Facebook Deals Beats Google Offers to Groupon's Game

By Clint Boulton  |  Posted 2011-04-30

Facebook Deals Beats Google Offers to Groupon's Game

Facebook Deals, the social network's riff on Groupon's local deals service, may have only launched as a test in five markets, but it's bursting with potential.

Deals on Facebook launched April 25, letting local businesses pitch deals to Facebook users living in Atlanta. Austin, Texas, Dallas, San Diego and San Francisco.

Facebook Deals come via e-mail and a Deals tab for Facebook homepages, but they also surface in  News Feeds to show users want their friends are buying. Like Groupon, LivingSocial, Google Offers and others in the mix, Facebook lets businesses offer 50 percent off or more off of goods and services.

While Groupon and LivingSocial have nailed the single consumer segment for teeth whitening, Facebook is focusing on discounting concerts, wine tastings and other socially-oriented events where the hook is groups of people rather than individuals.

This distinction stood out to Peter Krasilovsky, vice president and program director for marketplaces at BIA/Kelsey.

"The launch of a socially-driven deals site stands in contrast to some of the newer deal sites, which play down the social elements of deals, as massive e-mail lists and deal exchanges dwarf the role that viral leads have played," Krasilovsky wrote in a blog post April 26. "But nobody else quite has the clout of Facebook for social."

It's hard to argue with the analyst on that score. Facebook has more than 600 million users, some of whom spend 20 to 30 minutes each day on the Website. If one envisions Deals as another feature to check daily, such as the News Feed, friends' status updates or events tabs, the service will be seen early and often by most users.

One of the things that helps Groupon excel is its bid to target users' preferences. If Facebook can target its users with deals tailored to their tastes, Groupon will have a hard time keeping up.

Another potential home run for Facebook: rumor has it that Facebook isn't collecting commissions for its deals services. Rather, Krasilovsky said Facebook is letting businesses advertise sponsored units. This could certainly draw businesses tired of paying Groupon half of their cut from each discount.

Which leads to the other deals startup, Google Offers, which soft launched in Portland, New York City, Oakland/East Bay, Calif., and San Francisco.

Google's biggest challenge is that it doesn't have a social network to leverage, no repository of users. Google Places, for example, is loaded with millions of local businesses, but there's no big social tie to keep users from treating it like a network instead of another search feature users use and leave.

Facebook, Groupon, LivingSocial, Google Vie for Deals}

Unless Google finds a way to successfully surface Offers in Gmail or Google Maps, it will have a hard time keeping up no matter what discounts it delivers.

One negative Krasilovsky n

BIA/Kelsey said U.S consumer spending on deal-a-day offers will grow from $873 million in 2010 to $3.9 billion or possibly $6 billion by 2015.

"We expect this to continue as companies in the space are rapidly adding markets and increasing total user count," said Mark Fratrik, vice president, BIA/Kelsey.

"They are also subdividing existing metros to provide deals closer to where users live, which we believe will help offset any drop-off that may occur due to consumer fatigue as the novelty of the form fades."

Sounds as if Facebook, Groupon, LivingSocial and Google can enjoy some serious success in local deals for the next few years.

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