About a month ago, Facebook inserted a special story into the news feed and homepage ads asking users to sign up for a Deals service. The company instructed people to subscribe to get information about the service as it rolls out in five cities: San Francisco, San Diego, Dallas, Austin and Atlanta. Tomorrow, according to The New York Times, this test of Facebook’s competitor to Groupon, LivingSocial and other providers is going live.
We’ve covered Deals (not to be confused with Facebook’s mobile check-in based deals) in detail already, which you can read here. The new report includes a few more interesting pieces of information.
Facebook is planning to include Credits as a payment option along with credit cards, so if users who have stocked up on lots of Credits for virtual goods in games happen to see a Deal show up in their news feed, they’ll be able to buy it.
Companies such as Groupon and LivingSocial already take a very substantial portion of the revenue split with business that their deals bring in, with market leader Groupon grabbing 50% and second-place Living Social taking a competitive 40%. Facebook keeps 30% of the revenue from Credits purchases, and presumably it will retain the same amount from Deals sales. If that’s the case, perhaps it’s keeping the same 30% from transactions that it brokers via user credit cards.
Either way, 30% is competitive in the deals world, even though the percentage has been a serious new cost for platform developers.[Update: We’re hearing that while Credits is a payment method, Facebook will not necessarily do a 30/70 split on revenue through Credits-based purchases of Deals as it has with developers.]
Another interesting point in the report is that Facebook is not only tasking its own sales teams with bringing in deals, but it’s syndicating deals from a number of partners, listed below. The syndication efforts should play an especially important role during the product’s early days, providing deals when Facebook itself might not have as many flowing through to users.