There’s a reason Google is working at a rapid pace to bring location services to the forefront of many of its products (Maps, Search, Latitude, etc) — new potential business models. Sure, location also happens to be useful to many consumers, and that’s undoubtedly why Google loves it even more. Like AdSense, it’s a mixing of what’s potentially useful for a consumer, with a way to make money. So what exactly are they going to do with it? Well, location-targeted ads are already out there, but will get much more refined. But there’s also potential for new ways to use location as a business model. And the startup Foursquare is already showing the early stages of what could be some very interesting things.
A couple months back, we wrote about localities in New York and Los Angeles using Foursquare “mayorships” (which you get when you check into a venue the most times compared to others in the city) as a way to give out special deals, like free beer. That idea continues to expand.
As Amit Gupta noted yesterday, a bar/performance space is doing something similar in San Francisco. But they’re also expanding on the idea. Not only does the mayor of the venue (The Marsh) get free drinks, but everyone who checks into the venue on Foursquare and shows proof (on your iPhone or other mobile device) gets $2 off a ticket to any performance that night.
While Foursquare didn’t officially sanction this, it loves ideas like this. And it should be obvious why: It entices people not only to go to those venues, but to use Foursquare when they do. The service loves the idea so much, that it’s building support for these types of deals, or “Mayor Bonuses” as they it calls them, into the next version of the iPhone app.
It’s still being worked on, but in version 1.4 of the iPhone app, “ideally, when people checkin into places that have some kind of special / offer / etc, we’ll show a banner at the bottom which you tap to slide over and see the promo info. If the promo requires some certain level of “local” (e.g. Â you’re currently the mayor / you’ve been here 10x / etc) then you’ll see a special screen that you can show to bartender / waitress etc that makes it easier to identify that you’re entitled to the freebee,” co-founder Dennis Crowley tells us.
It may look something like the image on the right, though that’s just something they threw together quickly, Crowley says.
Amongst the people who use it in San Francisco on a regular basis, I know that will go over very well, and should cause a rush to certain establishments on certain nights. The next step would be Foursquare striking some kind of deals with these places (since it would be driving paying customers to them), and voila, you have a nice little revenue model.
There’s got to be some kind of reason the service recently came on VC Fred Wilson’s radar, right? (The service currently has no funding beyond the money put in by its founders.) Update: Charlie O’Donnell made some great points about why Yelp and retailers should be using the service as well, the other day. As he notes from a recommendation and advertising perspective:
I definitely started getting sucked into the game, too. Getting badges and seeing where my friends were was fun. The other night, I realized that I was about to go to a place that Mike Galpert had been to about an hour or so before me, so I called him to ask what he had. Indeed, the spinach gnocci at Supper was excellent.
That’s when I realized how valuable Foursquare really is from a business perspective. Mike made a recommendation to me, but Foursquare was the service that actually knew that I went, because I checked in. Being able to connect web advertising, recommendations, and social media buzz to an actual person walking into your store has long been the holy grail of the advertising world. We spent lots of money and effort online to drum up our brand, but does it actually drive food traffic? Foursquare knows.
Plenty of others (including Google) are working on similar ideas surrounding location-based coupons, but the Foursquare idea has different potential because it’s a more proactive use of location-based services. On one level, Foursquare is more of a game, and some people use it to obtain a high score and get badges (for checking in certain places). That’s different from being in a place like a grocery store because you’re shopping as you normally would, and seeing a coupon pop up.
And the badge aspect contains more possibility for the service. I’ve had a number of conversations with people in the advertising space who think that sponsored badges which center around events (like SXSW, where the Foursquare iPhone app officially launched) has real potential.
Know of any other establishments offering deals to Foursquare users? Foursquare is requesting you let them know (more here). And also let me know, so I can go to them and get free drinks.
[photo: flickr/amit gupta]
[Thanks Dan]
The “mayor” drinking for is brilliant!
*for free
Yes, the key point
Foursquare is taking all the right steps to market its services. Very impressive.
Location based advertising is very effective. Its proven to generate more sales revenue for the advertisers.
Since google is trying to build everything in every market (it does remind another company, isn’t it?) startups will stretch them more and more.
But what about the longevity of foursquare? Once people reach Mayor status at a few places doesn’t the whole thing become a bore? Virtual badges only provide so much satisfaction. I can’t shake the feeling that foursquare is going to be just another flashy trend among the tech community.
I suppose as you’re saying it could adapt to a model where checking in gets you deals, to keep people doing it. Will be interesting.
