Thursday, November 04, 2010

Facebook Deals Just Ate Foursquare's Lunch

Facebook announced yesterday that they're rolling out Deals, a location-based couponing and fund raising system. There are two types of Deals that can be had via their Places feature: coupons and charity. Basically, if consumers check in they unlock a deal or are helping to raise money for a cause. Sound familiar? It should, except this has real potential to take off in a big way.

If you read my last blog post you know that one of my criticisms of the existing LBS platforms is their weak business development units. Specifically, offering goofy badges that meant nothing and not signing big brands on board meant the service, while a competitive novelty at first, ultimately they provide zero benefit. In one fail swoop, Facebook just trumped Foursquare, Gowalla and everything on the market in addition to SMS testing programs to take social mobile marketing into the mainstream. Is this drastically different than what we were doing before? No, because the folks at Facebook worked around difficult carrier restrictions, SMS code fees and other nonsense that made mobile marketing cost and common sense prohibitive.

There are several reasons why Deals will work, the first being that this is your community. One of the few false promises that Foursquare really created was that because you're doing stuff around people doing the same stuff, well, by default you should hang out and be friends. And while I can stalk and be stalked on Foursquare, the app never really made sense. Call it a push vs. a pull model: I can go where my friends are or I can make an entirely new set of friends based on stopping in a my local coffee shop for a morning latte on the way to work. It doesn't add up.

Another reason Deals can explode is because it connects the online and offline worlds. Yes, you and your real life friends can shop together, save together, check in together, etc. Novel concept.

The third reason I believe Deals will succeed is because of the word of mouth aspect of Facebook. I've yet to see how it plays out in real life, but I can only imagine you would tell your friends about the free jeans Deal over at the Gap or 20% off at H&M.  In fact, if you look at the brands/offers/causes from major players on board at launch we're talking about some big brands that can affect a lot of people in a short amount of time: Gap, H&M, Starbucks, 24 Hour Fitness, Harrah's, The Palms, the San Francisco 49ers and Texas Tech University.

One last "reason to believe" is that they have major department store and chain partners on board at launch. Unlike Foursquare, who may wind up playing Indie label to Facebook's recording industry giant, they targeted businesses with high traffic rates to create a program that scales quickly. Can local businesses offer Deals too? Absolutely, but going after big players put pressure on like-minded, large competitors to at least experiment, and with a user base so large it's difficult for businesses - both large and small - to ignore it.

My final thought is that I can't help but wonder what this does for Facebook brand pages. If you're managing a community on Facebook I'd love to get your input as to how you see it changing your brand's page. It seems to me that brands offering coupons on their pages have struggled with an expectation of MORE coupons from fans (sorry, calling people Likers is just weird). One of the nice things about using third party companies to deliver coupons currently is the ability to capture data, so it'll be interesting to see how Facebook's Insights and analytics platform accommodates this need.

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