Facebook Launching Prepaid Local Deals Subscription Service

Facebook is showing a special story in the news feed urging users to subscribe to updates for its new Deals local pre-paid coupon service, and to invite their friends to subscribe too. A link in the story leads to a new subscription page for Deals which says that subscribers will soon get news feed updates about nearby promotions.

This aggressive tactic will rapidly generate awareness of Deals and produce many subscribers to the forthcoming updates, helping it catch up to established daily deals providers such as Groupon and lure local businesses to consider offering pre-paid coupons through Facebook. The first cities to receive these updates will be San Francisco, San Diego, Dallas, Austin, and Atlanta.

This new Deals service will let you buy coupons such as “Unlimited bowling with 6 friends for an evening for $60 (75% off)” or “Luxury winery tour and 25% off all wine purchases for $50”. Facebook bills it as a way to “”discover new things to do with your friends and get unique offers at the same time.” This is different than what Facebook now calls “Checkin Deals” — the location-based rewards service which lets users earn discounts and gifts from local businesses for checking in via Facebook Places.

The news feed story, headlined “Deals on Facebook. Now Better With Friends” includes a “Tell Friends” link which launches a multi-friend selector for sending friends invites that generates notifications linking back to the new Deals subscription page.

Facebook has also launched a new information page for businesses interested in offering Deals, linked to from the subscription page. It cites help from Facebook marketing specialists, the site’s huge user base, the ability to build customer loyalty, and examples as reasons why Facebook Deals is valuable to businesses. Admins of Facebook can can fill out a web form so they can be contacted by Facebook to start offering Deals.

Checkin Deals launched in the US in November, and in Europe in January, but has yet to see widespread adoption by businesses. The Facebook.com/Deals URL previously linked to a locator where users could view a map and list of nearby Checkin Deals, but in Facebook’s naming tradition, it decided “Deals” better described its new coupon service, and so it Checkin Deals are now just a subcategory.

By showing announcements of new Deals as stories on the home page’s news feed, which users frequently view and know how to share, Facebook may be able to generate such a swell of user demand for Deals that businesses feel compelled to offer them. While users already see when a friend redeems a Checkin Deal, coupon Deals subscribers will “get notified when Deals are available in [their] area and receive regular updates about new offers.” The Deals info page says these updates are “coming soon” and that additional cities will also be added soon.

When users subscribe, they’re asked to confirm their location. Facebook allows any city to be entered, so those outside of the initial launch cities may start to receive updates if Deals Updates roll out to that location. Users also receive an email confirmation upon subscription, again asking them to invite friends.

The initial story urging users to invite friends appears to have been given extraordinarily high news feed prominence. This means millions will see it, potentially creating an enormous audience for these updates literally over night. Facebook rarely injects stories into the news feed, preferring to let users opt in to updates, even regarding things as important as AMBER Alerts about missing children.

This example, along with its home page headline about voting in the last election, shows the power Facebook has to deliver a message to large portions of its user base. If Facebook abuses this power, it could lead users to return to the site less frequently because they feel that their news feed isn’t as fun or social.

The use of a special news feed story to promote the new Deals coupon service is a bold move on Facebook’s part. The aggressive strategy may  instead be designed to rapidly increase the Deals subscriber base so it can compete with Groupon, LivingSocial, HomeRun and other daily deals providers who have a huge headstart when it comes to email addresses.

Facebook has finally shown its distribution might, demonstrating how the site can be used to quickly grow its own features, not just third-party apps and games. None of its recent product launches, including Places, Groups, Messages, or Questions received this kind of promotion, but none of them had the immediate revenue generating potential of Deals.

Update 3/16/11: We’ve made several edits to this article to clarify that Facebook is asking users to subscribe to a new local pre-paid coupon service similar to Groupon and other daily deals services. This Deals service is different than the location-based Places checkin rewards program Facebook launched in November, now known as Checkin Deals.