Who’s the ‘Real Target’ of FB Places?

Matthew Ingram of GigaOM posits that Facebook Places’ “real target” isn’t Foursquare. Rather it’s Yelp, because Facebook is trying to get local businesses to claim their Pages and will eventually be selling presence or ads to them:

Facebook’s real focus with this launch isn’t individual users or even Foursquare: instead, it sees Places as a way into the local business and local advertising markets, and the company with the target painted on its back is Yelp.

But this characterization is inaccurate. Facebook is not “going after” Yelp in any specific way — though Places may well emerge as a competitor to Yelp in the near future. However if you want to argue that Facebook is going after anyone in particular, the same thing must equally be said about a range of companies that includes yellow pages publishers, newspapers, cityguides, local verticals and many others that offer local information online and/or sell ads to small businesses.

There will clearly be competitive fallout in the local space from a well-executed version of Places (and that’s a contingent statement). However there are a number of things coming together in Places with their own logic and momentum and which exist independent of any single competitor:

  • Facebook returns to its roots as a location-based social network
  • Facebook is extending its online culture into the “real world.”
  • It’s creating additional things to do as mobile users move through the world of physical places.
  • From the FB POV, it makes sense to organize content (news feeds) around locations, as much as it does individuals
  • Facebook is improving what it can offer to the many small businesses that have set up Fan Pages (though this is not exclusively for SMBs)
  • And last but not least, Facebook recognizes there’s a lot of cash flowing through local, albeit somewhat elusive to capture

Facebook has been working on or at least thinking about local and SMB-oriented products for several years. Its primary motivation is not to sell ads to SMBs or get a piece of the local pie — at least today. This product “makes sense” for Facebook. If you want to make any competitive references, Foursquare and Twitter (and maybe Google) figure more prominently than Yelp in the calculus.

Clearly Facebook knows who the significant players are in LBS and local. And Yelp is obviously one of them.

CEO Mark Zuckerberg spoke explicitly at the launch event about the Places team trying to make the Places experience different than other check-in services. So there was obviously some thinking about competitors in the design of the consumer-user experience.

The local market is large and, in general, not a binary, zero-sum game: Google vs Facebook, Facebook vs Yelp, etc. And before we say who’s going to be “crushed” or “destroyed,” I would submit that the ultimate success of Places depends on how the experience and the product evolve.

I can’t use it today the same way I use Google search/Maps or Yelp for that matter. I can check-in and talk about a place; I can see who’s nearby, but I can’t plan where I might like to go tonight for dinner or what to do this weekend. That capability could certainly come to Facebook Places, but it doesn’t exist at the moment.

Should Yelp be mindful of the potential competitive threat? Sure. But so should YP publishers and newspapers and Google, Yahoo, Bing Maps and perhaps dozens of others.

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5 Responses to “Who’s the ‘Real Target’ of FB Places?”

  1. Malcolm Lewis says at

    Agree it’s a natural extension of the FB service and its impact on competitors is more collateral damage than a deliberate strategy. The huge FB advantage, of course, is that they manage our social graphs AND provide an excellent mobile app for sharing stuff with that graph. Checkins are just one more thing to share on the mobile social web browser I use by default anyway. And as you point out, over time FB builds a critical mass of content that enables social discovery. At that point, FB has a huge search/discovery advantage over other sites because they’ll allow you to search/browse/filter recommendations by your social graph. What sushi bars in SF do my friends like? I read this pizza joint is good, BUT what do my friends think? 

    Google, by comparison, does not manage our social graph nor does it have a great mobile app that makes it easy for us to share stuff with that graph. And while they have a critical mass of content, they don’t (currently) provide social filtering during search/discovery. Ditto Yelp (places), Amazon (products), Trip Advisor (hotels).

    I suspect the trick for all the incumbents is to leverage the FB social graph API asap so that users learn to do social search/discovery on their sites before they become accustomed to doing it on FB. Even then there’s a “user inertia” challenge because users will need to switch from the mobile FB app to the mobile [competitor] app to perform the social search. If I can do it on the FB app, why bother?

    Social search/discovery is the next wave of search. We all know that search has an amazing business model and that search dominance creates huge revenue machines. Whoever dominates social search/discovery will be the next Google. So far, FB is making some great moves to be that player. Time will tell…

  2. Greg Sterling says at

    The point about whether competitors are now compelled to use FB to “socialize” their sites and apps is a very interesting one. FB hasn’t “nailed” it with Places (yet perhaps) and doesn’t replace a local search tool at this point.

    But with Questions, the Like button and now places FB has some really powerful WoM local-social assets. The challenge for them is to bring some or all of these together in ways that are easy to use.

    The site has not done a good job with search (either site search or integrating Bing) — so far. So I don’t think it’s a foregone conclusion that Facebook wins in Local. But certainly they’ve now got the potentially to be quite a significant playa.

  3. Malcolm Lewis says at

    Agree. They need a much better UI for searching/browsing Likes, Places, Questions, etc. in a simple, integrated manner and allowing filter by friend. That plus critical mass content will be a powerful combo. I imagine they know that. Agree it’s not a foregone conclusion, just theirs to lose right now. Of course many folks said the same thing about Google a few years ago and then social came along. Who knows what’s around the next corner. Fun times.

  4. Greg Sterling says at

    Yes . . . since local isn’t a bread and butter thing for them it gives them a kind of luxury to experiment and develop their products over time. The other side is that they won’t fully optimize the user experience because they don’t rely on local for revenue.

  5. Sebastian says at

    But if they (FB) optimize the user experience, the revenue from local might not only be counted by ad sales, but by adoption-/ “stickyness”-rate regarding the usage of Facebook, e.g. everyone doing local research on that plattform and getting used to use Facebook “for everything” (Questions, Local, Events, Music, etc.).

    One other thing is, that Google also sort of integrated “the social element” by now allowing business owners to respond to reviews. Google might now not be that sophisticated managing our social graph (technically they could be, if they wanted!), but the Google Place Pages do already provide a huge array of informations, including social (Integrated reviews) and that might even increase (asuming that Google might integrate Tweets on Google Place Pages and integrate social graphs from Google Latitude, etc.).

    I think it’s a question about what the users to want /need while performing local research, and which “Places Model” might be able to present the results in a most convenient way, not overwhelming the older users with “geeky-social-stuff” while still leveraging “social-information” in a way, so that the younger users can find their social rant about a certain coffee-shop around the corner…

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