When Foursquare  introduced Local Updates  last week so merchants could push updates to loyal customers, it seemed like only a matter of time before the company introduced paid features for merchants. In other words, how long would it be until Foursquare got serious about making some money?
Not long at all.
Today, Foursquare is launching Promoted Updates for businesses who want to display themselves more prominently in the app's Explore feature, which suggests places for users to visit nearby. Promoted Updates is in pilot mode for now, so only 20 merchants are testing it out, including Old Navy, Best Buy, Walgreens, and sandwich shop 'wichcraft.
Now, when you open up Explore within the app, listings for paying businesses will show up at the top of the screen, each with a little "Promoted" sign. It's no more obtrusive than the Promoted Tweets we're used to seeing on Twitter. Otherwise, Foursquare's Promoted Updates will act the same as Local Updates, pushing either text, photos, or a special. It's a natural extension of Explore, which has been driving record levels of in-app engagement since Foursquare introduced  it in June. And to keep it all feeling spam-free, Promoted Updates will only show up on your screen if you're nearby and they're relevant businesses, based on your previous check-ins, unlocked specials, and even the time of day. In other words you won't get a two-for-one Margarita special promo on the way to work at 9 a.m. from Margaritaville if you're a well established fan of Irish bars (and not generally into a.m. imbibing).
"Users love our specials and hearing from merchants, they just don’t hear enough from them," Foursquare's chief revenue officer Steven Rosenblatt tells Fast Company. "By allowing businesses to really put themselves out there, we give users more of the surprise and delight they're looking for."
Much like Twitter's Promoted Tweets, Promoted Updates work on a cost-per-action model, in which merchants pay each time a user checks into their business, unlocks a special, or otherwise actively engages with the update. (And, much like Twitter, Foursquare declined to say how much each action is worth.)
If Twitter's early results with its own promoted products are anything to go by, there's a future for Foursquare in the cost-per-action model. A recent study  from TBG reports one to three percent of desktop Twitter users engage with Promoted Tweets, and says mobile user stats are higher. And Foursquare arguably has richer data that Twitter when it comes to connecting customers and merchants.
"Merchants have been asking for these for three years," Rosenblatt says, adding that the company went to great lengths to try to assure that Promoted Updates weren't pestering users. "Now we really have a suite of tools for any business, from mom-and-pop chains to luxury and mass merchants."
[Homepage image: Flickr user Glyn Lowe Photoworks ]