UPDATE: Since we posted this Friday, Reuters and other news outlets have clarified that it is Facebook's Daily Deals offering (a la Groupon) that is now being phased out, not the Check-in Deals (a la Foursquare). It remains a bit unclear how Check-in Deals will continue or evolve, but since much of the commentary below is still valid, I've decided to leave the original post up:
Well, Facebook's short-lived attempt to compete with Foursquare in the check-in space is officially over.
As you might have heard, Facebook dropped the "check-in" aspect of Facebook Places from the social network's mobile app this week. Now Reuters is reporting that Facebook will be shutting down its related Deals product "in the coming weeks."
It's easy for all this to sound like a public defeat for Facebook — and it is, in the sense that they tarnished their brand by launching a lackluster check-in tool to begin with. The site also lost some goodwill from socially savvy marketers who tried using Facebook's check-in Deals, which were riddled with glitches. (In a recent campaign run by my team featuring Deals at 300 locations, the check-in offer went unclaimed due to glitches a staggering 95% of the time.)
But Facebook isn't giving up on location-based marketing. In fact, the site's leadership deserves credit for admitting they had a flawed product, pulling it, and choosing to focus on the next iteration of how location can be folded into online activity.
Here's a nice summary of the change, via MediaPost:
"This is not a retreat in any way," said Michael Nicholas, chief strategy officer at Aegis Group's Isobar. Rather, the move is essentially an "embedded tag strategy that's about getting more people to put more location data into Facebook." Instead of a single mobile feature where users have to manually check-in, he added, "they're putting location into everything."
The real question, of course, is how Facebook will allow marketers to make the most of this location data. My hunch is that it will be tied directly to the one marketing tactic that has been noticeably missing: mobile versions of Facebook ads.
Given that more than 50% of smartphone owners are checking Facebook at least daily, you can bet that Facebook wants to make money off this massive audience. Using location data to serve up geotargeted ads could be the perfect solution.