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(Updates with partners in fifth paragraph.)
Aug. 26 (Bloomberg) -- Facebook Inc. is shutting its Deals local-discount feature, opened in April to help the social network compete with daily-deal sites including Groupon Inc. and LivingSocial.
“After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks,” said Annie Ta, a spokeswoman for Palo Alto, California-based Facebook. “We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.”
Deals was introduced earlier this year to help Facebook harness demand for daily discounts, a market BIA/Kelsey predicts will generate $3.93 billion in 2015, up from $873 million last year. Facebook is adding services in its tussle with Google Inc. and Twitter Inc. for users and ad revenue.
Facebook’s closure “suggests that large media and tech companies can’t just ‘turn on’ daily deals and expect them to work,” Vinicius Vacanti, co-founder of daily-deal market researcher Yipit Inc., wrote in an e-mail. “It has to be more thoughtfully integrated into their existing product.”
Besides offering its own deals, Facebook’s service boasted discounts from partners including ReachLocal, Gilt City, Tippr, HomeRun.com, PopSugar City, KGB Deals, Plum District and Zozi. Facebook said in April it would run Deals in five cities, including Atlanta, Dallas and San Francisco.
“Gilt City is focused on exclusive experiences and insider access in the great cities in the U.S., and Facebook Deals performed well for us,” Nathan Richardson, president of Gilt City, said in an e-mail. “We still believe in the Facebook platform.”
The daily-deal industry, led by Chicago-based Groupon, had a 7 percent decline in revenue in July from the previous month in top North American markets, Yipit said this week.
Groupon Chief Executive Officer Andrew Mason said Facebook’s deal sales are "less significant’’ than those of other rivals, according to an internal memo sent to employees and obtained by Bloomberg.
--With assistance by Cory Johnson in San Francisco. Editors: Tom Giles, Nick Turner
To contact the reporters on this story: Brian Womack in San Francisco at firstname.lastname@example.org Douglas MacMillan in San Francisco at Dmacmillan3@bloomberg.net; To contact the editor responsible for this story: Tom Giles at email@example.com