PSFK » Facebook Deals Analysis: What's The Strategy?

---

This article titled “Facebook Deals analysis: what’s the strategy behind this new scheme?” was written by Jemima Kiss, for guardian.co.uk on Monday 31st January 2011 18.40 UTC

For a service built on intricate, highly personalised digital networks created online by several hundred million people and some of the world’s best engineers, Facebook Deals â€" announced today â€" has a curiously analogue interface when the deal in question reaches its final destination: users wanting validation will have to wave their phone screen towards the person behind the counter. “See â€" look! I’ve checked in, and I have a voucher!” It feels like the digital equivalent of a train running out of track, but somehow that’s enough of a confirmation that people really are taking part, and not just pretend-gazing at a screen.

That said, Deals is clever and timely.

Firstly, as Facebook director of local Emily White pointed out on Monday morning, our experience of the internet is increasingly defined by “the wisdom of our friends, rather than the wisdom of the crowds”. Facebook wants that experience translated as much as possible into the real world, so our activity, as much as our opinions and our party photos, is logged and shared online.

Facebook Places was the first part of that, inviting us to volunteer our location and our friends (along with the time, date and activity we’re doing) when we go out, whether shopping, eating or going to a museum. Deals is the next logical expansion of that, adding a layer that lets local businesses interact with users.

There are elements of daily deals site Groupon, though Facebook can let businesses do longer-term campaigns more like a Nectar card, or group buying with friends, or check-ins that donate to charity. It’s more flexible than Groupon and on a much larger scale, though there are several usability issues which might prevent this becoming truly mainstream for some time: users need to be on Facebook and have access to a smartphone, but they also need to be familiar with the location check-in concept and have the curiosity to investigate what that yellow square means next to venue names.

Facebook Places certainly challenges Foursquare, not least because Deals places it firmly along the commercial lines of rival SCVNGR, which claims to have had some success building a location-based game around business from the outset, rather than starting out with early adopter gamers. Again, it is scale that is Facebook’s main advantage.

I questioned quite how “local” Facebook Deals isn’t at this morning’s launch, because all the brands named so far (Yo Sushi, Mazda, Starbucks, Benetton, Debenhams, O2, Argos) are either national or international. White said that eventually Facebook will work to attract small, local businesses. But what Facebook means by “local” is whatever is nearby, and wherever we go to shop, eat or entertain ourselves â€" and that might mean a multinational as much as Sid the Fishmonger.

There’s no direct money for Facebook in rolling out Deals; business don’t pay to serve offers up, and Facebook doesn’t take a cut of proceeds or charge users. What it does get is a real incentive for users to explore the mobile app, and increased usage; European vice president Joanna Shields (ex-Bebo, ex-AOL, ex-Shine) also said at the launch that users on the mobile app already share five times more information than users on the web.

And down this road, of course, lies a collision with Google, which created much of its fortune by simplifying web advertising and making it accessible to small businesses. Facebook takes that one step further. Any of us can set up a local, targeted ad through a process no more complex than posting an event. Google wanted that, which is why it made its multi-billion bid for Groupon (rejected) and why it’s now readying Google Offers.

Where’s this all going? Take the dynamic that Google exploited with web advertising, tapping thousands of smaller businesses, and think how Facebook could build on that from international brands to individuals through your local network. Promoting a local club night, selling your car, appealing for funds for the local community centre â€" there’s a rich seam of targeted advertising already being nurtured on Facebook, and it has hardly begun.

Add to that Credits â€" Facebook’s on-site payment systems currently restricted to games â€" and there’s a much larger Facebook economy to be explored. Credits could be the next secure payment system â€" beyond virtual goods in games, users could buy music, films, books or anything else on sites integrated with Facebook Connect. If you “like” on a third-party site, why not “like and buy”, with Facebook, which already has your name and contact information?

It’s the logical extension on Facebook acting as the internet’s default ID provider. And it will happen. The only question is how soon.

guardian.co.uk © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

Source : Google blogsearch