U.S. Daily Internet Deals to Reach $4.17 Billion by 2015, Researcher Says

Groupon Inc., LivingSocial and other daily-deal websites will generate $4.17 billion in U.S. sales in 2015, more than double the amount this year, research firm BIA/Kelsey estimates.

The market will be worth $1.97 billion in 2011, according to Chantilly, Virginia-based BIA/Kelsey. The company has revised its projections since March, when it predicted smaller sales this year but a faster growth rate from 2011 to 2015.

Even as Groupon and LivingSocial increase sales, other companies have lost interest in the daily-deal industry. Facebook Inc. and Yelp Inc. have pulled back on deals, and some consumers and merchants have begun to grow weary of getting scads of offers from discount providers. That means a slower annual growth rate in coming years than in 2011, said Peter Krasilovsky, vice president and program director of marketplaces at BIA/Kelsey.

“The growth curve is leveling off at a certain point for the pure daily-deals activity that we’ve been measuring,” Krasilovsky said. “We will see more people signing up, but we will not see an endless amount of increased activity.”

More than 600 daily-deal providers have crowded into the market and they’re increasingly targeting users based on their location and interests, BIA/Kelsey said. Still, the average number of transactions and price per transaction on the sites is growing, the research firm said.

In August, the North American daily-deal industry grew 9 percent over the preceding month, according to data released yesterday by another researcher, Yipit.com. The increase followed a 7 percent drop in July, Yipit said.

The websites of online coupon leaders Groupon and LivingSocial had fewer weekly unique visitors in August than at their peak in mid-June, with LivingSocial’s tally dropping at a faster pace, according to ComScore Inc.

To contact the reporter on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net

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