Earlier this week Facebook announced plans to drop their Daily Deals coupon service “in the coming weeks”, which to me is a rare blow to the world’s largest social networking platform. But given the tremendous competition from sites such as the industry leader Groupon and the up and coming competitor LivingSocial there seemed to be an overabundance of coupons when Facebook decided to join the foray. And others competitors have also jumped in with some of the more notable inclusions being Google Offers and Bloomspot.
But will Facebook suffer as a result of bowing out of the coupon business? It is doubtfu. Facebook still receives a tremendous amount of revenue via their advertising program and stands to grow even more, especially when marketers are doing their best to convince prospective customers to try advertising on social networks and why it makes sense in reaching over to potentially 750 million members. Despite Facebook member gripes over the amount of ads they are subjected to, advertising makes complete sense to the social networking giant. While some lesser companies don’t generate more customer interest via Internet ads, Facebook clearly has a unique advantage, given their ever-growing membership, which might be more than 800 million members once Facebook announces another milestone.
Groupon, which has an expanding office locally in Palo Alto, has had an incredible rise in success given that it has only been in existence since November 2008. But with a catchy company name, leading edge marketing and deals of the day that appeal to a growing audience, it is no coincidence that Groupon has succeeded. Groupon has been poised to become a publicly owed company but because of the stock market’s wild gyrations in recent weeks, they might postpone the IPO until markets start settling down which no one really knows when. And its no coincidence that other companies are trying to their luck with the Daily Deals phenomenon. In fact I just became aware that a newly created site known as “Gaypon” has just launched today, with hopes of reaching out to the LGBT community and their straight supporters. Personally I hope this new site becomes successful but it remains to be seen how well they will fare in an already overcrowded market.
What might eventually occur is what typically happens with other technology companies and that is to merge corporations, eliminating tech jobs and cutting corporate fat. In general this is bad for the consumer in that they won’t have as many choices amongst daily deal companies to choose from, which in turn equates to an increase in cost of expenses in order to run a daily deal. Of course losing a tech job in this economy, management or not, is even worse.