• by Jack Loechner , Staff Writer @mp_research, September 23, 2011

According to an update of U.S. deals forecast by BIA/Kelsey, U.S. consumer spending on deals (including daily deals, instant deals and flash sales) will grow from $873 million in 2010 to $4.2 billion in 2015, representing a 36.7% compound annual growth rate. In March the firm had estimated 2015 deals spending at $3.9 billion.

Compared with the earlier forecast, this update indicates only a slight increase overall by 2015. However, revenues for 2011 have been revised upward significantly to $2 billion from the $1.2 billion originally estimated in March.

Consumer Spending On U.S. "Deals" (Forecast in Million Dollars)
Year	Consumer Spend ($Million)
2010	$873
2011	1,970
2012	2,455
2013	2,987
2014	3,564
2015	4,171
Source: BIA/Kelsey, September 2011

Mark Fratrik, BIA/Kelsey vice president and chief economist,  "... as more... awareness grows and new markets are entered... we see a ceiling on how many deals consumers will buy... (but) we believe daily deals reinforce other advertising and related services, like instant deals and flash sales... "

Among the factors underlying this revised forecast, says the report, are:

• A bigger increase in the number of registrants for deals services. Market leaders Groupon and LivingSocial have expanded quickly and many more participants have entered this arena, including vertical sites and local media companies
• Growth in the number of registered users who are "active" in buying coupons
• Greater specialization of deals sites (both vertically and by neighborhood) will lead to more activity by registered users
• Increase in the average number of transactions, resulting from more efficient providers of these services and expansion of the types of products and services being offered
• Rise in the average price per transaction, owing to general inflation and the attempt by some providers to offer more valued services at higher margins

The report says that Groupon and LivingSocial continue to lead a growing marketplace of 600-plus players, which include destination sites, white-label providers working with local media such as directory companies, newspapers, and radio and television operators; vertical players; mobile/location-based providers; flash sales sites; exchanges; and aggregators.

Peter Krasilovsky, vice president and program director, Marketplaces, BIA/Kelsey, concludes that "... the deals market continues to grow, despite the recent departure of Facebook and others that may not have been well-equipped... to participate in such a crowded market... we expect local media companies to leverage their existing promotional, sales and other local assets to play a significant role in this industry... "

For more from BIA/Kelsey, please visit here.