Tuesday, April 26, 2011

Deals on Facebook Challenges Groupon's Daily Deals

Watch out, Groupon. Facebook is moving deeper into your territory. Maybe Groupon should have seen it coming when Facebook launched Check-In Deals a few months ago. That offering has evolved into Deals on Facebook, a direct Groupon rival.

While Check-In Deals helped Facebook users get special offers when they check in at local businesses from mobile devices, Deals on Facebook goes one step further. The new feature aims to help Facebook users find fun experiences to share Relevant Products/Services with friends.

"While many Deals on Facebook offer discounts, it's more important to us that you find interesting experiences around you to do with friends," said Emily White, director of local at Facebook. "We've worked with partners and local businesses to help deliver the best social activities in your area. And once you've found a deal you like, having the deal on Facebook makes it easy to share, buy and plan with your friends."

500 Million Reasons

White pointed to Austin City Limits Live. That venue is offering an All Access Experience for concerts, starting in May. Facebook users can buy this deal and get backstage passes, sound-check access, and a catered dinner in addition to attending the show. Facebook has also inked deals with aDealio, Gilt City, HomeRun, kgb deals, OpenTable, Plum District, PopSugar City, ReachLocal, Tippr, viagogo and zozi.

There are two ways to find deals on Facebook. Users can get deal updates in an area via e-mail and notifications, or check the Deals tab on their home page. If friends choose to share information on a deal, it could also show up in a user's news feed.

The saving grace for Groupon, Google and other daily-deal sites is the limited number of retailers -- and the limited geography -- Deals on Facebook offers at launch. The new feature is rolling out first in Atlanta, Austin, Dallas, San Diego, and San Francisco. White said Facebook hopes to expand to other cities in the future, but didn't make any promises. But with 500 million members compared to Groupon's 70 million and LivingSocial's 28 million, Facebook could make an impact.

Can Facebook Fail?

For all the potential, Facebook is a bit late to the party with Deals, said Jake Wengroff, global Relevant Products/Services director of social media for Frost & Sullivan. Still, he said, Facebook had to offer a daily-deals product to compete with Groupon and LivingSocial because, well, it's Facebook.

"Unlike Groupon, LivingSocial and others, Facebook Deals will not be pushed to user's inboxes unless specifically requested -- so discovery and awareness of a particular deal might be slower," Wengroff said.

"Facebook claims that its deals will be more 'experiential' -- less a simple discount at a local nail salon or burrito place and more an experience which can be shared with friends, such as a six-week bridal boot camp or a kayak and bat-watching tour," he said. "Both of these are currently offered in Austin, Texas."

Wengroff does see some benefits to advertisers and small businesses, namely integration with display-advertising campaigns and stronger targeting based on user preferences.

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