Facebook announced this past week that they are scrapping their Deals initiative. During its four month test phase, the program didn’t prove to be a successful endeavor. The project had the potential to be great seeing as Facebook has nearly 20 times the amount of users as Groupon.
We are categorized by our “Network” on Facebook, which is essentially your geographic location, and “Deals” focused on a highly specific region in which these offers were presented with a goal of attracting users to local businesses. What is still being promoted, however, is Facebook’s “Check-In Deals.” Much like FourSquare, users will “check in” to places and will be able to see a list of “deals” or coupons available to them at the establishment.
With all of the potential backing this idea, why did it fail? There are several factors involved in this test that present potentially flawed results. First, Facebook chose select locations to test the “Deals” program in including San Francisco, San Diego, Minneapolis, Dallas, St. Louis, Austin, Atlanta and Charlotte. I’m sure that Facebook didn’t invest their money and resources into this project without researching their test cities, but are these cities really the best choice for this kind of program? Maybe cities with a higher cost of living would have been more successful; maybe cities with higher population density would have produced better results. It’s even possible that cities with a larger amount of people in the age demographic of 18-30 could have produced better results.
Also, the offers that were marketed on Facebook Deals were reportedly several of the same deals that were being marketed on Groupon and LivingSocial at the same time. This overlap of deals makes for a lot of cloudy research. LivingSocial and Groupon both have apps in which you can purchase the deal directly on your mobile device and these apps save your credit card information so you can purchase their deals with just one push of a button. Facebook did not offer that kind of integration which could have contributed to poor participation.
Yet another factor working against Facebook was the fact that some local business owners reported staggering losses after participating in a Social Coupon program. Being the “Deals” program was focused on local businesses, after one bad experience with a Social Coupon provider, business owners are left with a bad taste in their mouth. While the business model designed by Social Coupon giants works for some businesses, for others it can be financially devastating.
Several factors have could have contributed to the downfall of Facebook Deals and unless Facebook decides to release more specific information about what caused the program to fail, we’ll never know for sure. However, Social Media remains an effective way of marketing your business to relevant audiences- as long as it’s done with a well thought out game plan.