Facebook's Network Will Give Its Online-Coupon Service "Deals" a Boost
|Money CAN buy friends|
Facebook's move comes as Groupon-wannabes, of varying levels of quality, are flooding the market, and as many local businesses are beginning to question the wisdom of making use of such services. Last week, Google announced its own service, the imaginatively titled "Offers," after failing to woo Groupon for a reported $6 billion last year.
Facebook, though, has a distinct advantage going in: it's a network -- and a huge one at that.
Another difference: Facebook's Deals service won't be relying so heavily on deep discounts - something many local merchants find offputting about, for example, Groupon's service. The idea is to attract new customers, but if the cost of granting heavy discounts exceeds the revenue gains (which it often does) there's little point in participating. Similarly, if existing customers use coupons, the net benefit gain is zero.
Facebook will offer discounts, but the main thrust is the "social" aspect of "Deals." Most offers will be for services that people use in groups, such as dining, movies, and sporting events.
It should be interesting to see what happens to the relationships Facebook has with Groupon and LivingSocial, another coupon provider. Both services use Facebook as channels for their offers and, more to the point, both are big advertisers on Facebook.
With the introduction of "Deals," Facebook -- for the first time -- will allow users to spend Facebook credits on real-world purchases. Before now, credits, which are paid for with a credit card (that is, legal tender), were used only within the service, for games and the like (for example, for bored housewives in Peoria to buy manure in Farmville, or whatever).
Now that users can spend credits on coupon deals, Facebook, by having its own currency, is one step closer to what is, obviously, its ultimate goal: nationhood.