Facebook has launched Deals on Facebook in an effort to compete with the likes of coupon networks such as Groupon and LivingSocial. You're bound to read your "Groupon killer" stories, but I'm not buying it.
The social network announced that its Deals will be available in Atlanta, Austin, Dallas, San Diego and San Francisco. In a nutshell, local businesses can buy ads and offer coupons to Facebook's users.
Why won't Facebook crush Groupon and LivingSocial? Here are a few reasons:
- If you've been around tech long enough there's a familiar plotline that rarely plays out. The story goes like this: Big company with more resources enters market. Smaller, but focused rival is toast. The reality is that small and focused often does pretty well. After all, Microsoft didn't kill Intuit with Microsoft Money. Microsoft also didn't kill VMware. Google hasn't done jack in social. Cisco bought Tandberg and Polycom thrived. You can whip up these examples all day. Facebook doesn't have the focus on coupons or local business relationships to knock off Groupon or LivingSocial.
- The Facebook-commerce connection is tenuous. I've experimented a bit with Facebook ads and they are fine for marketing. Commerce is a different story. You're on Facebook to check out photos and check on friends. There's no buying intent. Will coupons be annoying in the context of Facebook?
- Local relationships are different. The knock on Groupon is that the company can be replicated. All you have to do is hire a few thousand local salespeople and pound the pavement. It's harder than it sounds. That's why the Yellow Pages still work.