Checking in and Cashing out on Location-Based Social Networks

Posted by Megan Jeffrey on
Saturday, April 10th, 2010 at 6:14 pm

Social media has made today’s marketing less about controlling the message and more about asking questions. While Twitter and Facebook want to know what’s happening, Foursquare and other location-based social networks wonder, “Where are you?”

For those unfamiliar with Foursquare, the service lets users “check in” to a location via their smartphones or laptops and logs their positions on a map that others can see. The more you check in, the more badges and bragging rights you earn.

“The X-factor appeal of Foursquare is in its social currency,” says David Berkowitz, senior director of emerging media and innovation at digital agency 360i. “Giving Foursquare users these badges for completing explicit tasks adds an element of surprise, like a scavenger hunt.”  The badges also help users show off their interests to others, enabling them to connect with like-minded people and keep the “game” going.

Since its launch in 2009, Foursquare has racked up a lot of media attention and over 400,000 registered users. Why is it so appealing? Fans insist that location-based social networks make a night out with friends even more fun, because they encourage competitiveness and exploration. For example, Foursquare users won’t earn points during normal work hours (M-F 8am-4pm) unless they “discover” a location that isn’t in the system. So, if you’re the first to lunch at that new Asian-fusion restaurant next to the office, Foursquare will reward (and publicize) your adventurous behavior. Moreover, if users check in enough times, they can become the “mayor” of any location. “Foursquare is very smart,” blogs one member. “They’ve created a system where normal shmoes like you and [I] are willing to advertise for other businesses for the sheer pleasure of earning points and being crowned mayors.”

Although only a year old, Foursquare has signed business deals with numerous corporations looking to benefit from the check-in phenomenon. Marketers hope that rewarding location-based social networks users and their friends with real-time discounts and recommendations will generate repeat business and build long-term brand loyalty. Metro Canada’s Marketing and Interactive Director Jodi Brown also argues that newspapers should join with location-based social networks in order to provide geo-targeted content that will benefit a “highly mobile” audience. She imagines a future where “you’re checking-in to your university, and we’re delivering you a topical piece of news about policy changes.”

However, many businesses remain skeptical that location-based social networks will appeal to the masses. Several bloggers like Jessica Grose have pointed out that “though hyper-social twentysomethings in cities with endless options may enjoy competing with their friends for the ‘player please’ or ‘douchebag’ badges, the reward system does not hold much [appeal] for anyone older.” Moreover, sites like Please Rob Me use streams of data from Foursquare and Twitter to demonstrate how theoretically possible it would be for criminals or other undesirable individuals to keep tabs on when people are not at home, thanks to users’ willingness to broadcast their current locations.

But in spite of these flaws, the future looks good for companies like Foursquare and its Austin-based competitor, Gowalla.  According to a new report released recently by ABI Research, location-based social networks will generate $3.3 billion in revenue by 2013. Also, for those interested in location-based social networks, but not in darting all over town, The New York Times reports that an application called Miso is “a Foursquare-like app for homebodies.” One thing is certain: whether you’re looking for a new way to promote your business or be social with your friends, check-in applications are worth checking out.

Megan Jeffrey is a graduate student in the MCDM program at the University of Washington. She has a bachelor’s degree in journalism and public relations from Cal Poly University, San Luis Obispo. She has worked as an account assistant for Verdin Marketing Ink, a community manager for Serra Media and as a HubPages.com columnist. Megan is currently the social media strategist for the UW School of Drama.