The daily deals industry has become a behemoth in the last year. Companies like Groupon and Living Social are growing exponentially while other smaller competitors are receiving hundreds of millions of dollars in funding to catch up.
In fact, daily deal websites have raised more than $1.69 billion in venture capital funding since the beginning of 2011, according to the latest Daily Deal Investment Index released in July.
However, the question that many analysts and investors have asked still remains: Is the growth sustainable? A recent survey conducted by Business Insider found that more than half of small businesses that ran a Groupon deal didn't have any interest in doing it again, even though around 60 percent found the experience to be a success.
Amid talk that daily deal sites might not be all that they are cracked up to be, Living Social conducted its own survey of current customers and passed the results along to Business Insider.
A total of 85 percent of Living Social customers said that they at least broke even on their last deal, with 54 percent of respondents indicating that they made a profit. In addition, Living Social clients said that they expect more than one-fourth of customers who took advantage of the deal to return.
Finally, respondents felt that daily deals are the most effective form of local advertising that they employ, ahead of email marketing campaigns, online search and their own websites.
Based on the fact that Living Social conducted this survey on its own, you'll need to take it with a grain of salt. Still, the results are eye-opening.
Some analysts are wary of the daily deal because they feel it is a niche product. While many campaigns are obviously successful, others only bring in customers for the short-term, leaving businesses right back where they started. If companies become disenchanted with the idea of the daily deal, the multi-billion dollar industry could falter in no time.
Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.
Edited by Rich Steeves
