With the phenomenal success of Groupon, it seemed inevitable that Facebook would eventually want to grab a share of the daily deals market. After all with over 500 million captive users as an audience, Facebook has the perfect opportunity to cash in big on the deals industry.
Last November Facebook offered up its answer to daily deals with the launch of its Facebook Deals program, allowing merchants to offer discounts to users when they check in using Facebook’s location based places. Deals focuses on the group experience, convincing users that “Deals are now better with Friends“.
Now Facebook is ramping up its marketing campaign in an attempt to build up its provider and subscriber base as it prepares to enter the daily deals space in full force. The social networking site is placing ads on the home page asking users to invite friends to sign up for Deals newsfeeds and email updates. Facebook has also been using email blasts, sending out location-based emails to page administrators, pointing out that Facebook Deals is the new way for them to promote their business and reach thousands of local consumers.
About a month ago Deals began showing in newsfeeds as well as asking users to sign up for pre-paid local group experiences that they could share with friends. By using newsfeeds, Facebook can avoid spending the millions of dollars on ads that sites like Groupon and LivingSocial do in an attempt to collect opt-ins for their offers. But Facebook is a late entrant to the game and still needs to build a substantial subscriber base. By comparison, Groupon is believed to have as many as 40 million subscribers around the world.
Fortunately Facebook has a stockpile of over 500 million users as well as the ability to reach out and communicate with them. After all they can serve up ads in premium space on their own site, where they will convert the best.
At the same time Facebook needs to recruit a number of businesses in its initial launch cities so it can have a wide selection of attractive deals to offer up. The deals offered during any initial launch can make or break the success of a service, so deals need to be extremely attractive and offer users true value and savings. If the initial deals are mediocre traditional offerings, many users may not return and the service loses its chance to impress. So the initial deals need to be nothing short of spectacular.
Any deals service needs to have both merchants and consumers to succeed and Facebook deals seems to be doing a nice balancing act of collecting both at the same time as it gears up to take on the big players in the daily deals industry.