Advertisers are lining up to become a part of Foursquare’s developing mobile-ad business, the only problem is that the startup is having trouble keeping up with the demand.
Even Foursquare itself is surprised the service has caught on as quickly as it has, and the inherent growing pains of a fast moving startup are beginning to take hold. The ecosystem that’s evolving around the service is growing by leaps and bounds, and advertisers have seized on the model as a way to serve up location-based ads and special offers, without annoying mobile users.
Upon launching its “Local Business Dashboard,” which allows local businesses to sign-up and launch offers and promotions to take full advantage of the potential, Foursquare has been bombarded with local businesses wanting a piece of the pie.
“Foursquare’s funnel is overflowing now. They’ve got so many people that want to work with them that they can’t handle it all,” said Michael Schneider, vice president at ad agency Allen & Gerritsen Inc. “We’re kind of stuck with the vanilla experience of go to the site and fill out a form.”
Advertisers aren’t the only ones that want in on the Foursquare craze. The site’s Web traffic quadrupled in the first quarter of 2010, to 2.1 million unique visitors monthly. With a $1.4 million Series A round of venture capital in its pocket, Foursquare last week reportedly turned down an acquisition offer of more than $100 million from Yahoo.
The folks at Foursquare are likely beginning to realize what they’ve stumbled upon- which is a solid foundation to pioneer the concept of location-based mobile advertising, combined with integrated social networking and mobile apps. Though that wasn’t the initial goal of the startup, the evolution has begun and will likely pave the way to Foursquare being a massive player in the mobile-ad game very quickly.
Location has long been regarded as the “holy-grail” of mobile advertising. Finding effective ways to incorporate location for increased relevance and targeting will do wonders for the advancement of the industry, and Foursquare is currently in the best position to make it happen.
Paul Rosenfeld
Justin – well said! Thanks for the continuing discussion. Perhaps we can all create a good analysis together over time and invite them into the important discussion about the future of local marketing.
Cheers, Paul
Justin
@Paul Rosenfeld – You’re absolutely right. While I do jump to conclusions in some of my assumptions, they’re simply based on the massive momentum I witness Foursquare achieving in a short amount of time.
While they’re definitely the “media darling” at the moment, I think it’s due in large part because their emerging business model involves such a unique concept. Jumping to the conclusion that this unique concept will work out in the long wrong is premature, however.
The points you make are spot on, and the topic does deserve a balanced view, I agree. Dealing in location-based mobile marketing in general is tricky, and Foursquare will undoubtedly have numerous hurdles to overcome if it wants to monetize effectively over the long-term.
As it stands right now, I definitely think they’re on to something, but they’ve still got a long way to go…
Rich
As much as I see things heading in the mobile direction, small business are still trying to figure out Email Marketing and Social Media. Most of them still can’t figure out ways to monetize of of these two platforms.
The average small business website is not user friendly the designs are terrible and the conversion rate is bad to say the least.
Most SMB’s don’t have a clue how Twitter or Facebook can help them, let alone a Location Base Service that makes you a Mayor of a location if you check in enough.
Let me just say I think 4Sq is a great idea, and I actually use it a couple times a week, but it has a long way to go in my Book.
Paul Rosenfeld
What FourSquare has done is impressive by most any standard of web adoption and I am a big fan of their model, their people and their early product.
But I think your wonderful publication is obligated to provide a more balanced view of that success. I’m writing not so much as a critic, but as a service to readers because I’m finding that too often the analysis is missing from the discussion in a rush to “crown” and annoint winners and losers before anyone is out of the starting gate. So, just for discussion purposes…
– 2M unique monthly visitors isn’t the same as 2M actively using and happy customers. How many of the 2M use once per week? How many are new users destined to never come back?
– How are merchants getting value here? Checkins do not equal purchases. They don’t even equal visits since you can check in from anywhere. So merchants hoping to use 4Sqr as a loyalty card will be disappointed for now. To compensate, they’ll make banal offers to mayors only.
– where are the 2,000 merchants they have singing their praises about the wonders of 4Sqr? Shouldn’t you go poll these merchants and find out what the customers of 4Sqr actually think of the benefits it is delivering?
– So the Wall Street Journal and other big brands will throw money at 4Sqr. Super for them. I’ll have a lot more confidence in 4Sqr once I hear reports of merchants willing to pay $10 or $50 or $100 per month for a handful of checkins per month. Not happening yet. They have a shot at it, it’s just a bit premature to declare they will be “a massive player in location…” as you note. Especially when location is being incorporated into every product out there.
Again, a balanced view would incorporate these divergent perspectives. 4Sqr is a media darling for some very good reasons. But the internet and social media only amplify nascent start-ups’ success without necessarily providing a richer analysis we need as mobile marketing experts to advance the profession. My humble two cents.