Foursquare Looks to Monetize the Platform with GEO-Targeted Ads
Mashable is confirming that location based social networking company Foursquare is currently testing a new advertising platform aimed at small business, by letting large advertisers like Burger King, Gap and Starwood Hotels to test promote themselves with the platform. These listings show up in Foursquare when a customer gets close to a business physical location. Small businesses already had the capability to offer discounts when a user checked in to a location, but now Foursquare is providing them with a way to attract geographically close customers by showing an image ad and/or review by a previous Foursquare user.
Whats in it for Foursquare?
Foursquare is a location-based social networking site for mobile devices, such as smartphones. Typically its users check in at various venues using a mobile website, text messaging or a device-specific app. Their specific location is found through the GPS in their mobile device. Foursquare has until now been a means for consumers to promote their favorite bars, hangouts and restaurants. Now, those places will have a way to promote themselves directly to consumers. While Foursquare has gathered some 25 million registered users, they earned just $2 million dollars last year, according to The Wall Street Journal. They are clearly searching for ways to pump up the revenue.
How the ads work
The way this works is the ad platform targets Foursquare users based on their locations and check-in histories. Merchants will and do have the capability to target nearby consumers with particular tastes a predilection for fine dining, for example, or customers who had previously checked-in to their store. Merchants in this program are able to turn on and off their Foursquare promotions any time they want, and are charged similar to a pay per click model, that is, they are going to be charged only on a per action basis (when a user actually taps on a promoted listing as opposed to merely viewing it). So far, Foursquare is charging $0.50 to $3 per action, but thats likely to change when it is rolled out to the masses. Foursquare CRO Steven Rosenblatt said, Small businesses are willing to pay for local advertising if it makes sense.