Facebook Deals: A Threat to Location-Based Services Everywhere?

Facebook launched a new program earlier this month in connection with their location-based check-in app, Places. Deals allows businesses to offer discounts to Facebook users when they check in using Facebook Places. For people who have been using Foursquare, Gowalla, SCVNGR, Loopt, and other location-based services, this is not a new feature.

To date, though, this group of people has not been large. According to Pew Internet, only 4% of online adult Americans use location based services (LBS). Compare this to the statistic that 33% of American adults access the Internet from their mobile device and you can see that location-based services have a long way to go toward greater awareness and adoption.

The large majority of people who could be using location-based services are not, and with the introduction of Deals, these services could start to see a serious boost in membership. More users on location-based applications will be good for the social media industry, Facebook, businesses, and, most importantly, consumers.

Facebook’s quick introduction of Deals only a month or two after Places was announced shows Facebook’s real intentions with Places. Facebook wants businesses to register on their site, creating company Places pages. Deals’ explicit focus on adding value to a customer’s experience at a business is one of many features Facebook could have added to Places and, in addition, they could have offered a Tips app for people to provide feedback and advice to others, like on Foursquare. They also could have offered a Create Your Own Scavenger Hunt app like on SCVNGR.

Why would Facebook want to introduce a service that would increase the number of local businesses indexed on Facebook? I believe it comes down to “Likes.”

Facebook’s competitive advantage as one of the dominate forces on the Internet is its database of social connections between people, places, and things, or as Facebook calls it, The Social Graph. This allows Facebook to offer up relevant advertising, friend suggestions, and the status posts you see in your News Feed. The backbone of Facebook’s future is attaching a “Like” button to everything, online and offline.

Many businesses already had a Facebook presence prior to Places, but now, businesses connected to Places add a critical piece of data to Facebook’s databases: Not only are brands connected to Facebook, but individual stores and locations are registered as well. Each new Place added on Facebook is “Like-able.” I believe Facebook uses the check-in as a gateway to offline “Likes.”

Deals could ultimately help shift the title of “LBS King” from Foursquare to Facebook, which raises an obvious question: Should incumbent LBS leader Foursquare and others feel threatened by Facebook Deals?

The answer is no.

Foursquare and other location-based services are creating their services for other purposes, not to amass “Likes.” Foursquare centers around serendipity, SCVNGR around competitive games—and the other location-based apps have their own mission statements. I think Foursquare should be wary of Facebook’s actions on their territory, but not too alarmed (yet).

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