Is Your Small Business a Candidate for the New Foursquare Ads?
Mashable is confirming that location based social networking company Foursquare is now testing a new advertising platform geared towards small business, by letting large advertisers like Burger King, Gap and Starwood Hotels to test promote themselves on the platform. These listings appear in Foursquare when a customer gets close to a business' geographic location. Small businesses already had the ability 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.
Why this may be a good idea 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 available through the GPS in their mobile device. Foursquare has until now been a way 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 made just $2 million dollars last year, according to The Wall Street Journal. They're clearly searching for ways to boost the revenue.
How the ads work
The way the new ad platform works is by targeting Foursquare users based on their locations and check-in histories. Merchants have the capability to attract nearby customers with specific tastes, say for example a hankering for Far Eastern cuisine, or simply just customers who had checked-in to their location previously. Merchants are able to stop their Foursquare promotions whenever they want, and the pricing for this is like a pay per click model, that is, they are only going to be charged on a "per action" basis (when a user actually taps on a promoted listing rather than merely looking at it). Initial ad prices are $0.50 to $3 per action, but that may change as it's released to everyone. Foursquare CRO Steven Rosenblatt said, "Small businesses are willing to pay for local advertising if it makes sense."