Give me a deal, Facebook?

Posted on the 10th May 2011

OK – you all must have heard of Groupon and know about the general concept. Well, Facebook are starting what amounts to the very same thing. Facebook is finally launching local Deals — a feature that will compete with Groupon‘s core product in five cities starting this month. The five communities in question are San Francisco, Austin, Dallas, Atlanta and San Diego. Facebook revealed to The New York Times that the local offers made to Deals users will be delivered via email and will also appear in users’ news feeds. Any Facebook user can sign up for Deals notifications on the feature’s landing page.

Deals is seen by Facebook as an motivation for Facebook users to incorporate Facebook Places into their daily lives — and they were also an incentive for marketers and major brands to put more money into the Facebook platform – something that hasn’t happened up to now.

The new Deals will be like a Groupon voucher, which means the user will pay money for a certificate for a particular good or service at a really good discount, on average half off its retail price, then exchange it later.

Examples of the new breed of Facebook Deals from brands include “unlimited bowling with six friends for an evening for $60 (75% off)” and “luxury winery tour and 25% off all wine purchases for $50.”

However, I think the most important thing is that users will be able to buy Deals using Facebook Credits, paving a smooth path between a virtual currency and real-world goods and services. We suspected Facebook had plans to bring Credits to the real world since around the time of f8, the company’s developer conference, when Facebook announced its ambitious Open Graph. It’s unknown whether Facebook will make more money from Credits purchases than from traditional ones. “We’re not disclosing details about revenue splits, but paying with Credits will work the same way as paying with a credit card,” said a Facebook representative via email. “It’s simply another way for people to pay for Deals. We think this just makes things easier for people using Facebook.”

Users will also be able to buy Deals with all major credit cards.