The other shoe dropped Friday when Facebook pulled the plug on its Deals offering just days after killing the mobile-only version of Places. As the demise of Places was welcome news to Foursquare, Gowalla and others so the end of Facebook Deals should provide a measure of relief to Groupon and Living Social--one less competitor to worry about.
Launched only four months ago, Facebook's daily deals service had been criticized for the quality of the offers geared to social events and group activities, the level of discounts and lack of aggressive promotion by Facebook. Considering the brief window of opportunity for Deals to gain traction, it seems Facebook wasn't prepared to go all out to prop up a non-core service until it showed signs of life. It was sink or swim. The same goes for Places.
Facebook itself said it "learned a lot" from the test and will continue to try to figure out how to best serve local businesses. It is also maintaining Check-in Deals, which offer free mobile coupons users can get by checking into local venues via their handsets. (Facebook Deals are pre-paid coupons, purchased on Facebook with Credits or a payment card.)
What seems clear is that simply parking "Facebook" in front of a new product offering doesn't automatically make it successful, especially were it a me-too service banking on the site's massive audience to make it instantly viable. As Apple has shown in its history, if you want to break into existing markets, like those for mp3 players or smartphones, you have to introduce something that leapfrogs the competition.
Another approach is to partner with, or acquire, an established player in a given area, as Facebook did by teaming with Skype to launch video chat. Facebook CEO Mark Zuckerberg himself said at the Skype deal was "symbolic" of how the company would roll out new features in the future. "We want to leave as much as possible to independent entrepreneurs and companies who are going to be best in class at doing these things," he explained last month.
How that plays out in the mobile realm remains to be seen. Facebook has recently rolled out its Messenger app and is rumored to be close to launching a photo-sharing app to compete with Instagram. Will they wind up like Places and Deals? Both at least are closer to Facebook's core services of communication and content-sharing, especially of photos, than its half-hearted efforts to bolt on location and deals services.
And while it's natural for Facebook to try to extend its franchise in mobile via specialized apps, there doesn't seem to be a big appetite so far for free-standing Facebook offshoots. People want the Facebook app for social networking, Flipboard for reading magazines, Evernote for organizing content they create or collect, and Shazam for music discovery. Even longtime Facebook ally Zynga is looking to reduce its dependence on the site by releasing more mobile games that don't count on the Facebook ecosystem as much for success.
For now, Facebook would probably do best to focus on making its mobile offerings as user-friendly and consistent as possible across all devices and platforms rather than trying to duplicate the latest popular app. Above all else, it doesn't want to become the MySpace of mobile when it comes to its bread-and-butter: social networking.
COMMENTARY: In a blog post dated April 26, 2011, I was not willing to hail Facebook as the eventual victor in the daily deals space against Groupon and LivingSocial. I thought Facebook was rushing into a space that they didn't understand. For one thing, it's a tough way to make money, there are lots of competitors selling daily deals, and I have very open about how I feel about the ability of daily deal startups like Groupon and LivingSocial to make any money in. Anytime you offer shitty deals and don't promote the business, you are just setting yourself up for failure. Hey, Zuck, we got a deal right?
Courtesy of an article dated August 29, 2011 appearing in MediaPost Publications MoBlog