Consumer spending on daily deal offers is expected to reach $3.9 billion by 2015 with Groupon and LivingSocial leading the way, according to BIA/Kelsey.

The company expects consumer spending to grow from $873 million in 2010 to $3.9 billion in 2015. This represents a 35.1 percent compound annual growth rate.

?We?re going to see a dramatic increase in the number of users, the number of merchants, the number of markets and the total number of dollars in the deal a day space over the next five years,? said Peter Krasilovsky, vice president and program director at BIA/Kelsey, San Diego.

?The rise will be especially steep in the next couple of years,? he said.

BIA/Kelsey advises companies in the local media space through consulting and valuation services, research and conferences. 

Mobile research
According to BIA/Kelsey, there are a number of variables that will have impact on daily deals such as growth in the number of cities and sites, registered users, transactions per year for the average user and the average price per transaction.

If all the variables come together, then daily deals could grow to $6.1 billion by 2015 ? a 47.4 percent CAGR. A conservative outlook pegs the space at $2.1 billion ? 19.7 percent CAGR, per Bia/Kelsey.

Additionally, the company estimates that there are 178 cities with deal-a-day sites reaching 102 million people in the United States.

Daily deals are becoming vastly popular.

Groupon offers deal-a-day offers via its Web site and mobile applications.

In addition, LivingSocial and KGBdeals also offers consumers various daily deals.

?The most surprising finding was that the media companies that have deals have different dynamics than destination sites with deals,? Mr. Krasilovsky said. ?They typically have users that are focused on discovery as much as saving money.

?Deal a day and other interactive deals and offers such as flash sales should definitely begin to be developed by local publishers and companies,? he said. ?In many ways, Groupon and LivingSocial may be the biggest competitor for local ad dollars for traditional players such as newspapers and Yellow Pages.?

Deal a day
According to Mr. Krasilovsky, the combination of fun offers and convenience makes daily deals an attractive way to reach local users.

The company expects to see some shift in local media spending resulting from the adoption of deal a day by local advertisers.

?With growing awareness of the format and specific companies, deals are going to grow really fast  this year,? Mr. Krasilovsky said.

Final Take
Groupon and LivingSocial fuel mobile commerce