What went wrong with daily deals? Groupon, LivingSocial, Etc…

There is a way to fix the daily-deals business, but it may be too late for this generation of companies.

By Rob Go, contributor Fortune

Like many people, I’ve been watching the meteoric rise of Groupon as well as some of the negative press we’ve been seeing the last several weeks. I am not privy to any private information about the company, but I’ve said publicly that I admire the founders and the kind of business they have been able to build so quickly.

For the record, I think that Groupon is much more than a deal-of-the-day mailing list.  The long-term $20 billion+ potential for this business is not really a mystery — it’s as a performance marketing solution for small businesses. The company should get to the point where they can give small businesses the tools to make very targeted offers to consumers based on demographics, location, past purchase behavior, and other targeting options. You essentially offer the small business yield management and somewhat dynamic pricing. All of these are big deals and are win-win for businesses and consumers.

The price of admission into this opportunity is consumers engagement. Groupon and its competitors embarked on a land grab, amassing as large a list as possible in as many regions as possible. In theory, the larger the list, the better the opportunity for targeting and yield management.

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