Facebook Hopes To End Business As Usual With Location-Based Deals

Facebook looks to revolutionize the world of coupons with location-based deals.

Today Facebook formerly announced a new deals platform, a tool that we first revealed last week was in the making. While Facebook hasn’t stated that the reason behind this is to get more users to check-in, that’s clearly the primary point. Foursquare, Gowalla, and just about every other check-in platform has been heavily criticized for lacking a significant incentive to get users to check-in. Facebook hopes this may be the answer.

With the announcement was the inclusion of almost 20 deals that various business would be giving away as part of this launch. Probably most significant was Gap deciding to give away 10,000 pairs of jeans for the first 10,000 users to check-in to a gap on Facebook Places. I’m sure there are plenty of people who will rush to Gap for a free pair of pants! Other deals include the following:

  • 24 Hour Fitness: Donating $1 to Kaboom to support children’s health for everyone who checks in to its fitness clubs.
  • Alamo Drafthouse Cinema: Hosting a free screening for whichever of their movie theaters gets the most check-ins, as well as giving free souvenir Facebook Places pint glasses just for showing that you’ve claimed the deal.
  • American Eagle Outfitters: Offering 20 percent off.
  • Chipotle: Giving its Facebook guests two entrees for the price of one.
  • Golden State Warriors: Inviting those who check in on Facebook to an exclusive event with a basketball player on the NBA team from Oakland, Calif.
  • Harrah’s: Offering a complimentary roller coaster ride, nightclub admission, buffet or other gift to people who stop by and of its 10 Las Vegas resorts.
  • H&M: Offering 20 percent off.
  • Lululemon: Sharing the gift of yoga by giving guests a pass to a local yoga studio.
  • Macy’s: Offering 20 percent off select merchandise.
  • McDonald’s: Giving $1 per customer to the Ronald McDonald House Charities.
  • The Palms: Upgrading your room or extending your weekend at the hotel another night–on the house.
  • REI: Donating $1 to a local conservation non-profit when you visit its stores.
  • San Francisco 49ers: Giving to the first 200 fans who check in the opportunity to buy tickets to a subsequent football game for just (you guessed it) $49.
  • Starbucks: Donating $1 per guest to Conservation International.
  • TAO and LAVO: Adding you and a friend to an upcoming guest list at one of the nightclubs for checking in.
  • Texas Tech: Giving away 100 pairs of tickets.
  • University of California at Berkeley: Letting football fans who check in form the human tunnel through which the players run.
  • University of Nebraska: Inviting attendees to a meet-and-greet with a Husker living legend.

So far Facebook claims that the number of users who have used the Places application is multiples larger than any other location service. That would lead us to believe that well over 10 million Facebook users have checked in with Places. If enough brands begin to leverage the new Deals platform, this could clearly be a big win for Facebook. Most significant here is that Facebook doesn’t charge any companies to launch deals.

Contrast that with Groupon who goes through the laborious process of negotiating the cost of every deal that they launch with local businesses. While Groupon has an incredible email list of consumers who want to make purchases, Places based deals could prove to fill a much needed niche. While companies can’t ping Facebook users as they walk by their businesses, users can choose to seek out deals that are nearby.

With a frictionless creation process (pictured in the image below) there’s no doubt that this will transform small business marketing.

Currently there are four types of deals that can be created:

  1. Individual Deal – An individual deal rewards individual customers when they check in at businesses. This is for deals such as the gap giveaway where the first 10,000 check-ins get a free pair of jeans.
  2. Friend Deal – Friend deals reward groups of customers as they check-in together. This is the equivalent of the types of deals that would be offered to Foursquare users who generate a “super swarm” event. For example, check-in with 10 friends (bring a crowd), get round of beer on us!
  3. Loyalty Deal – This is a huge one. It aims to replace the annoying loyalty cards that sit in your pocket. Users who check-in to a Place more than a specified number of times can get a reward incentive. While not yet hyped, this is probably one of the biggest components of the deal.
  4. Charity Deal – This is a way for businesses to raise money for a cause by giving away money to a charity every time users check-in to their businesses.

To be clear, Facebook Deals is not the Groupon-killer that some had claimed when we leaked out information last week about the impending launch. Instead, this is a different business model where customers will have to seek out deals through businesses that they become a fan of. Fortunately, many of the companies don’t think it will be long before most Facebook users are seeking these deals out.