Facebook and Yelp are leaving our space!

Two giant tech companies who made a splash by entering the daily deal space are leaving altogether: Facebook and Yelp are scrapping their daily deals. (Mashable: Are We Approaching the End of the Daily Deals Era?)  Do they know something no one else knows?  After all, both companies have tons of intelligent and strategically minded people.  So, what’s going on here?

 

Well, I certainly don’t have all the answers, but based on some solid experience, I can make a few good assumptions and theories as to why Facebook and Yelp are leaving the space.

 

The deal industry has gone through so many changes over the past few years – at warp speed.  At the same time, local vendors are slower to move.  They are pragmatic business owners who care about customers and tangible benefits, carefully evaluating every dollar spent.   So, this is the dichotomy: tech is moving at warp speed, but local vendors want a very practical solution before they jump into the next great technology to promote their businesses.

 

Here’s an interesting example, I know a startup created by two brilliant engineers from MIT and Caltech.   They started a company with a great vision for a new marketing technology for local vendors.  Guess what?  It failed within seven months.  The two engineers realized the enormous effort it would take to fully understand how a local vendor thinks, evaluates, and buys.   They knew they didn’t have the skill set or time horizon to patiently build a “relationship model” with the vendor.

 

“Local advertising is sold, it is not bought.”  This is so true in the local vendor space.  It takes a very precise sales campaign, effort, and process to create a relationship sales model with local vendors.  It takes time and patience to do it right.  Technology companies all want to sell through a website, email, or even call center.  Local vendors want a real “local” human being to speak with.

 

I believe Facebook and Yelp realized that connecting with vendors in a successful way required an intense combination of local “feet on the street” to market, engagement, and sustaining a long term relationship.  This is not Facebook’s core expertise, never will be.

 

Yelp is closer to the vendor, but they are also not specialist in creating “smart” deal campaigns.  Yelp is a review site for consumers to engage with each other about the topic of “vendors.”  This is the tough part for Yelp.  They are trying to get money from local vendors, but they often have a conflict of interest between the “negative review” versus “vendor appeasement.”

 

So, I totally get it.  I understand why Facebook and Yelp are leaving this space.   It’s all about the vendor relationship and the care, time and thought it takes to keep it going for the sake of the customers.

 

For Pirq, it’s only a good thing to have a few giants leave this space.  It leaves a lot of room for our company to be a pure ally of both businesses and consumers.  We deliver deals to customers.  We empower local vendors to create “smart deal campaigns” that bring those customers in the door for a long time to come.  We are – and will always be – entirely focused on creating a win-win for both the local vendor and consumer.