Foursquare has had a number of advertising options for brands in the past including check-in offers. Now the company is testing paid promotion for SMBs with selected businesses in NYC. According to AdAge:
The four-year-old mobile app company has started allowing a “handful” of local New York City merchants to promote their store listings within the service, meaning they will be able to target Foursquare users in the vicinity. Until recently, promoted listings were limited to large national merchants such as KFC and Radioshack.
The article characterizes the model as “pay per action.” However the “actions” appear to effectively be clicks:
Merchants can turn on and off their Foursquare promotions at will and will only be charged on a “per action” basis (fees are accrued when a user taps on a promoted listing as opposed to merely viewing it). Foursquare typically charges $0.50 to $3 per action, but that may differ for local merchants.
I haven’t spoken to Foursquare about this and it’s not clear entirely what the targeting options are. My guess is that these are essentially geo-fenced promotions.
Foursquare could have priced these on a “check-in” basis: $X for each offer redeemed through an actual check-in. However that would minimize revenue for the company.
The challenge here of course is getting the attention of the small business owner and finding a way to acquire SMB advertisers without a large sales force. Another question is how would this be differentiated vs other SMB ad products and programs in the market? A pay-per-check-in model would have been a way.
The Foursquare brand will be known to some business owners in entertainment verticals but not in most SMB categories. In other words, this is a long, uphill climb. But people at Foursquare are smart and understand this.
My guess is that they’re trying to develop a number of revenue models and options and see where they get traction.
I was at the Street Fight Summit in San Francisco today and a number of people engaged me in conversation about Foursquare and its future. Most observers would agree it looks like an acquisition rather than an IPO.
One question that remains is how many active users Foursquare has. There’s an anecdotal sense of declining engagement. I would love to hear about monthly active uniques or a comparable metric.
What’s your sense of the trajectory of Foursquare usage? And do you think they’ve got a reasonable shot at attracting SMB advertising on some sort of national scale?