The daily deals business isn’t dead, but it isn’t growing either. At this point, they aren’t the anchor for SMB digital solutions that had been hoped. The question is whether more sustainable loyalty and rewards programs – many putting their customers directly into the transaction funnel — will take their place.

Media companies such as Gannett and U-T San Diego are betting that rewards programs will be an answer. U-T San Diego, for instance, began its deals business a few years ago, after President Mike Hodges saw Groupon founder Andrew Mason keynote BIA/Kelsey’s Marketplaces event in San Diego.

It initially did well, and the company bought out Discover SD, another local deals business. But a few years ago, the deals business started to slide as “many local merchants became uncomfortable with the large discounts and heavy revenue sharing,” notes Hodges.

“We had to come up with a product that helped them build new and more importantly repeat customers,” says Hodges. “That is what we have built with U-T Rewards. Merchants love the pay for performance model we have designed. The data we are able to provide them in terms of purchase history, price per visit, repeat purchases, etc. is something local merchants are not used to seeing.”

Hodges adds that the new Rewards program also leverages U-T’s multi-media platform (print, digital, TV). It drives “our subscribers into participating merchant stores. It is a win for all parties.”