Daily Deals Down the Drain, Facebook Virtual Currency Coming?

Monday, September 5, 2011

Image representing Facebook as depicted in Cru...Image via CrunchBaseFacebook decided that they would leave the daily deals business.

Here is what I left in the comments section of the article I just linked to:

This is a really interesting article but I don't understand why it doesn't mention that the difficulty with branding is a likely driver in this kind of move. Daily deals need to differentiate themselves from each other in the market, and that is not a Facebook strength. It seems to me that Facebook plays a rather neutral position when it comes to creative work. they may have realized that it was resource intensive to pursue...

With all due respect to Dan Mitchell, who contributed this article at Fortune, I feel like he points out the problem without really addressing it. The fundamental problem for Facebook is that it costs a lot of money to make a branding exercise out of fine-tuning the daily deals offering in the marketplace. According to Jim Moran, co-founder of Yipit, there are currently 521 daily deal sites out there.

Mitchell doesn't close the loop. Facebook would not want to spend money, people, time or collateral on making themselves different. That's not what they do. Facebook does Facebook things. Anyway, Mitchell says:
There will likely always be a market for online coupons. But the ease of market entry and the fact that most deal services aren't differentiated from each other makes for a toxic combination for companies like Groupon and LivingSocial hoping to dominate the market. Customers have no compelling reason to stick with, for example, Groupon; they can easily go to Living Social or any other such service without losing anything. 
What if Facebook instead focused on creating their own virtual currency?  As Mitchell says, there will be a market for online coupons. But Facebook likes to keep things in the Facebook perimeter. as long as you would be able to buy Facebook things with Facebook money, then everything would be alright.

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