Monday, September 19, 2011

DealChicken | For newcomers, startup costs mount

As the daily deals industry has started maturing, the costs of running such a business have soared, according to a new Wall Street Journal story this morning. In particular, the cost of acquiring subscribers who redeem a deal has skyrocketed during the past two years, said executives at daily-deal websites.

Gannett hasn't made its DealChicken startup costs public. But COO Gracia Martore told analysts during the second-quarter earnings teleconference two months ago: "Where we are starting new initiatives like DealChicken and others, we're going to obviously invest the appropriate dollars to get those initiatives off to a great start."

Some key numbers about development costs, hiring, and consumer interest in deal sites, according to the WSJ, GCI documents, and other sources:
  • No. 1 deals site Groupon spent about $7.99 to acquire each subscriber who actually redeemed a daily deal in the first quarter of 2010. By the second quarter of 2011, that figure had nearly tripled to $23.46. 
  • Groupon has 990 sales employees in North America, up from 201 a year earlier. LivingSocial, the No. 2 player in the space, has beefed up its sales force to 700 employees from 191 a year ago. 
  • Nearly one-third of all daily-deal sites nationwide -- or 170 of 530 -- have shut down or been sold so far this year, according to daily-deal-site aggregator 
  • 15,000 DealChicken subscribers is the minimum number for a site to launch.
  • 20 GCI social commerce jobs are now listed in the careers section on Corporate's website. Most are sales jobs, but there are also openings for a copy editor and a graphic designer. 
  • DealChicken plans to be in more than 50 U.S. markets by the end of the year. It launched nationwide with 10 sites in late July. The first opened in Phoenix a year ago this month. 
  • Phoenix's DealChicken site has 5,025 fans on Facebook right now. On April 15: 3,500. In September 2010: 2,268. Number of Phoenix Twitter followers today: 922. On April 15: 630.
  • Zero references to DealChicken in GCI's most recent financial report to federal regulators, for the second quarter.
  • Zero analyst questions about DealChicken during the second-quarter conference call.
  • 24 posts now tagged DealChicken on Gannett Blog.


  1. I think it's important to note that the majority of aquisition costs are advertising, and obtaining email addresses. Both of which the USCP can do without much hard cost. They advertise their own products (with some outdoor, and tv thrown in) fairly cheaply. And most of them already had the minimum email addresses.

  2. @Jim: While the initial minimum set by corporate was 15,000 addresses, there seems to be a softening of that position. The Times of Shreveport, LA. will launch with about 12,000 addresses at the end of September. There was a cost associated with obtaining most of the addresses (a list buy). No idea whether that site hired additional people to launch.


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