Facebook May Expand Deals To Compete With Groupon

Facebook will begin testing an expansion of the Deals service to better compete with Groupon.

Facebook will begin testing an expansion of the Deals service to better compete with Groupon.

Bloomberg News’ Brian Womack reports that Facebook employees will work with businesses to promote Deals and encourage people with accounts on the 600-member social network to share details about the discounts with friends. Tests of this expanded service would begin in Atlanta, Austin, Dallas, San Diego and San Francisco.

At first glance, the description above doesn’t sound like an expansion unless you read it as staff of Facebook working more closely with businesses than has previously occurred. Perhaps Womack was referring to Friday’s announcement that the new insights for pages include measurements of Deals and Places usage, although if companies had the ability to discuss how to improve those new numbers with staff at the social network, that might really help drive further adoption of Deals.

A spokesperson for Facebook confirmed the forthcoming test of an expanded Deals with the following email message:

We will test a new feature for our Deals product that allows people to buy Deals on Facebook and share them with their friends. Local businesses will be able to sign up to use this feature soon and people will be able to find Deals in the coming weeks.

Currently Deals focuses most on mobile users, but if the service expanded beyond that emphasis, Groupon would face serious competition. Even without any expansion, Facebook’s promotions service seems well positioned to compete because the social network so far hasn’t charged businesses any money for Deals — presumably hoping that companies would buy more advertisements as result. If Facebook added premium services onto Deals and charged for these additions, that would get really interesting.

Readers, what do you think Facebook ought to do with Deals to take more market share from Groupon?