Foursquare’s Monetization Push Hints At Deeper Marketing Services Component

Foursquare, the platform that perfected the art of the “check-in,” has set its sights on the small-business advertiser.

Not a stranger to the phrase “monetization,” sitting on 35 million users’ worth of locally relevant, location-based user data has led Foursquare to explore various avenues to boost ad revenue among the 1.4 million small businesses that connect to the platform.

A newly launched self-serve tool, Foursquare Ads for small businesses, is in a test phase with a couple thousand small businesses in the US, UK, Turkey, Brazil and Russia and will expand over the next few months, the company said.

Merchants that use Foursquare Ads can connect with consumers in two ways. When a user opens the Foursquare app on their phone, they will either see the ad when they search for a specific place or on the first screen, based on similar businesses they’ve frequented. Small businesses are charged if and when a user visits the store or via the Foursquare app, and ads will not be served to someone who is already visiting a particular business, the company said.

“I think Foursquare has gone a long way beyond the novelty of a check-in,” said Peter Krasilovsky, VP and senior analyst at BIA/Kelsey. “Previously they had been all about coupons that were sold through them by American Express and then they got into offering loyalty services … so they really crossed the spectrum for loyalty engagement. [Foursquare Ads] is the next step for them to really provide a wide range of marketing services.”

Citing BIA/Kelsey findings, 12 million-14 million small businesses in the U.S. today now use approximately eight different channels for marketing purposes. It’s “tremendously different than the days when they did the Yellow Pages and maybe a little search,” he added. “Having a one-stop with many different solutions is a good thing for them.”

Foursquare is not the only game in town sniffing out small-business ad opportunity. Twitter acquired Spindle in June, bringing local search and personalized alerts into the fold. The social network’s also been credited with developing geo-targeted ads for retailers and has, for a while now, been developing ad solutions for small businesses.

“If you told me a year ago that Twitter and Foursquare would be going up against each other, I’d say that wouldn’t make any sense, but worlds are converging,” Krasilovsky said. “It’s not only with them, but many other players. They’re all looking to provide integrated marketing solutions for small businesses. That’s where the volume is and Twitter’s Spindle acquisition is really aimed at that same target group.”

Although both companies are attracting more interest from the SMB crowd in terms of advertising, both have a long way to go before they could introduce themselves as commerce marketing providers for small business, he said.

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