Foursquare is rolling out its first revenue product as the company moves from focusing on user growth to generating cash.
The new Promoted Updates enables businesses to send promoted content to users. These updates will appear at the top in a prominent position in the "Explore" tab in Foursquare. That's the section of the app that is for users to find businesses nearby. The Promoted Updates, like Google search ads, there is "intent" there while users are looking for a restaurant, bar or other business nearby, says Steven Rosenblatt, Foursquare's chief revenue officer. Businesses pay on a "cost per action" performance basis for these ads. In some ways these updates are also like Twitter's promoted Tweets.
About 20 brands are participating including small businesses and large chains such as Gap, Old Navy, Hilton, Butter Lane, Standard Miami, BR Guest, B&B Hospitality Group, jcpenney, 'wichcraft, Best Buy, Hertz and Walgreens.
Companies can choose what types of actions they want to pay for. It could be check-ins, unlocking specials, syncing an Amex Card to Foursquare. Old Navy is testing an offer where users can get $15 off when they spend $75. An Italian restaurant in New York gives users the ability to get a special omelette dish that no one else can get. "There's lots of ways to use it," Rosenblatt says. "It can vary depending on all the different ways merchants want to use the platform."
The Promoted Updates product is different from Local Updates, which Foursquare just launched last week. Local Updates, which appear in the main friend activity stream on Foursquare, are updates that businesses can send for free. Those updates only appear for users who have check-in at a business a certain number of times or if their friends have checked-in there. They are like organic search in Google or updates from a company's Facebook page where a user has already indicated that they Like the brand. Both the Promoted Updates and Local Updates are rolling out on top of Foursquare's recently released redesigned app that added more social features and the ability for users to more easily find businesses.
Foursquare for some time has had a free self-serve system for business to create check-in deals for consumers. But that feature, while bringing about 1 million businesses onto Foursquare's platform, does not generate revenue. The new Promoted Updates product is designed as a revenue product. It will be a key test for Foursquare, after the company raised $50 million in new funding last year. Meanwhile a number of other companies such as Groupon, Square, LevelUp, Belly and others are working on app-based loyalty tools. While Foursquare was one of the major companies to popularize location-based apps, there have always been questions about whether it could turn the popular app into a massive business.
