ability to sell deals into the platform. This can be a valuable component to a publisher's existing advertising product arsenal.

Above all, remember that the space is crowded. Make sure your selected partner will be around long-term to ensure your investment pays the dividend you expect.