
Websites like Groupon and Living Social have exploded onto the scene in recent years. They help businesses raise their profiles through discount offers. Now, Facebook will soon start testing its own service in several U.S. cities: Dallas, Austin, Atlanta, San Francisco and San Diego.
The company already offers Facebook Deals through Facebook Places, its check-in service. Its new daily deal service will work with Deals, though it will be very hard for Facebook to steal first place from market leader Groupon. Still, whenever the social network enters a new market, it has one huge advantage: 600 million users and counting.
Daily-deal services supposedly account for a third of all the ads on Facebook. Clearly the social network wants to take down the competition, but it wants to make sure its generating that extra revenue before it does.
“Local businesses will be able to sign up to use this feature soon and people will be able to find deals in the coming weeks,” the Palo Alto, Calif.-based company said in statement today.
Facebook hopes to avoid pitfalls, such as those Groupon encountered when some small businesses were so overwhelmed by customer responses they could not keep up and ultimately suffered losses.
Facebook plans to sell the deals through its own sales team, as well as working with partners such as Gilt City, Home Run, Pop Sugar City, Tippr, KGB Deals, Plum District, Reach Local, Zozi, and Open Table.
With more than 600 million users, Facebook certainly has the critical mass and the social mojo to tap into the booming online deal market and compete with market leaders Groupon and LivingSocial. Facebook will showcase deals and encourage users to share those deals with friends. What’s going to lead to this program’s success is that users can “unlock” a deal and share that discount with friends. Facebook testing showed that people were more likely to buy a deal if one of their friends bought it first. It makes perfect sense: Getting that great deal on dinner for one just isn’t as fun if you can’t share it with others.