Facebook to stop Local Deals after short trial:
In a trial lasting only a few months, the potential Groupon killer called “Facebook deals” has not lived up to expectations and in the cities it has been trialled will now be pulled in the coming weeks.
A sign of things to come for other competitors to Groupon and LivingSocial
With many well known brands trying to cash in on the popularity of local deals including Google offers, Amazon local and Priceline, could it be that a report from Forrester research is starting to come true? They predicted that the daily deal phenomenon will have a limited lifespan, and in their own words consumers will simply overdose on the marketing tactic by 2016.
Forrester analyst and the report’s author Shar VanBoskirk states:
“Consumers will grow so conditioned to micro-impulse offers that they’ll lose practice at considered decisions – in all walks of life, not just when buying spa treatments. Facing a cultural descent into maladroit judgement, employers (and spouses) will blacklist impulse deals to keep people intentional.”
Sticking to what you know best:
Facebook have come out to say that they have learned a lot about hyper local daily deals and are committed to helping local businesses market more effectively to local people but will be (for now) sticking to what it knows and perhaps does best:
“We remain committed to building products to help local businesses connect with people, like Ads, Pages, Sponsored Stories, and Check-in Deals. We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.”
Foursquare still a direct competitor:
Whereas the daily deal phenomenon requires a massive amount of advertising/sales force spend to create the interest to ensure deals are consumed in their allotted time. One report has stated that Groupon is more akin to a huge ponzi scheme with very little actual cash after huge swathes of sales people are required to keep the beast growing and the investment coming. Meanwhile the companies who take part and discount heavily find they only have a limited length of time to “cash in” on the interest, especially as the sales force move on so quickly, and the issue of fresh new people coming to expect a huge deal hits businesses hard.
Hyper local still on the cards just not as time sensitive or with quite the discounts that daily offer:
This however does not mean that the hyper local deal that Foursquare can offer does not make a lot of sense for Facebook as it very much does.
Check in deals:
In this model people are essentially rewarded for checking in to a business who has an account on either Facebook or Foursquare or potentially Google Places, in this marketing tactic you may be rewarded with a 10% discount if you choose to go for a coffee in one business over the other. The offer is never as generous as a daily deal (up to 75% quite often) but is simply an incentive to ensure that people aware (or unaware) of your business have more of a reason to go to you as opposed to a competitor.
This almost always requires the use of a smartphone and in my opinion is not hugely adopted by the general population but currently has some serious merit with the under 40’s.
Deals still a growth area:
I do however see serious growth in this area as adoption rates of smartphones soar and people generally become more aware of options to save money via applications and online sites and portals.
For a business, the ability to manage this kind of deal comes at a fairly small cost and allows people to trial various options in order to benefit the most from the marketing tactics available.
Expect to see more of the check in type deals in the coming months and years.