Groupon and LivingSocial should probably keep an eye on their new competitor's customer service and offers flexibility.
If Facebook wants its "Deals" pilot to fly high, marketers say the Palo Alto, CA-based company better have boots on the ground. Indeed, getting small business owners - brick-and-mortar stores, sometimes with little web presence - to sink limited ad dollars into new channels takes a strong sales effort.
Facebook has embraced a nuanced approach. The company plans to leverage 11 daily deals partners to bring offers to its Deals platform while also sending out its own team of reps.
The social site launched its answer to Groupon, LivingSocial, and Google Offers yesterday, going beta-live in San Francisco, San Diego, Dallas, Austin, TX, and Atlanta. Each city page is offering roughly 10 discount offers put together by the partners (Gilt City, Plum District, and OpenTable, to name a few) and Facebook's sales team.
Chris Treu is co-founder of The New Movement Theater & Conservatory, an Austin, TX-based company that is testing a deal on the platform. "Facebook's sales team reached out to us," he explained. "We received calls and emails. They also sent us a snail mail. They invited us to their office. They gave us snacks and food and sat us down in a nice comfortable room. It was awesome."
Treu's firm is offering $150 worth of classes for $100, underscoring a key difference in what Facebook Deals is pitching to marketers compared to other discounts platforms. Several current offers on Facebook Deals represent savings of less than 50 percent. Groupon in particular is known to urge merchant discounts of at least 50 percent.
"Facebook was not very big on that," Treu said. "I felt like I could have raised the price to $125 if I wanted to. They were pretty flexible."
Emily Salberg is events director for Oyster Racing Series, which is offering a $40-for-$25 voucher in Austin. The offer will be live for three days, as Facebook allows campaigns to run for up to one week. Salberg said she initially reached out to the social site about doing a Deal, based on a revenue share.
"We got to design our own deal," she said. "Facebook's sales team has been great."
Sumaiya Balbale is marketing director for Quidsi, an Amazon subsidiary that operates Diapers.com, Soap.com, and Beautybar.com. For those brands, Balbale has run deals campaigns via Groupon, Gilt City, and Plum District. "They are not as flexible as you would hope them to be," she told ClickZ.
When informed about the types of discounts running on Facebook Deals, Balbale said, "I think that's exciting…I think the big questions are, 'What does the discount mean in terms of whether or not an offer goes viral? What's the tipping point? At what price point do you lose the awareness and the ability to reach people overnight?' I don't know exactly what the answers are. But just that Facebook is offering the flexibility makes it another platform that we would probably interested in testing. It could allow us to refine our offers and figure out what moves the needle and what doesn't."
In the end, the marketing director said, social commerce platforms are still experimental. "It's about making the numbers work for us," she said.
11 Partners to Help Sell SMBs on Deals
Emily White, director of local for Facebook, was hired away from Google seven months ago to help the social site connect with small businesses. When asked about the size of her sales team at launch, White said, "It's pretty small."
While Facebook ramps up its city-specific presences, she said it will leverage local offers that "are social in nature" from its collection of partners. Those include ReachDeals, Gilt City, HomeRun, kgb deals, OpenTable, Plum District, PopSugar City, aDealio, Tippr, viagogo, and zozi. (Neither Facebook, Groupon, nor LivingSocial would comment on if the latter two were offered a partnership.)
There's essentially no difference in how the partners' Deals appear on Facebook when compared to the ones it sells directly. Involved parties won't say, but it's likely they've penned revenue-sharing agreements akin to lead-generation relationships.
Rich Razgaitis is general manger of ReachDeals, which was previously called DealOn before being purchased by ReachLocal in February. ReachLocal has hundreds of local sales reps in its 50 worldwide offices. Razgaitis said his company plans to increasingly leverage that sales network to sell ReachDeal to SMBs, especially now that it will receive Facebook's distribution.
"What we have done for Facebook in particular is use our own feet-on-the-street sales force to put deals into the platform that we are providing through technological solutions and APIs," he said. "A lot of publishers don't realize until you get into this space how critical it is that you have a localized field sales force that can walk into an establishment and transact value."
From the perspective of businesses, Razgaitis added, "It's enough of a job to run an entrepreneurial SMB," he said. "On top of that, to have to be an expert on a digital space that's moving so quickly and in particular deals commerce, it's tough to do. That's why we don't think self-serve is going to get any considerable traction."
Deals to Get Layered Distribution
Facebook Deals will be distributed via Facebook ads, email, user newsfeeds, and notifications.
"When any merchant runs deals with us, we'll run ads on their behalf," White from Facebook said. "It's not a separate product. It's one of our distribution mechanisms."
Since the social site already has users' email addresses and location in their profiles, it simply asks them to tap the "like" button to join the Facebook Deals' list.
White predicts that newsfeed activity and other viral sharing will trump direct marketing. "We do have email, but we do not expect it to be the primary way we distribute [deals]," she said. "It's first and foremost about social experiences with your friends. And second, it’s about the discount."
Janice Diner, a partner with Horizon Studios and a ClickZ columnist, remarked about the potential distribution of Facebook deals. "The whole thing is low threshold, isn't it?" she said. "You are already there with all of your friends…I find it amazing that people are not talking more about Facebook Credits. I mean, they've created [an alternative] monetary system."
To Diner's last point, gamers who purchase Facebook Credits will be able to utilize them to pick up Facebook Deals. So, perhaps a real-life gardening brand like Scott's Micracle-Gro will run offers on Facebook Deals for virtual products aimed at FarmVille players.
As long as Facebook's able to put seasoned sales reps on the ground, the sky may be the limit for a deals platform that will be at the fingertips of more than 650 million users worldwide. Somewhat curiously, there's no direct tie-in to Facebook Places for check-in deals on the Deals platform.
White from Facebook explained, "While we are not forcing people to check in when they redeem the deal, our expectation is that there will be a lot of checking in and uploading photos and discussion [on Places] about that experience."
Murphy USA social media director Casey Petersen has been a successful tester of geo-social campaigns for his gas stations brand in the past year. When asked about Facebook Deals, he said, "I have no immediate plans to participate. Facebook check-in deals…that's another story."
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Christopher Heine was a senior writer for ClickZ through June 2012. He covered social media, sports/entertainment marketing, retail, and more. Heine's work has also appeared via Mashable, Brandweek, DM News, MarketingSherpa, and other tech- and ad-centric publications. USA Today, Bloomberg Radio, and The Los Angeles Times have cited him as an expert journalist.
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