In the past year, we've noticed a lot of dire predictions on the future of Daily Deals. Industry types and investment analysts have reported on companies shutting down, pulling back, and relying on celebrity approval. An international group formed to help regulate ethical practices for Daily Deals. We see a lot of people questioning whether offering a deal is good for small business, massage practices, or even veterinarians. The mass of opinions can be overwhelming.
We can't predict the financial future, but we do have a lot of data about email, and we can tell you how the Daily Deal industry looks from an email perspective. Do the companies look desperate? Are subscribers still signing up for this stuff, and do they still open emails? Would you do better offering a deal for chocolate or bacon? Thousands of Daily Deal companies of different sizes have been using MailChimp for the last two years, and we've noticed some surprising trends.
Before we get to the charts, a note about our data collection: To get a long-term view on Daily Deal performance, we pulled all the data from January of 2010 to November of 2011. We removed any campaigns that went to fewer than 2,000 subscribers and any users who sent only once. We decided a daily sender is anyone who sent at least four times a week for at least four weeks, and eyeballed public campaigns to verify it was typical daily deal content, and not retail or other industries. We analyzed 4.4 billion emails from more than 2,000 daily deals, and condensed it all into 28 colorful charts.
We break up email addresses into two categories: free webmail addresses and everything else. Anyone can have a free webmail address from Hotmail or Gmail, but not everyone has an address from Comcast or AT&T. Even fewer people have an email address from a company.
You have to be careful with your work address, but that's not so with free webmail addresses. You might give it to friends and family to get those precious forwarded jokes from your uncle. You might have certain addresses you use to make purchases online. In any case, list composition can tell you a lot about who your subscribers are.
It turns out Daily Deals send a lot more email to these free webmail ISPs than the average MailChimp subscriber. This tells us people tend to think of Daily Deals fondly. Then again, maybe people think of Daily Deals like utilitarian one-time services through which you purchase a robot vacuum. Either way, it's not something people typically receive at their work addresses.
We took MailChimp's top four free webmail domains and charted them against everything else. You can see the average MailChimp user has a list that's over 50% "Other" while Daily Deals have lists that are over 50% free webmail addresses. This trend is true even for international Daily Deals.
It makes sense that international email would have a larger "Other" category since a lot countries have their own major ISPs, like mail.ru (Russia), orange.fr (France), and 163.com (China), just to name a few. But you'll notice that even international Daily Deals have a much smaller "Other" category than the average MailChimp list. Actually, an international subscriber is twice as likely to use a Yahoo or Gmail address when signing up for a Daily Deal, as compared to any other type of newsletter.
From an ESP's perspective, a company looks desperate when they purchase a list, quietly re-add unsubscribed addresses, or take actions to increase list size at the expense of list quality. From a business perspective, that might not be the case. Regardless, desperate companies tend to have bad delivery stats.
This one surprised us. The bounce rate for Daily Deals is enormously lower than the average MailChimp user, and the same goes for abuse reports and unsubscribes. Everyone says Daily Deals are struggling, so we expected to see hideous list stats here. Instead, the lists are clean, and subscribers are sticking with them. The attrition rate is surprisingly low.
You might be thinking, "Well of course no one is unsubscribing or hitting the spam button. They don't check that email address anymore." Not exactly. Daily Deals fare slightly worse than average in terms of opens and clicks, but the difference is less pronounced. In fact, the only category where Daily Deals truly suffer are repeat opens. Apparently, opening a deal email once is generally enough.
We've established that people aren't unsubscribing, so the next question is obvious. Are they still subscribing? If Daily Deals are dead in the water, then interest in deals must be slowing down.
If you compare the average list size of our users week over week, you'll see that most people experience list growth over time. For about a year and half, Daily Deals experienced higher than average list growth. Only recently have we seen these number fall back in line with the MailChimp average. Most of this growth was due to the booming international market for Daily Deals.
So technically, list growth for Daily Deals is slowing down—but it's slowing from explosive to normal. People aren't tired of receiving Daily Deals. Whether they use them or not, it seems that most people still want the email.
A note on these graphs:
We had to chop off a good portion of the charts at the beginning and end of the time range. The parameters specify that a user has sent for at least a month, and that distorts the week-over-week data as you approach the edges.
The charts below show the average life of a Daily Deal user vs. all other MailChimp users. The horizontal axis represent the number of weeks that a marketer was active. With enough users (a lot of data), you can chart every campaign (huge amounts of data) sent over the course of the average email marketer's "life" (all of the data).
