Foursquare tests paid ads in push to monetize platform
Foursquare is trialing Promoted Updates, a new paid advertising initiative that heralds a major step toward monetizing its location-based social networking platform.
Promoted Updates will spotlight deals from local merchants via the foursquare app's Explore recommendation engine. For example, users in downtown Chicago who search the Explore feature for "shopping" will pull up a $15 coupon for Old Navy, one of 20 national brands participating in the Promoted Updates trial. All deals will be plainly designated by a "Promoted" notice and will leverage context awareness and consumer preferences to guarantee an ad appears on users' mobile device screens only where and when it's appropriate.
Like Twitter's Promoted Tweets service, Promoted Updates will bill advertisers on a cost-per-action basis, with merchants paying foursquare only when consumers check into their business, unlock a special, or otherwise interact with their promotion. (Speaking to Fast Company, foursquare Chief Revenue Officer Steven Rosenblatt declined to specify how much it charges for each action.)
"We've created a suite of tools that we think will truly drive business and build loyalty for merchants," Rosenblatt told Bloomberg. "It's something that business owners have been asking of us for a long time."
The June release of foursquare version 5.0 for Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android de-emphasized the mobile social networking app's signature virtual check-ins to focus on personalized recommendations and user interactions. In addition to the Explore feature, foursquare 5.0 introduced the new Friends tab, enabling users to identify their contacts' whereabouts, "like" their check-in status or mention them in a post, alongside the Me tab, which collects tips, check-in badges and to-do lists, also aggregating personal contacts and photos.
Foursquare now tops 20 million users worldwide, with check-ins at local venues eclipsing the 2 billion mark. Its network nevertheless pales in comparison to the likes of Facebook (901 million users worldwide, including 488 million active mobile users) or Instagram (50 million). Foursquare has raised about $71 million in venture financing; a $50 million round was completed in June 2011 and valued the startup at $600 million.
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