Facebook Places Deals offers users local discounts

Facebook’s opened up its Places app to thousands of US retailers, offering Places users deals and bargains through the company’s iPhone app and via touch.facebook.com.

Places Deals is an extension to the existing Places service, which lets users share their location with friends, and simply extends this to 23 major merchants and around 20,000 smaller businesses. The company is encouraging others to sign up.

“You’ll see a few different types of Deals: individual deals for a discount, free merchandise or other reward; friend deals where you and your friends claim an offer together; loyalty deals for being a frequent visitor to a place; and charity deals where businesses pledge to donate to a cause when you check in,” says Facebook’s marketing principal Jon Fougner.

Users check in to a location to view deals, which appear as a yellow box on the screen. To claim a deal, they check in, automatically sharing the deal on their wall, and then simply show their phone to the cashier.The first deals available include a free pair of jeans to the first 10,000 customers checking in at gap, and 20 percent off at H&M.

Some retailers, such as 24 Hour Fitness and McDonald’s, are making charitable donations for every check-in. Many are using the system to encourage people to bring their friends, for example by offering two means for the price of one.

While the service is currently only available in the US, the company plans to release it in other countries over the next few months. Android devices aren’t yet supported.

The launch is likely to prove a headache for Foursquare. Like Foursquare, Facebook offers its service free to retailers – it hopes to monetize the service through increased advertising – and offers rewards for multiple check-ins.

Although Facebook will not charge businesses for these ads, it is evident there is tremendous revenue potential as this program grows,” says Forrester analyst Augie Ray. 

“Eventually businesses won’t want to be just one of many ads that consumers see but will demand ways to differentiate and surface ads, which is how Facebook can eventually turn consumer check-ins and local ads into a new revenue stream.  Within a year or two, businesses will be bidding to have their deals gain more attention on the Facebook mobile platform, just as they currently do in Google AdWords.”