While most users experience a dramatic first week, negative stats like bounces and unsubscribes tend to settle down over time. High-frequency senders have the advantage that their stats settle down quickly. It turns out that sending frequently keeps your list very clean. This is probably because you have a smaller set of new addresses between each campaign. However, this doesn't totally explain stats like unsubscribes and abuse complaints. Daily Deals end up with low unsubscribes and abuse complaints throughout their sending history. That's a good indication that their subscribers aren't jumping ship.
Of course, what matters most to the Daily Deals are open and click rates. On average these are going to be lower than the average MailChimp user. Come on, if you're sending email every day, you can't expect to have the same impact that a weekly or monthly email might have. Still, these positive stats fluctuate over time.
Opens and clicks seem to have a life of their own, and you can't match these wild fluctuations to the relatively steady bounce and unsub stats. How do we explain this? Maybe the older Daily Deals are just more popular than the new guys. Then again, maybe it takes a while for a Daily Deal to really find its audience. Maybe Daily Deals tend to expand their markets after about a year, and what we're seeing is a huge glut of new subscribers excited about new deals. There's more than one factor at work here.
If you're curious about this "MailChimp average" we keep referring to, take a look at our Industry numbers. You can see that our average is not a homogenous whole. We have many different users with very different trend patterns. Daily Deals may not be the largest group of users we have, but they certainly send the largest volume of email. They also have ridiculously low bounce rates.
Keep in mind that users choose these industry designations themselves.
Daily Deals excel at avoiding the "spam" button. The "abuse reports" data is below. They get at least half as many abuse reports as any other industry. We think that says a lot about how popular these emails are.
We've established that Daily Deals have lower open and click rates than average, but they're actually fairly competetive with other industries. They're slightly lower than other sales-related industries like Retail and eCommerce, but higher than industries like Music and Entertainment
Does all of this mean the doom-and-gloomers are wrong? Not necessarily. We've definitely come accross some Daily Deals with bad stats. They had poor list-collection practices, questionable content, and they're gone now. But we don't see evidence of a crumbling industry.
We've all read articles about 800 Daily Deals shutting down. But we also know that tons of smaller Daily Deals have been bought out by the big guys. And the big guys are offering more deals and more variety than ever before. That's just business as usual, right? This brings us back to all the financial analysis around the Daily Deal industry. It's easy to get excited when we see companies closing or stock value rising, but that's not the entire picture.
For now, people still like getting these deals in their inbox. If you look at the big picture, you see list sizes are growing, open rates are good, and attrition is low. The markets were expanding, and now they seem to be heading towards an equilibrium. So treat your subscribers well, track down compelling deals, and take predictions of doom with a grain of salt.
Fun with Geography
And now, a few amusing factoids. If you're interested in where the international market is for Daily Deals, check out these charts.
Fun with Words
MailChimp's resident scientist scanned a statistically significant amount of content from actual emails and then charted all the words against click rates from the campaigns. He then did something called a Gaussian Blur that tells us how successful a campaign is likely to be given some specific content.
Meanwhile, we pulled a list of words Daily Deals were most likely to contain and cross-referenced our efforts to discover what subjects Daily Deal subscribers respond to the most. The results were dramatic, hilarious, and horrifying.
The most important thing we learned is that even high performing words saw negative results when they were written in ALL CAPS. We're not even going to put up a chart for that. If you're using the internet, you should just know: BAD | good.
We learned that Chocolate is more compelling than Vanilla, and Gourmet is obviously more interesting than Buffet. In fact, mentioning specific foods was overall more effective than mentioning the meal itself. ("Lunch doesn't interest me, but Sushi sounds great!")
People are mildly interested in Yoga and Lasers, but they're rather tired of Teeth Whitening and Massages. Perhaps those subjects are over-saturated in the deal market. This brings us to the word "deal." People don't like it. They like to hear about Coupons, but they're unsure about Value.
Most specific activities rated very well, but for some reason Golf is totally neutral. Again, this may be due to saturation. How many Golf deals does one really need?
People are mildly interested in Yoga and Lasers, but they're rather tired of Teeth Whitening and Massages.
The most horrifying realization was that emotional words can be highly effective... but only if the emotions are bad. Nice words turn out to be pretty negative for Daily Deals. Scary words are much more likely to garnish clicks. Perhaps someone will start a goth-themed Daily Deal and take over the whole market.
To close, let's go back to basics and look at color words. Keep in mind this had nothing to do with the actual color of the email. We're just looking at the words in the email itself. Daily Deals who use color words like Yellow and Green tend to be fairly successful, while words like Purple and Violet are associated with a negative success rate. If that makes sense to you, congratulations. You're either a psychologist or a great email marketer.