—Ted Risdall, Risdall Marketing Group

Consumers spend billions of dollars online every year. To improve their chances of cashing in on this huge opportunity, many businesses have turned to group buying services like Groupon and Living Social to help them reach large audiences with "deal of the day" offers that entice buyers with significant discounts.

The offers are extended en masse with little to no targeting to everyone who signs up to receive them. As a result, one day you may receive a Groupon for teeth whitening while the next it might be for a restaurant, or nail salon. As you’d expect, with this type of shotgun marketing, conversion rates are not nearly as high as they should be.

The biggest drawback from these offers is that businesses have to pay up to 50% of the take to the service. That’s a large cut for a small business to give up.

Now Facebook and Google are offering group buying with Facebook Deals and Google Offers. Each of these new players has enormous reach and virtually unlimited resources. But that’s where the similarity ends. As a social network, Facebook has untold reams of information about its members that Google lacks, specifically, all the demographic, psychographic, likes and status updates you make on your Facebook page. This gives Facebook a seemingly huge advantage in being able to target offers that match the current state of mind and lifestyles of their members.

Plus, businesses can list their offers for free with Facebook. It’s a win, win, win situation. With no 50% cut, businesses can offer better deals and realize more profit with zero waste. Consumers have the potential to get offers that are specific to their likes and interest, if Facebook plans on letting businesses use their social targeting capabilities.

We predict that Facebook offers will “learn” your buying behavior and only serve you offers that you may not need, but really want. So, if you’re a 42 y/o male you won’t be getting those mani/pedi offers anymore. Everyone will have different Facebook offers based on their Facebook behavior. Why isn’t Facebook taking a cut of sales from these offers? Facebook needs to create an e-commerce experience on their website and get people used to purchasing. Once you are comfortable putting your credit card in for Facebook deals, they can then continue to get you to purchase products and services through their website. In their perfect world, you’ll never have to leave Facebook and will be able to do all your online purchasing through them…that’s the real payoff.

Currently both Google Offers and Facebook Deals are being rolled out in limited markets and it’s too soon to tell which one will come out on top. But with a combination of free listings for businesses and targeted offers for their members, we’re betting that relevance will beat reach and Facebook will come out the big winner.