Posted March 29, 2011 5:42 pm by with 5 comments

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Facebook is launching a deal site. Who isn’t? But according to Network Effect, Facebook is going to be specific about the kinds of deals they promote and that could be the key to success.

The word is that the deals on Facebook will only be for social activities that you can share with a friend. Half price movie tickets and lift freebies for a ski resort as opposed to discounts on teeth whitening and carpets for your home. Daily deal site KGB will be partnering with Facebook for a five-city test and they say their deal vouchers will be delivered in minutes. I take this to mean that I can sit down with friends on a Friday night, choose an activity and we can all be sharing that discounted fun later on that same evening.

By only offering deals on group activities, Facebook Deals is setting themselves up to be the go-to spot for social butterflies. It could easily become the dice roll for people who like to try something new every week. Bored? Check Facebook Deals. Bowling this week, a museum next week, the movies on a Wednesday night.

This niche strategy does mean they’ll have to turn down potential advertisers who don’t fit, but surely, there will be a dozen more lined up to take their place. The big question for advertisers is how much is Facebook going to take off the top? A somewhat related question is how is Facebook going to process the cash for these deals?

Facebook’s credit system is one available option but rumor has it that Facebook is working on becoming a financial institution like Paypal. If Facebook can deliver a monetary exchange system that handles “real” money, it will be a huge step toward turning the social network into a truly diversified internet powerhouse.

Facebook Deals is smart to stick with social activities that are made to be shared with friends and family. That is, after all, what Facebook is all about — connecting with others. And though the deals are seemingly aimed at groups of friends who gather together in the physical world, that’s not the only option. There’s a fun synergy about knowing that your friends in three different states are all participating in the same activity at the same time (thanks to the same deal). Add in the use of mobile Tweeting, photo and video sharing and even mobile webcams and they can all share in the experience in real-time. I suddenly feel like singing, “It’s a Small World After All.”

What do you think? Is Facebook’s idea of presenting only social deals a smart one or is that niche too narrow for flash deal success?

  • Cynthia,
    This is a really interesting article. This is the first time I have heard about Facebook wanting to implement this into their social network. If they can make the payment function work and get all of their followers on board, I think this could be a beneficial program to implement into the social media realm. Similar apps on the iphone, like Groupon and Living Social are getting really popular and for Facebook to create something similar, for friends to do activities together will be great! I’m excited to see how this turns out!


  • John

    I think it is a great strategy to target this niche. With countless group buying sites popping up everywhere, it is a great way to differentiate. Facebook is already one of the powerhouse’s of the internet, but there is no point in taking on the well established group buying sites. I think this will be a definite success and another string the big bow of FB.

  • YES. Really interesting that they are only going to go for this in a niche strategy. I think if it works well then they will be introducing other niches. grocery-pets-travel

  • Actually, there are many factors of success in Face Book strategy. So, specialization can be always considered as one of these factors.

  • As long as the deals don’t change the social network into a cash machine and don’t bring stores to bankrupt, it’s fine. If FB can’t be another Groupon…