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Facebook and Amex Tread on Groupon's Turf

  |  May 16, 2012   |  Comments

Deals space still looks up for grabs.

While Facebook Offers has been available to brands nationwide for less than two weeks, marketers are already assessing how the free-to-use deals platform might compete against Groupon.

Chris Awad, a director for New York-based local marketing start-up eBoxed, says Facebook Offers will be attractive to SMBs that want low-risk social commerce opportunities. He's run a handful of Facebook Offers for restaurant and day spa clients in recent weeks. The results, he said, have been fairly encouraging so far.

"[It's] very easy to see that Groupon will have to come up with something strategic to combat Facebook Offers," Awad said. "For now, Facebook seems like the easy go-to option."

Kip Cassino, executive VP at local markets research firm Borrell Associates, believes Facebook will eventually pivot and make retailers pay to run Offers. "I think they will charge merchants," he said. "It doesn't make natural sense [otherwise]."

Facebook is hardly the only powerful player treading on Groupon's turf. For instance, there's major credit firm American Express, which is running "Link > Like > Love" deals via Facebook, Foursquare, and Twitter. The credit giant has promoted the program in its broadcast TV commercials during recent weeks.

Janice Diner, CEO of Horizon Studios and a ClickZ social commerce columnist, pointed to how Amex might implement its deals offering into its mobile app. As smart phones and other mobile devices continue to proliferate, deals-on-the-go could help determine which firms win out, she suggested.

"It will be interesting to see how Amex integrates the new local 'My Offer' [feature] in its mobile app," Diner commented.

Deals Competition Heightens

battleroyaleFor Groupon, the deals space's leader with more than 150 million subscribers, the competition has gone beyond second-place LivingSocial and is getting fiercer. While the deals space entails hundreds of brands, the greatest challenge could come from Facebook.

The Menlo Park, CA-based company, for the time being, appears committed to letting merchants use its Facebook Offers for free, under the idea that enough of them will buy ads to further distribute the deals on the social site, effectively monetizing the feature. At no cost, the Offers can be rolled through the news feeds of brand fans at the same frequency as regular posts. Conversely, Groupon and other deals players like LivingSocial and Google Offers take up to 50 percent of the sales cut when consumers redeem vouchers.

At the same time, things seems to be looking up for the sometimes beleaguered Groupon. On Monday, the Chicago-based company announced $559 million in Q1 2012 revenue, up 89 percent compared to the same period last year.

Regardless of whether Groupon or another player like Facebook prevails, it appears there will be a ton of cash at stake going forward. Researcher BIA Kelsey estimates consumer sales will reach a $4.2 billion for the deals niche by 2015. And Borrell Associates forecasts online deals - when taking into account consumer sales and the money spent on promoting the offers - will reach $14 billion this year.

Cassino from Borrell Associates said he's not sure if any of the existing deals platforms will still be viable in three to five years because of a disruptive technology climate.

"The whole thing is evolving," he said. "I think what we will probably see in a few years will look completely different."

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ABOUT THE AUTHOR

Christopher Heine

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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