Tuesday, January 31, 2012

Why Groupon Should Not Worry About Facebook Deals

So Facebook wants in on the daily deals business model and has launched Facebook deals as a proposed "Groupon Killer." Makes a lot of sense too because of the volume of Facebook users and the social nature of group buying. No doubt, the deals platform will do very, very well and will certainly gain significant market share and steal revenue away from Groupon and Living Social alike. But I don't see it as a "killer" of anything.

From what I've read so far the difference between the Facebook Deals model and Groupon is the delivery of the deal. Facebook is betting on social elements like sharing via a "like" with friends that are in your Facebook network. Groupon, however, delivers an email. To me, these kinds of deep discounts are better served direct, via email. Yes, I know, sounds old school and I realize that Facebook provides email addresses now and some people have even gone as far as to say that email will die in the next decade or so. Fine, in the meantime most of the world still revolves around email. Email, for many of us is how we stay connected, conduct business and share information. There is and will always be a percent of the population that will respond better to an email than a Facebook message or wall post from a friend.

Facebook is also noisy as hell, with a lot going on these days. We have groups, events, places and now deals to pay attention to and that's on top of all of the other clutter we get from our "friends" on a daily basis. Sure, these things all tie together nicely in Facebook. I envision savvy marketers setting up an event linked to a deal and then providing further discounts to folks when they check-in via Facebook places. It's all very symbiotic and pulled together in one platform via Facebook. But how many people actually use the places feature? I'm sure they have a ton of people "activated" on places and I'll bet there are a lot of users actively using it too - but that's simply because of the volume of people using Facebook. With Facebook the numbers will always be staggering.

But for the deals portion and especially when it comes to high conversions I seriously doubt that Facebook deals will kill anything. Groupon has this model down cold. They deliver a witty email, on-time at practically the same time every day and have trained the more than 70 million subscribers to look for these emails. Furthermore, the deals will be different for Facebook.  This quote was taken from a write up done over on the Huffington Post and was given by a Facebook spokesperson:

"We're building a product that is social from the ground up," says Emily White, director of local for Facebook. "All of these deals are things you want to do with friends, so no teeth whitening, but yes to river rafting."

So even the deals will based around social and community. Which is cool and will no doubt catch-on with Facebook users. But, like I mentioned earlier, there is still a large audience for the less social deals. Saving money on things like teeth whitening is relevant for some people, especially professionals who can afford to act on these deals. Which is why I think Groupon will continue to grow and thrive.

Furthermore, I think it would be silly for us to believe that Groupon will always only be a daily deals email platform. I'd venture to say that Groupon has something else cooking and may be working on a social play of its own. At the end of the day, there is enough pie to go around in the space and each platform has its own model and audience. Groupon's not going anywhere - trust me, or Howard Shultz (Founder of Starbucks), amongst others, would not be sitting on their board.

Keep your eye on Groupon and the next move they make.

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