Is Facebook the Godzilla that crushes everything in its path? Will Groupon and Living Social be next?
Facebook tred on Flickr's turf and is now the number one photo-sharing site on the web, surpassing the Yahoo-owned photo-sharing site. Will it do the same to the shared deal market?
Photo by Duane Hess, Legozilla
- Deal participation for retailers might be free or low-cost. Groupon and Living Social both take a cut from the retailer, which has driven some small retailers unable to handle the sudden influx of traffic out of business. At first, Marshall Kirkpatrick of ReadWriteWeb reported that deal participation would be free for retailers, then Facebook PR made a correction to the post. Currently, the cost of participation is unclear, but it seems that it might not be as financially invasive for retailers as participation in a Groupon of Living Social deal.
- It all happens in the (not-so-)walled garden. The deals can be puchased using Facebook Credits, which reportedly will be exchanged for vouchers. The possibility of Facebook Credits flowing back and forth like water is easily imaginable. Birthday? Give your Facebook friend Facebook Credits to spend on his favorite haunts or to try something new. Grandma not sure what the hip thing is for her grandkid? Give her Facebook credits and delight as she uses them publicly, in the stream. It all happens within the Facebook garden. The fact is that such a large percentage of the population is there anyway; why not share deals here instead of purchasing through Groupon and cross-posting to Facebook? One less step, one more reason to stay in the garden.
- Sharing is caring. For even more motivation, just as users can tag friends in photos, they will be able to tag friends in deals. The New York Times reports: "Local retailers will be able to offer several different kinds of deals, including one-time offers and loyalty rewards, as well as 'friend deals,' for those who check in and 'tag' multiple friends."
It's a logical step. Facebook Places merchants have been offering deals through Check-Ins for the past six months, and "with 600 million users and being a platform based upon friends sharing with friends... , it does seem the best suited platform for group deals." (Source: Suzanna Vara) With so many users already accustomed to sharing every detail of their lives on the site, why not at least get a free side of fries with that, right?
However, there is a rub. Facebook is famously unabashed about collecting all the data users choose to share and providing it to marketers for more exact targeting. It's a dream for marketers, with a plethora of data fields to romp about in. And it's a nightmare for Facebook users, who can expect to have their demographic and sociographic information shared with retailers. It would be foolish to believe that Facebook wouldn't share your recent activities, favorite movies, beloved hobbies, martial status, etc. with retailers hungry for more efficient targeting.
Also, the delivery mechanism is unclear. The New York Times reported deals would be available through the iPhone app, but ReadWriteWeb later posted that Facebook PR refuted that fact: "Update: Facebook PR pinged us and said that at launch, deals will not be offered on mobile." Hmm.
Would you use Facebook Deals due to the convenience factor? Or would you avoid it, knowing that marketers will have access to a tremendous amount of personal data as a result? Will you give up Groupon and Living Social in favor of the Facebook Godzilla?