Facebook Deals goes live

27 April 2011

NEW YORK: Facebook, the social network, has launched a test version of its new Deals service covering five major US cities, including Dallas and San Francisco.

While Groupon and LivingSocial, which regularly use Facebook to promote their own activities, have blazed a trail in this area, Facebook believes its offering stands out from alternative platforms.

"It is not about mimicking an existing business model and force fitting it into Facebook," Emily White, Facebook's director, local initiatives, told the Wall Street Journal.

"A lot of deal sites get that deals are social. But I wouldn't say they are really well integrated with Facebook."

Instead, the organisation intends to extend its core proposition into the offline world by facilitating shared experiences.

"We're building a product that is social from the ground up," White said. "All of these deals are things you want to do with friends. So no teeth whitening, but yes to river rafting."

Facebook's offers will thus typically be based around collective pursuits, from meals to sporting events and exercise classes, and could, therefore, avoid solely emphasising low prices.

"If your primary reason for doing something is getting together with friends, I don't know if a discount is necessary," White said. "We are not looking for the deep discount customer."

Such an outlook might encourage firms concerned either about retaining buyers won over by heavy cost reductions, or which risk actually making a loss on deals if they prove too successful.

Netizens in the pilot cities access details of available offers by clicking on a special icon, and opt to "like" a promotion, meaning it appears in their contacts' news feeds, or recommend it directly.

The ability to spread word of mouth in these ways, alongside the fact purchases are often displayed on personal pages and news feeds should all help drive awareness, White argued.

"The discovery of the product can happen in lots of different places," she said.

"You can receive Facebook deals via e-mail, but if there is a deal that is good for you, it will likely show up in your news feed at some point in the day."
Shoppers on the social network are able to make acquisitions with credit cards, but may choose to deploy Facebook Credits, the portal's virtual currency, and already a means for obtaining items in games such as Farmville, and renting films.

"It is first time it has been used to purchase a voucher that is redeemable for real goods," White said.

Marketers have the option to award a "bonus", providing, for example, more money off a product, if the friend of a Facebook member also participates in a promotion.

As well as sourcing deals through its sales team, Facebook has tapped 11 partners, like restaurant specialist OpenTable, concert, sport and events ticket provider Viagogo and female-focused site PopSugar, to achieve this aim.

Facebook's interactive strengths, and the presence of many small companies on its pages, potentially leave it strongly positioned, observers suggest.

"Groupon and LivingSocial have shown how much demand there is out there," said Greg Sterling, senior analyst for Opus Research. "Facebook, if they do this right, can have a big hit on their hands."

Data sourced from Reuters, Business Standard, Wall Street Journal; additional content by Warc staff