Foursquare is now in the offline sales attribution game.
The social/location discovery platform is going after retail marketing budgets and promising to connect digital ads—and not just Foursquare ads, but those from across the Web and mobile apps—with actual visits to physical stores.
As a tech player stymied by the narrative that its consumer-facing user growth hasn't scaled fast enough, Foursquare execs hope this latest program shines a light on the many positives that they say are developing inside the company.
The new offering, called Attribution Powered by Foursquare, has been in the works for several months and has been tested by restaurant chain TGI Fridays, spirits giant Brown-Forman, publishing app Flipboard and programmatic advertising companies Drawbridge and Adelphic. Flipboard recently used the system to measure a campaign that it ran for an undisclosed retailer and found that the digital ads drove a 12 percent incremental lift in visits to the retailer's locations within a week.
"Measurement needs to evolve as mobile evolves," said Steven Rosenblatt, Foursquare president. "We get a lot of information from consumers in aggregate and in an anonymous way that helps really understand so many different things about the world. And we apply that."
How It Works
Attribution Powered by Foursquare leans on a voluntary, nonincentivized panel of 1.3 million Foursquare users who have agreed to leave their location-sharing feature on at all times, meaning Foursquare knows every store they visit—even if they don't open the app or the company's sister app, Swarm. The panel also takes U.S. Census demographics into consideration.
Brand marketers can select specific demographics in certain markets to home in on a campaign's performance across Web channels like Yahoo and AOL and various mobile app ad networks. Then, a test group and a control group from the Foursquare panel are set up.
The smartphone-carrying consumers' offline activities are recorded for an amount of time the marketer necessitates—for instance, a travel company would be interested in looking at visits data 30 days or more after a campaign runs, while a fast-food brand may want to know if an ad drove people into stores within a few days of seeing it. Marketers will be charged at a 50-cent CPM rate for the attribution program, which will also be sold on a licensing model.
"If you are an 18-to-34-year-old male in Madison, Wisconsin, and you see an ad, we are going to find another person on our panel who is an 18-to 34-year-old male in Madison, Wisconsin, and make sure they don't see an ad," explained Peter Krasniqi, vp of global sales strategy and operations at Foursquare. "Then we measure the visit rate on both groups, and we will be able to show the incremental lift on that ad."
Or incremental decreases in visits.
"You can optimize against it. You can see what's working versus what's not," Krasniqi said. "We've boiled this down to where we can pass you data daily—visits."
Traditionally, retailers have had to wait weeks or months to sync credit card data with ad campaigns in order to judge performance. Foursquare will, however, face competition in the digital ads attribution space from players like Placed, xAd, Uber Media and PlaceIQ, which offer their own stats meant to solve the "offline ROI problem" for retailers, car brands and packaged-goods companies.
Here's how Foursquare's attribution reporting looks on the back end:
Global Goals and TV Aims
Whether Foursquare's new program boosts the company will be worth watching. The measurement play represents the six-year-old firm's first attempt at making a splash in the marketing world since co-founder Dennis Crowley relinquished the CEO role five weeks ago to serve as executive chairman of the board and focus on product. (Former COO Jeff Glueck took over Crowley's CEO post, and Rosenblatt was elevated from revenue chief to president.)
Attribution Powered by Foursquare can draw from 65 million venues in 100 countries listed on Foursquare and Swarm. While the initial launch is U.S.-only, the service appears to be headed in a global direction.
"We have a hit list of 10 markets," Krasniqi said. "The map is already built. The venues are built, and the data is fresh. And we have already enough user data in those markets to build panels and run this attribution product."
What's more, Foursquare envisions the attribution program will be extended to measuring foot traffic from television ads someday.
"We are exploring partnerships with third-party TV data providers to see what our overlap there is with our data," Krasniqi said. "But that's the goal."
Attribution in Action
Foursquare wanted to share a glimpse into what it could some day mean to TV attribution, so it looked at how Super Bowl 50 advertisers fared when it came to their foot traffic in the week after the game. It assumed that the consumers involved in the research watched the Big Game commercials and compared their visits with the prior weeks. In other words, there was no test-group-versus-control-group analysis like it's doing with digital ads. Yet, the results are still interesting.
In the automotive sector, Hyundai saw a 5 percent incremental lift in store visits after its campaign, per Foursquare, while Kia and Mini saw incremental increases of 3 percent and 4 percent, respectively.
Foursquare also examined the quick-serve-restaurant category, which drew higher incremental visit lifts after the Super Bowl:
- Red Lobster saw a 12 percent jump in store visits during the week after Beyoncé dropped the brand's name in a song during her Super Bowl halftime show.
- Taco Bell garnered a 10 percent hike.
- Jack in the Box got a 7 percent boost.
- McDonald's received a .5 percent lift.
When Crowley stepped aside in January, many perceived the move as a sign that Foursquare's audience growth—it has 55 million monthly users—wasn't satisfying investors. Rosenblatt, who came over from Apple four years ago, suggested that such a storyline was ill-informed.
"This company has evolved," he said. "The health of the consumer side … we will continue to invest in it, and it has been great, but that's not our company. Our company is much bigger."
Rosenblatt said the $45 million round of equity funding revealed last month should get the company to profitability. "That's the plan," he said. "I am very bullish on the business."
The executive stated that advertising-based sales were up 170 percent in 2015 compared to the year before, driven chiefly by 1-year-old Pinpoint—the company's initial foray into translating its 1 billion data points into revenue. That product lets marketers employ Foursquare's stats for ad targeting across mobile devices and the Web.
The larger data side of Foursquare's business, Rosenblatt said, was up 160 percent in 2015 year over year, as it powers location for 100,000 apps and developers, including Apple, Microsoft, Twitter, Flickr and Pinterest. His company also does work for Wall Street stock analysts who want location insights for the retail sector, and real estate firms, restaurant chains and beer companies pay Foursquare for data to help them with their physical-world strategies.
"Location intelligence is a massive industry," Rosenblatt said. "What you can do with it … scale and accelerate the business phase. And it's been going great. We're excited. We are hiring about 30 people right now too on the business side, so we are going nuts."
What's the old boss, Crowley, up to? He's still in the office on a daily basis, Rosenblatt said, happily grinding away at location-product development like he has since creating Foursquare precursor Dodgeball more than 15 years ago. But for the first time in a while, Crowley doesn't have to worry about wearing other operational hats.
"It has been fun—Dennis has been great," Rosenblatt said. "He has been psyched. Dennis is a product guy, you know."
And that leaves those who are laser-focused on building more data-marketing offerings running the show. How much revenue their efforts generate could determine whether Foursquare will still be a story in 2020 or a footnote of the previous decade.