"We could imagine something akin to a Google AdWords-like model, where merchants can have featured placement based on latitude and longitude, time of the day, or day of the week," says Tristan Walker, head of business development for Foursquare. "We're still exploring, and encouraging all retailers to get on our platform and help us find the product that we could actually charge for."
I spoke with Walker yesterday following the release of a report on location-based apps by Forrester Research. The study found that just 4% of online adults in the U.S. have ever used services like Foursquare and Gowalla, and that 84% of respondents were not even familiar with geo-location apps. Forrester recommends that major marketers should hold off on "check-in" services until they become more popular.
Walker disagrees. "It may be a fair comment on how there needs to be more education around what geo-location can mean in general," he says. "But here's an opportunity for marketers to lead—to take a burgeoning space and do some really exciting things with it." And Walker points out that Foursquare is growing, too. More than 2.3 million users now check-in roughly 1 million times per day, and a "pretty high percentage" of users check-in more than once per week, despite Forrester's conclusion that only 1% update that often. Moreover, while the report claimed 80% of location-based service users were male, Walker said Foursquare's male-female ratio was approaching 60-40, and moving "closer and closer toward parity."
But numbers aren't the only thing that should appeal to marketers. "I don't think we need huge scale to be successful. It's not only about reach, it's about engagement. Foursquare allows consumers to build an even deeper affinity for brands," says Walker, citing successful Foursquare partnerships with Bravo and Starbucks. "Services like Twitter and Facebook have shown that brands can engage with consumers in really interesting ways online, and Foursquare is well poised to take all that engagement offline, providing brands with tools to lead their consumers to do things, as opposed to just suggest."
Walker isn't shy about Foursquare's lack of a comprehensive plan for revenue, and he shouldn't be. Most start-ups out there are trying to figure out how to make money in social media, even as the market's popularity soars (see: Twitter). "We're focused right now on making the experience better," he says. "How can we charge for that? We don't know."
Ideas for revenue streams are so far "pie-in-the-sky," according to Walker, but that doesn't mean Foursquare isn't working toward a financially-viable future. The service already charges for sponsored-badge integrations, and in addition to a potential Google AdWords-like service, Walker foresees a time when the New York-based start-up might "charge for really robust analytics that haven't been served before." "We're hoping to offer retailers tools to aid consumer retention and acquisition," he explains. "So, telling them a little more about their loyal customers—that is, who checks in, when, where, how soon, how often, where they go before, where they go after. And on the acquisition side, geo-tag specials that can entice new consumers."
So is geo-location the future of social media? Walker thinks so. And it that's true, don't expect Foursquare to be the only player on the field. Look for competitors such as Google, Twitter and Facebook in the market, too.