Facebook's New Mobile Tools: The Promise and Peril for Businesses

The new mobile tools that Facebook unveiled today for third-party developers offer enormous opportunities for outside companies, whether they’re game developers or brick-and-mortar businesses such as hotels or clothing stores. They also tie those companies closer to the social network -- in ways that might be uncomfortable for some. Here are some of the promises of the new features—and one peril:

No more losing customers because of sign-in requirements

According to Lee Linden of Tapjoy, a company which helps 5,000 publishers with their mobile apps, about 50% of mobile users drop off once they see a sign-in screen. It’s hard to tap in your password when you're on the go, much less remember what it is. Plus, mobile users are in instant-gratification mode. Anything that slows them down from getting to the meat of the app raises the possibility that they’re going to give up and move on to something else. “Our users are gamers,” says Chung-Man Tam, vice president of product of social entertainment company Booyah. “They just want to get directly to the game.”

Facebook’s “Single Sign-In” feature removes that friction. It extends the Facebook Connect concept to mobile, and gives apps the ability to let users sign in with their Facebook credentials. It doesn't just mean that existing apps will have a better chance of acquiring and keeping customers. It also creates the possibility for more entrants into the mobile space.

Expect to see: A further explosion in the number and types of Facebook-friendly mobile apps being created—both by brands and by newcomers.

"Deals" gives brands a drop-dead simple way to offer deals to customers

Sure, brands have been able to offer special deals via Groupon and its peers for a couple years now. But the new Facebook Deals feature takes the idea a step further by connecting it to location. When the Golden State Warriors play the New York Knicks on November 19, for example, fans who “check-in” to Oracle Arena on Facebook Places will get invited to an exclusive event with one of the players. North Face is going to conduct a charity campaign, donating $1 for every customer who checks in at either a North Face store or a national park.

The Deals feature makes it so incredibly simple to create an offer that small businesses, which might not have had the bandwidth to figure out how to use Groupon, will be more likely to give Deals a try. Facebook says it is making the Deals feature available today to 20,000 small and medium-sized businesses with Facebook Pages in the U.S., and will roll the feature out to more users in the months to come.

Expect to see: More companies offering more mobile deals—and more creative types of deals.

Aggregation of check-in information

Right now if you want to find out if you’ve got any friends nearby, you have to check various individual apps—Foursquare, Gowalla, Yelp, and so forth. Facebook has now made it possible for all those apps to share information, so that no matter which application you’re in, you can see where all your friends have checked in. As Sam Altman, CEO and co-founder of Loopt explained, people want a “social first” experience. Sure they want to see which bar is most highly rated on Yelp, for example, but if most of their friends are at the fifth-most highly rated bar, that’s ultimately more important.

Expect to see: Brick-and-mortar businesses, especially coffee shops, bars, and restaurants, putting more emphasis on getting their customers to check in.

The Peril: Becoming ever-more beholden to Facebook

Sure, Single Sign-On makes it easier for app developers to acquire and keep customers. But it also means that they’re signing over a key part of their infrastructure to Facebook. And sure, the Locations APIs mean you can do even more with location-based functionality. But you’re turning over ownership of the places database to Facebook. While the new tools Facebook rolled out today make it even easier and more convenient for brands to create mobile and social applications, they also mean Facebook owns significant portions of the infrastructure. It’s a classic tradeoff. Brands that use their tools get the ability to do more. But they also become ever more beholden to Facebook.

Expect to see: More expressions of concern over how Facebook guards privacy. Also more regulatory scrutiny as society wakes up to the implications of Facebook’s offerings.

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