Business development managers looking to expand their portfolio of online advertising strategies will doubtless be interested to learn that listings giant Foursquare has decided to open out its services to small businesses around the globe.
The idea is deceptively simple: Promoted listings will feature in the app’s “explore” function, in which users can search for local attractions. For example, if the search term is “rack of ribs”, Foursquare populates a list of local restaurants providing appropriate fare. Restaurants (or hotels or other local services and attractions) can bid to have their details pop up in the search, meaning their profile is raised and the guy on the other end doesn’t go hungry. Job done.
Foursquare clearly thinks there’s mileage in this tank — the business spent time testing out its potential with SMEs in the New York City area earlier this year. In terms of the mechanics of payment, it works on a similar basis to other advertising listings. SMEs wishing to advertise their wares are charged on a cost “per action” arrangement, which essentially means that they only hand over the dollars if users tap through to the promoted listing or check in at the location advertised on the app.
Advertising sales managers will be watching keenly to see if this latest approach means Foursquare start justifying the hefty $760 million price tag placed on them in the past. Whichever pole the company swings to, it seems that they won’t escape scrutiny: A recent profile of founder Dennis Crowley tentatively suggested that Foursquare was on to make something in the region of $15 to $20 million this year. Whilst they remain tight lipped about the prospects of these figures coming off, there is still a degree of skepticism in some quarters about whether a service that’s an order of magnitude smaller than social media giants Facebook and Twitter can really make this latest tactic pay.
Not surprisingly, Foursquare itself sees it as an opportunity. CRO Steven Rosenblatt was keen to state that check ins are “the most powerful location signal that exists today,” and pointed out that of the 1.5 million stores that are registered users of Foursquare, 1,000 are already paying to use the promotion feature.
Search engine marketing specialists might be wondering how Foursquare is going to spread the word to their target audience. The answer of course, is an investment in an old school sales team of ten that has plans for rapid expansion over the coming months.