Competition in the geolocalization market is about to kick off. Facebook has been late in the market, while some spiking start ups like Foursquare and Gowalla have already been able to build a strong audience. Of course, geolocalization brings a lot of interest for business, especially retailers, as it might trigger in store traffic generation with the appropriate offer.
Mc Donald’s have already set up a great case study, while it increased by 30% its sales thanks to a Foursquare campaign. Hence Facebook has launched recently Facebook Places, which aims to compete with Foursquare. Facebook has a great advantage on Foursquare, as it owns already a way larger audience, which already spends a lot of time on the social network.
Facebook has declared it will launch a new deal service for business to use. Businesses will be able for free (at least so far) to create deals which will be displayed to Facebook Places users. When someone will check in somewhere, it will be able to see the deals proposed nearby.
I believe this is a great strategy for Facebook to propose this service for free, as it will give a lift to Facebook Place, which will be more attractive for customers as it may propose a larger amount of deals than Foursquare.
During the conference, chief executive Mark Zuckerberg seemed to place a particular emphasis on the friend deals — after all, the ability to tag friends, including friends who don’t normally use check-in services, helps Facebook Places stand out. When I first heard about the deal tagging system, I was concerned that it might lead to lots of fake check ins, but Zuckerberg noted that users need to present their coupons in-person to claim a reward. So it would be hard to claim that you brought three of your friends to the store if you’re there by yourself.
During our interview, Kendall also emphasized the tagging feature: “We think it’s a real digital representation of how people discover local businesses offline.”
Facebook uses its size in order to get leverage, and hence to get a competitive advantage on the competition, which remains small start ups. I find the strategy very interesting.