Actually, thinking about this more, the revenue model is limited. Bars, etc. have no way of proving that you made a purchase with foursquare. So imagine a sandwich shop was offering a free sandwich with every 10 checkins. I could just checkin from a distance every day and a get a free sandwich. There would have to be a way for businesses to authenticate a purchase.
Sure, there have to be limitations, perhaps eventually authentication, but the core idea is solid, I think.
You have to come to the shop to get the sandwich, and that’s what they want you to do in the first place. Shops give away free stuff all the time to people who have never heard of their place… at least these would be people who are familiar with the place, will come in at least once, and for the most part are broadcasting their affinity to a network of people.
I agree it’s a very good idea. I’m sure they can find ways to expand on the features.
One way to authenticate is if the shop gives you a code to enter on your phone to verify that you purchased a sandwich.
You mean like loyalty points that you find in virtually every coffee shop and supermarket. This sounds like a novel idea that will eventually recognise the limitations of making it’s information authentic to both business and public users, and turn into schemes that already exist. Convenience of sharing information ultimately devalues it.
The main advantage of Foursquare is not becoming Mayor, the badges, etc. The main advantage, as for Dodgeball, is letting you and your friends find each other. People who use it to create a running diary of their lives and everywhere they stop into are just annoying. I check in when I’m somewhere I’d want people to join me.
I am all over this. I want to setup more badges and bar promotions in SF. Dens, Naveen, hit me UP!
Dens, Naveen: We can use @sfparty to promote new badges and mayor discounts.
Brilliant idea Andrew. Hook it up.
Are you in the local market space? If so, I’m also in the bay area. Maybe we can work together.
This is probably the biggest nut still left to be cracked. People are attacking the local game from so many different perspectives that its too early to predict what model will win out. Just wondering how long it’ll take? A much more valuable space from revenue perspective and consumer based social media, at least I think.
This is pretty awesome. I admit I didn’t see the interestingness behind foursquare when it first launched, but am beginning to see the light. Looking good Dennis & Naveen!
maybe using GV they could add a “Call users who have bben to this location in the past 24 hours” or something…
CALL ME!
805-768-4521 http://bit.ly/oBsDJ
Any update on an ETA for a Blackberry app
I love using foursquare but feel like I don’t get to take advantage of the full experience via m.foursquare.com
I asked an open question on twitter if this was @dens business model a few weeks back his response was that they weren’t getting any kickbacks and that it was just to help people explore their areas.
It is interesting. This is the direction google will go in my opinion, but they need to close the loop via a transactional network (competition with visa/paypal/debit?).
Purchase is the ultimate goal of pay per action based advertising afterall.
I’m the mayor of 21 places in LA. Where are my free drinks?
I’m slacking this week though. Not in the top 10. Sucks. But beware. I might come up from behind with my 5 pts for new places this weekend!
i use foursquare in venice beach but whenever I try to check into a place not on the the list it crashes.. at least give me a failwhale or something…
This is quite hillarious..LOL
That’s cool. I love seeing online social networks make their way into the real world. This is a really clever idea!
Really wish they’d add more cities (like the capitol of CA, maybe?)
You mean Sacramento? Yeah.. no one in California cares about Sacramento.
checked in at Mikuni’s East
checked in at Mikuni’s West
checked in at the Mikuni’s in Arco Arena
done.
Great idea! It’s just like loyalty cards, except you don’t need a card, and you don’t have to make a purchase. And you get an app on the phone to interact with the user, or to pop up rich promo information.
But I think the right technology is NFC, not GPS. When all cell phones have Near Field Communication built in (maybe one day?), then you should be able to swipe your phone near a little device to register that you were there. I actually think that will be much more practical than using GPS / location for this app.
1. it creates a physical user experience for voluntarily telling the store you were there. Easy to take out your phone and swipe it next to the “swipe to let us know you were here” box. Otherwise you have to fiddle with your screen and click some buttons to tell an app that yes you want to register your presence. Physically just swiping your phone is easier, simpler.
2. GPS is not accurate enough. Imagine a mall. First, your indoors, poor gps reception, or perhaps none. Two, are you at the GAP or at the Hallmark store 5 feet over? Easy to get it wrong. If you swipe your phone at the GAP’s “swipe here” terminal, it’s clear.
Poor Brightkite.
Brightkite is boring. No awards or badges. Foursquare keeps me entertained.
Brightkite does have more venues listed, but it’s not an issue since you can add any missing venue to Foursquare easily enough.
I’ve always liked the concept of not having to carry around a bunch of customer loyalty cards in my wallet. This takes it a step further – very smart!
and what if someone have a patent covering this “area” – then perhaps they are gonna be fu….. rich ?
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