Many people have been wondering what cut Facebook is taking from partners through their new deals product. According to our sources, Facebook is currently charging their partners nothing to participate in the new deals program.
It’s not surprising considering that this is the same model Facebook implemented when rolling out Credits within games on the site.
The Focus Is On Credits
Facebook’s approach appears to be solely focused on expanding the reach of credits. In the short term it’s a win-win for the social network and its partners. These businesses get a dramatic increase in distribution of their deals and Facebook can get more users to put their credit cards on file with the company.
As Facebook has very long-term ambitions with credits, this sort of deal makes a whole lot of sense. Should the new deals product become wildly successful, Facebook can simply take a cut of each deal sold since they own the currency.
While we don’t know the details of the contractual agreements secured with the partners (which include OpenTable, PopSugar City, Homerun, Zozi, and others), what we’re hearing is that Facebook is approaching this product with a very long-term perspective.
And one interesting aspect of the program is that Facebook isn’t actively reaching out to businesses directly, but is are letting businesses contact the social network (and most likely work out their own deals).
Unfortunately, we don’t know if Facebook is simply passing those businesses on to partners or instead creating their own arrangement with each small business. However, Facebook’s own copy states, “Facebook takes a portion of the proceeds only if a deal is purchased.”
As such, we can only draw the conclusion that Facebook is using the partners as a short-term solution for filling deal inventory, while building up its own customer base.
Whatever deal Facebook has worked out with partners (not intended to be a pun), the current arrangement involves Facebook taking nothing. But I’d assume that will all change if deals becomes as successful as the company hopes it will.
Readers, what do you think about the future growth of deals?