Facebook launches Groupon-style deals

Posted by Lydia Leavitt

After Facebook launched its Check-In feature, it seemed like only a matter of time until it would partner with local business to offer discounts a la Foursquare and Gowalla.

Well, Facebook has taken the feature one step further with Facebook Deals, rolled out today in Atlanta, Austin, Dallas, San Diego and San Francisco.

Facebook Deals does indeed offer local discounts but it also takes a group buying approach (much like Groupon). The Facebook blog describes its motivation saying, "It's more important to us that you find interesting experiences around you to do with friends. We've worked with partners and local businesses to help deliver the best social activities in your area."

Facebook users can access deals from local retailers or through particular partners like Groupon’s major competitor, Tippr.

This raises the question of whether Facebook Deals will indeed be a "Groupon killer."

Unlike Facebook, sites like Groupon and Living Social have social elements integrated into their marketing plans but still rely heavily on B2C email marketing.

Although users can share deals on Facebook and Twitter, the sites have failed to implement true enticement to share on the social networking sites. While social adoption is not necessarily an indicator of success, it does add a certain viral element to help spread and share ideas.  

Facebook, on the other hand, has the power of 500 million users and the ease of organizing and sharing Deal purchases. The blog post emphasizes this point adding, "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."

Facebook director of local Emily White recently said in an interview that users who sign up for or express interest in a certain deal will have it broadcasted to his or her social graph, which offers new visibility to businesses.

Facebook said it’s not focusing primarily on deep discounts but rather, social deals like special tickets to a sporting event or dinner. 

Facebook Deals will also utilize Facebook Credits, becoming the first program within Facebook to allow users to pay for real-life goods in virtual money or "credits."

Until now, these credits could only be used to buy add-ons within social games as well as a very small market for movie rental.

Although limited, the Credit system is worth a billion dollars within Facebook. Opening the system up to new abilities will only increase this marketplace. According to White, credits will be used to buy a coupon, which can be exchanged for the discount.

One barrier to success may be the fact that Facebook plans to broadcast deals a user expresses interest in on their personal page. Do people really want to spam friends with such deals?

The second is the idea of virtual currency. Considering Facebook’s problem with protecting personal security in the past, some people may be hesitant to use Facebook’s own virtual currency within the site at all. That said, several hundred million people are already using social currency within games like Farmville.

Will Facebook have success with Deals? Only time will tell.

(Via Gigaom