When Facebook launched Places, the social network’s long-awaited location-sharing feature, in August, it was accompanied by a couple of key assumptions. One was that 800-pound gorilla of the social networking space, with its 500 million total users and 100+ million mobile users, would take the check-in mainstream. As my colleague Debra Aho Williamson sagely put it in an eMarketer blog post:
Right now, checking in is a fairly niche activity. Places will introduce a lot more people to the concept. Facebook has already shown that it can drive big changes in people’s behavior—just look at the popularity of status updates. Checking in is another one of those behaviors that Facebook can easily push toward mass acceptance.
Another was that the launch of Places signaled the death knell for foursquare and other location-sharing services. But as it happens, the reports of foursquare’s death have been premature. In fact, since the launch of Places, foursquare’s user base has continued to surge, growing from 2.6 million on August 12th (according to a tweet by CEO Dennis Crowley) to 4 million on October 21st. If it continues at its current pace, foursquare is projected to top 5 million registered users by the end of November.
In addition, while Places has built-in scale, it doesn’t necessarily top foursquare in engagement. According to some recent (and admittedly rough) calculations by Silicon Alley Insider (SAI), a large number of people (a reported 30 million) have tried Places, but more people check in on foursquare on a more regular basis. Blame a lack of compelling features, such as game dynamics, that give foursquare a lot of its appeal. On the other hand, engagement and usage metrics, even the somewhat speculative data assembled by SAI, that disproportionately favor the smaller foursquare over the much larger Facebook, serve as further evidence that two can peacefully coexist.
The big question is: what would make Places more compelling? With yesterday’s launch of its Deals program, Facebook is betting the answer is commerce.
Why Places + Deals is important to Facebook:
First, the opportunity to save money will give Facebook’s base of mobile users, now 200 million-strong, a reason to use Places to check in. The success of group-buying services such as Groupon and flash sale sites like Gilt has demonstrated that consumers will jump at the chance of a good deal. The fact that Deals is launching with a roster of 22 national brands, including the Gap, H&M, McDonald’s, Starbucks, Macy’s, American Eagle Outfitters, JCPenney and Chipotle, proves that Facebook is serious about driving adhesion. In many cases, the inaugural deals mean discounts, but Starbucks and McDonald’s, for example, are offering donations to charities in return for checking in, reminiscent of a successful program non-profit Earthjustice has run with foursquare.
Facebook also recognized the need to include a mechanism to drive ongoing usage. In short, Deals is not about the one-shot deal. Rather, merchants have the option of using the platform as a virtual loyalty program or punch card to reward repeat buyers. This is a smart move that could counter some of the criticism leveled at services such as Groupon and one that will make Deals more compelling for users and businesses alike.
Why location-specific deals make sense for marketers:
Location information, which provides insight into not only place but also context, enables marketers to deliver a compelling offer or reward when consumers are at the point of decision. In yesterday’s geo-location sessions at the ad:tech New York conference (coincidentally scheduled at the time same time as Facebook’s Deals announcement), WHERE CEO Walt Doyle noted that reach, relevancy and redemption are the key factors in the location game.
Cracking all of those nuts simultaneously and with the same degree of success is challenging. Facebook can do its part by offering scale and ease-of-use for the business owner, whether a national brand or single proprietorship. But platform and scale alone are not sufficient. Ultimately, the success of Deals depends on, well, the deals that merchants offer. Unless they’re consistently attractive, consumers will lose interest or not sign on at all.
Will Deals alter the dynamics of the marketplace?
The answer is yes, but the impact of Deals will be felt differently throughout the geo-location ecosystem. Although foursquare was absent at yesterday’s launch, Groupon and Loopt, two companies that are farther along than Facebook in marrying location and offers, were present. The single-click sign-on feature that Facebook announced as part of the enhancements to Places will enable deeper integration between Facebook and other location services, which, in theory, at least, will give Facebook more appeal as an aggregator, a value proposition that will likely extend to commerce as well.
Could Facebook, with its reach and resources simply blow its erstwhile competitors out of the water? Given the inclination, the answer is probably yes. But Facebook understands a) the value of the ecosystem (a lesson perhaps learned from Google, now Facebook’s primary competitor in the digital space); and b) its limitations in being all things to all people and all companies. Fast Company described the post-Places opportunity for services such as foursquare and Groupon in the following terms:
Their long-term sustainability will probably rest on the same thing that enabled the Mac to survive in a PC world: A decision to eschew the urge to be everything to everybody and instead to focus on a customer segment they will always be able to serve better than the big boy.
Deals may not be perfect, it may be “cruder,” in Fast Company’s estimation, than similar offerings, but assuming that Facebook is on to something here, Deals could have a significant impact in the marketplace. It could also offer a big boost to mobile-assisted commerce and make mobile not only a more viable but also more necessary channel for reaching consumers.
