Facebook Launches Local Deal Service for Places

In a move that could bring millions of local and small business advertisers to the social network, Facebook launched a deal service for Places today. The service lets merchants push deals to their existing customers and attract new ones, according to Tim Kendall, Facebook’s director of monetization.

When users open up Facebook Places, they will see a listing of nearby venues, some which will have special icons indicating deals. They can pull up the deal, and with two clicks, they can claim it. When they go to the store or restaurant later, they can show the staff their Facebook app to redeem the deal.

The most interesting part of the product is that Facebook isn’t taking a cut of revenue for these discounts, posing a challenge to smaller competitors that use deal revenue as part of their business model. On a business’ Places page, they can set up an offer. There are four kinds:

  • Individual deals, which reward a customer if they check-in once.
  • Loyalty deals, which reward customers for a certain number of purchases or check-ins.
  • Friend deals, which reward customers if they bring in extra friends.
  • Charity deals, which allow businesses to donate to charity for every check-in they attract.

Facebook attracted more than 20 initial partners to launches the deal service. Gap is one of the first; the clothing company is giving away pairs of blue jeans to the first 10,000 customers who check-in.

Another partner is North Face, which will give $1 to support National Parks for every customer who checks-in. The Palms Hotel will be giving away a free third hotel night for people who stay two nights. The Golden State Warriors basketball team will let fans who check-in during November go to an exclusive event after the game with a player.

Facebook is opening up deals to 20,000 businesses initially and then will make it available to everyone over the next few months. The new deals service puts Facebook in even further competition with predecessors like Foursquare and Gowalla, which have offered similar coupons for months.

It also makes Facebook a potential rival to another big social deals company, Groupon, which is backed by the same venture investor Accel. Groupon offers a select number of deals a day in specific cities and it is reportedly working on a self-serve model, which will let store owners create their own deals.

Founder Mark Zuckerberg said Places deals are free now, which could undercut Groupon. But he said the company could consider making money from it in the future if it’s in the interest of the user community.

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