Thursday, July 12, 2012

DealChicken | About those soaring user numbers

Corporate is getting ready for Monday's second-quarter earnings release, an occasion for CEO Gracia Martore to once more trumpet results of Gannett's most important initiatives, including the nearly year-old DealChicken.

Only last month, Martore said the online coupons site was doing "very well" for the company. "Revenue in the first quarter of this year was approximately 40% higher than the fourth quarter last year,'' she told the Media and Entertainment Analysts of New York. "In May, we surpassed 1 million visitors, moving DealChicken to the fifth position among all deal sites nationally."

But a closer look at those figures and the recent performance of industry leader Groupon tell a more nuanced story.

DealChicken launched nationally just as questions were raised about Groupon's prospects heading into its November initial public offering at $20 a share. More and more, that IPO is looking like a bust. Yesterday, GRPN traded at a new historic low: $7.72 a share. How bad is that? Even Facebook has scored a better performance since its own IPO.

Martore is certainly correct that DealChicken's visitor count has soared. In May, according to Web analytics firm Compete, the site had 1.9 million unique visitors. While that was still just a fraction of GRPN's 15 million, it was a big jump from only a few months before, in January, when the Chicken had just 648,000 visitors, according to Compete.

Closing look at numbers
How did it get so many new visitors -- and what are they worth? That's the intriguing question raised by self-described marketing expert Pace Lattin, who tore apart DealChicken in a recent post on his site. I can't vouch for Lattin's expertise, but his figures mostly track Compete's, suggesting he may be on to something.

He claims Gannett bought new users for DealChicken by contracting with online networks -- a practice that's not unusual in web marketing. But Lattin says those new users didn't translate into a proportional increase in revenue. "Many of the users were complete junk,'' he says.

Reversing course, he says, GCI ended the new-user campaign.

At the same time in at least one market, DealChicken started advertising for commission-only salespeople.

Forecasting Monday's results
How much of Lattin's claims are true? We may learn more on Monday, when Martore and her team release quarterly results before markets open at 9:30 a.m. ET. As always, they will discuss the figures during a 10 a.m. conference call with analysts; you can listen in.

Those results, by the way, aren't expected to be very good. On average, analysts are expecting GCI to report earnings per share of 53 cents, down 8.6% from last year's 58 cents.

Revenue estimates are $1.32 billion for the quarter, just below $1.33 billion a year ago, according to Seeking Alpha.

Wall Street will be looking for something to support a recent run-up in GCI's stock. Shares closed yesterday at $14.29, down 1.7%. Still, that's up more than 12% from only a month ago.


  1. Mr. Pace needs a proofreader: it's not Gannet, as he writes in first reference.

    It's Gannett.

  2. It would be interesting to hear how many of the deals are from the local site versus national deals and whether all these local reps are paying for themselves.

  3. The highest performing deals are in fact from the local reps. Gannett local cant sell for squat over the phone.

  4. Groupon Market Cap: $5.1 Billion

    Gannett Market Cap: $3.4 Billion

    After USAT and a handful of other big circ papers, Gannett gets ZERO VALUE for print. Why do you think Buffett can buy papers for (relative) peanuts? Because the sellers will take ANYTHING.

    Does ANYBODY want to buy either Detroit paper? The ONLY value in Detroit is the JOA - the ability to get paid for doing NOTHING.

  5. They're having Deal Chicken 1 year old birthday parties across Gannett today. Who thinks they'll make it past 2?

  6. Can any body say furloughs in 3 Q

  7. Has the Chicken even made back its seed money yet? HAHA, I kill me....but seriously folks...

    Support staff, infrastructure, sales staff, etc etc etc.

    Is DealChicken even in the black yet?

  8. The chicken has been choked!!! This shit is dead and the people running it are a bunch of corporate losers.

  9. Aside from maybe Phoenix, I do not see advertisers picking up the phone and making DealChicken their first choice to run a deal, if at all. This seems to be correct if in many properties they are hiring part time only reps to increase the call volumes even more. If you notice, Groupon's quality of deal has diminished a great amount since last year. The industry needs to change somehow. Advertisers dont want to run deals though Gannett seems to blame the sales staff for not making enough phone calls or closing.


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