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Thursday, 17 March 2011 13:07
Facebook goes head to head with Groupon
Local deals are getting better and better!

Just when you thought you understood where the big competitive threats are coming from in this fast evolving new world of social media, along comes another which changes the whole environment.

Here’s the background to Facebook’s latest announcement that it is going to offer deals to ‘use with friends’.

Groupon was virtually unknown until a few months ago – certainly in the UK.

If you haven’t dabbled yet, don’t, because it is totally addictive.

The concept is simple. Companies offer their products and services at a ‘deal’ price. If a certain number of takers buy the deal, the ‘deal is on’ and your credit card is debited.

You then have several months to book and take advantage of the deal, which could be anything from a weekend away, to a trip to a beauty clinic.

I recently bought a deal for three trips to an Osteopath for £29 – total bill – which was a huge saving. The Osteopath explained that it was his wife who had suggested they put an offer on Groupon. They made two mistakes – not putting a limit to the number of people who could take up the deal, and having the deal on for two days (most deals expire in 24 hours, so you have to act quickly).

Apart from the problem of having too much business, this small single practitioner osteopath in a small urban conurbation is delighted. He has dozens of new customers coming through the door, some of which he will manage to convert into proper customers. As he seems quite good as his job, so I am sure he will.

A restaurant offering a half price meal for two with a bottle of wine was equally full of praise. Their restaurant had filled up during a quiet time, which improved the atmosphere, and all these new customers were filling the tables, which gave mine host the opportunity to convert them into potential returning customers. As any marketer knows. The difficult job is getting people over the threshold. After that, good quality, a warm welcome and value for money will keep them coming back.

Looming competition
But with Groupon’s online deals getting bigger everyday, it was only a matter of time before one of the big boys took notice, and this has now happened.

Facebook has announced it is getting into the local deals business. It will only be available in a couple of US areas to start with including  Atlanta, Austin, Dallas, San Diego and San Francisco, but like all things social media, this is bound to spread quickly into its other active areas, which includes the UK.

Analysts are saying that this move alone is enough to make Groupon nervous, because of the undoubted strength of Facebook but Loyalty Magazine suggests they are ignoring how much fun Groupon has made the boring task of checking one’s emails. Every day there is a new offer making emails more like dress shopping. Do I need liposuction? Would it be fun to try it? It is so cheap, how can I not?

Who do I know who would like  cheap break in Cyprus, in a four star hotel, or what about Marrakesh? A vegetarian indian meal for two including starter, main and dessert plus rice and naan each for £17.60 at Bobby’s Restaurant (Value up to £44). Why not persuade all my friends to buy this and we can have a party?

Facebook is clearly on the backfoot with this one, which is not a position it is too used to. It thought the whole interaction piece could wait for NFC mobile, but this is like waiting for paint to dry, and Groupon has hit an interesting temptation point. Who can ignore a bargain?

Dressing up its offer in Facebook speak, the company says Facebook Deals "are about to get better with friends" according to a new landing page that aims to promote the social network's answer to Groupon.

“You won’t get your legs waxed with friends,” said Emily White, Facebook’s director of local operations. “You dine out, you go to concerts, you do outdoor activities. We want to make sure those experiences are maximised.”
The social network first announced Facebook Deals last November but little has happened since apart from the fact that local businesses could offer users deals when they go to their Facebook page.

However yesterday, Facebook upped the ante. "We're working to make it easier to find fun things to do with your friends and connect with local businesses," Facebook wrote on its Wall.

"We're testing a new Deals feature that brings you offers from nearby businesses, which you can share with your friends," it said.

Facebook will offer multiple deals every day, generated by its own sales force and also aggregated from nine partners, including Open Table, Plum District and Zozi. Facebook says it will seek to specialise in offering deals that can be shared among friends.
But it is only going to do what Groupon is doing already. And Groupon has ensured they also have a Facebook presence.

Ezra Gottheil, an analyst with Technology Business Research in the US commented: “Facebook would like to be users' entry point to the entire Web -- communications, content, game-playing, etc. As long as additions don't obscure the primary experience, and I don't see any reason this would, every addition removes one reason to leave Facebook World, Gottheil added.

That is, unless you are already getting your morning Groupon fix.

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