Facebook takes on Foursquare and Groupon

Source: AdAge

It will be interesting to see who the winners in this play will be - I am backing Facebook.

Facebook Ads Provide 'Deals' for Local Merchants, Marketers

 Facebook has a new offer for users willing to share their locations in status updates: deals from nearby merchants or big-brand marketers such as Starbucks, Gap or McDonald's.

The social network announced "Deals," an extension of its Places mobile feature, which allows users to check in at locations such as bars, coffee shops or malls. Users will be able to claim those deals by walking into a merchant and checking in on their phones or other mobile devices, giving marketers the ability to reach consumers and potentially attracting them into a given store.

The new service combines two of the hotter trends in local marketing: location-based check-in services such as Foursquare, and local group deals services such as Groupon or LivingSocial. "There are many changes in mobile, and there's a revolution in the social space," said Mark Zuckerberg, founder and CEO of Facebook, which has 200 million mobile users. "Mobile is as big as that -- when you combine mobile and social, industries can get disrupted."

But like everything Facebook does, it has the potential of taking a niche phenomenon now exploited by a coterie of small startups and turning it into a mass phenomenon. "While businesses have been able to use other geolocation services to incentivize customers to some extent, Facebook Deals allows global brands to do so at massive scale," said Michael Lazerow, CEO of social marketing firm Buddy Media.

Facebook announced the Deals Platform and another feature called "Single Sign On," which allows users to log into any app on their iPhones and Android phones, eliminating the need for remembering passwords and typing on tiny mobile keypads. There are 550,000 games and applications available on Facebook, and developers can now build the single sign-on into any of them or build new apps with the feature.

Facebook is launching the Deals service with 22 big brand partners -- Starbucks, McDonald's, H&M and Gap -- and 20,000 small- to medium-sized businesses can start creating Deals on their Places page inside of Facebook. Merchants create a Facebook page where there is an option for choosing the kind of deal they would like to offer: individual, loyalty, friends or charity. Individual and loyalty offers are digital versions of the traditional coupon and loyalty cards, where a customer gets a punch hole for every coffee or sandwich purchased. The friends offer is a strictly Facebook style deal, where if a user checks in his or her friends, they get a discount. The charity deal is where the merchant will donate $1 for each check to a charity.

"The Deals concept solves the long term," said Facebook's director of local, Emily White. "For a long time, merchants have been told to get online. This solves that problem for them and turns the fans into real dollars."

Gap decided to immediately participate in Deals, offering 10,000 pairs of jeans for free to all users who check into one of the 900 Gap stores nationwide. "It's important for us to connect with our customers where they are," said Olivia Doyne, a Gap spokeswoman on hand at the event at Facebook headquarters in Palo Alto. "This can be used in so many ways. If a store has too much inventory, we can use Deals for that. We can tailor the deals to our customers' locations."

Facebook does not earn money in the Deals promotions, and Ms. White said this project is very much in a beta state. But inadvertently, by having more businesses create pages on Places and having more people checking into those businesses, there will be a natural increase in Facebook traffic.

Marketers have long seen mobile phones as a powerful means of reaching consumers while they're out shopping or physically close to a given store. "This is continuing Facebook's empowering of small businesses," said Dave Marsey, senior VP of Digitas digital media. "We're gonna see the biggest response with small local businesses that can more directly and electronically manage attracting new customers and rewarding loyal customers."

Mr. Zuckerberg said that, as always, Facebook's focus is to make things better for users. "Whether the deals platform turns into something more commercial, or we choose to monetize something else -- though we have no plans of doing that any time soon -- that works for us too."