Turning deals into a social or sharable experience is not an easy task, as demonstrated by Facebook’s closure of its daily Deals trial this week.
Social or location-based deals have been one of the hottest topics for brands over the past year but this week Facebook closed its daily Deals, launched just four months ago (nma.co.uk 30 August 2011). The closure of the trial shows that even with Facebook’s almost unrivalled scale and its experience at creating social products, such services aren’t easy to pull off.
The poster child for group buying or social deal has so far been Groupon. In the UK alone it has around 6 million people subscribed via email and has seen its valuation rise to over $20bn. Facebook’s Deals service was similar to Groupon’s, as it encouraged group buying by promoting deals that people would want to take part in with their friends, but unlike other group buying services Facebook didn’t stipulate that buyers needed to hit a certain number before the deal was valid.
The main criticism for sites like Groupon and LivingSocial, and their sky high valuation predictions, have been around the idea that consumers will become tired of the daily deals format. Groupon itself acknowledged that keeping people engaged with its emails was a priority (nma.co.uk 17 March 2011). The novelty of such great offers have had people interested initially but irrelevant offers at the wrong time for consumers could potentially turn them off from looking out for them in their inbox or social news feeds.
Facebook’s announcement included an explanation of their strategy on Deals, saying that it would still continue the Deals service based on mobile check-ins, which is live in the UK. Rather than relying on people to return to emails or messages about deals, check-in deals only appear if an offer is valid near a person’s location. Groupon has also now formed a partnership with location-based service Foursquare, suggesting that it too recognises that having a mechanism to give the right deal at the right time could be a way to future-proof its service.
The closure of Facebook’s daily Deals service does not suggest that deals don’t work in a social context, however, it does show that companies need to think hard about relevance and delivery to make it work.