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Is Local bigger than Social?

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We’ve been all over about social and connecting with people using services like Facebook, Twitter and LinkedIn. Facebook is at the center stage and people love socializing with their friends, play games with friends or check-in to the places and share.

The only problem with Social is monetization. Historically, the social media platforms have had hard time monetizing themselves. People have trained themselves over a period of time to look at less Ads. The social sites have a lot of content and an information overload as we call it. So, It is hard to get great results with Ads.

On the other hand, companies like Groupon and their hundreds of clones are growing by day and night. Groupon enjoys a whopping $15 Billion valuation in such a short time.

So, why is Groupon Cool?

Groupon

Groupon is cool because of quality of deals being bargained by them and presented to their visitors. People want crazy mouth watering deals which are hard to get. The major difference between the Ads and Deals today is – Deals are whacky stuff with unusually cheap prices which attracts special attention. Once they start liking the deal, they start sharing it with their friends on Social Networks and Groupon gets free eyeballs.

There is a major problem with Groupon and Clones – If everything is a deal, there is no deal. I mean, think if you start getting deals everywhere and anywhere, deals loses that special importance. Groupon is great but not sure if that is quite  sustainable!

Foursquare, Google Latitude and Facebook Places

Location-Based-Services

There are more location based services that catches our attention. Each of these services commands user base in millions, Facebook topping the list with 200 million users for Facebook places. The problem with Check-in based services is though, it is an extra work that people might not be interested in doing that often. If you look at the web traffic for Foursquare, It is not growing like Facebook’s did. It is certainly is not the next big thing apart from a cool game.

Can Facebook pull it together?

With over 700 million user base it must be very easy for Facebook to get onto places and monetize local really big time. Facebook has already come up with interesting products like Facebook Deals, Facebook Places and Facebook Credits etc.

I really think Facebook can’t. Why?

  • Facebook relies on everything with notion of Friends. People usually avoid financial transitions with friends e.g. I won’t like to sell my Lancer to my close friend just to screw up the friendship. I would put it on classifieds and sell it to a stranger.
  • Facebook bans friend requests algorithmically to ensure people must know in person to be friends on Facebook. So, there are very little chances of them dealing locally.
  • Facebook used to have Local Networks feature in the past. They removed it because it was not working well for them. Facebook is designed to communicate with close friends globally and share moments together.
  • The way Social Products should be “Social” from ground up, Local products must be “Local” from ground up which is not true for Facebook and hence it can’t pull it together!

So, what is the Next Big Thing?

Group buying sites are just the tip of the iceberg. 95% of transactions happen locally worldwide. The Next big thing will power these 95% of transactions and earn nicely to make it happen.

Here are some of the possibilities:

  • Something that lets people connect locally and share stories by building new relationships and execute transactions
  • People powered Local News – The purest and unbiased form of news.
  • Something that makes people look at the places in a new city even before they visit them providing them with good source
  • Something that lets people spend time locally with well defined benefits.

Feel free to debate and comment. The Next big thing is always debatable ;)

  1. Pradeep says

    car selling example is great.
    yes i think Local is and will be bigger than social

  2. Rajan Chandi says

    Yeah. This may be true for kids.

    Kids value friendhship differently than grown-ups. It is easy to make new friends when you’re a kid. After adolescence, people don’t make many good friends.

    This is when they don’t want to f**k up the friendship by selling something at a relatively higher price. At the same time, they will be happy to sell the same thing at a higher price to a stranger on ebay or craigslist.

  3. Mark says

    Are you kidding, I’d *much* rather sell things to my friends than some stranger. Search “craigslist” and you will mostly get sories of robberies, murders, scams, etc.
    Rather the devil I know than the one I don’t :)

  4. Parmar says

    Really interesting! I think local is going to be the next big thing but that remains to be seen is whether facebook n other socials can tap into this market and make money out of it. As the article suggests, they are trying but have obvious limitations. At the same time, the pure locals like four square have come-up with better models to monetize their businesses by introducing schemes to give discounts at local merchants. I will see groupon as a hybrid local-social because they provide local deals but depend on social networks to spread the word and go viral. Another important trend is growth of mobile phone internet users, which gives more meat to going local argument.

  5. Onesmartclick.in says

    Yeap. Social has its own identity and Local Has its own Identity. and as per my acknowledgment local is bigger always. and might be all time

  6. Rajan Chandi says

    Yeah. I’ve heard those stories and the future of daily deal sites is going to be unclear.

  7. accommodation in goa says

    You know Rajan, some of these Groupon clones in India want to make profits at the expense of business owners. They want people to give ridiculous discounts of up to 90% The magic words that they use to convince owners is, “It’ll lead to brand awareness.”

  8. Rajan Chandi says

    Thanks Sriram for very informative comments.

  9. Sriram Vadlamani says

    Local and social have to co-exist. Social can exist without local, but the functionality and reach would be limited. Local, the way these services are designed, cannot exist without social.

    Groupon is a group buying site. If there is a buy 2 get 1 free offer, it’s like three friends going and buying the shirts and then splitting the bill equally. Groupon is making the finding friends part easier. That’s where groupon’s social thing comes from. Without social, groupon or any of its myriad clones, can they go local? I doubt it.

    The real question is what are you more inclined towards? You start with local and go social, though local is 70% of your core-business and social is 30%. This way the awkwardness of being a friend would go away. Because you are just being social to get local.

    Social cannot be misinterpreted with friendship. This is where facebook has a problem.

    And to answer the question, local is bigger than social. But social is really the backbone for local.

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