What Foursquare's Looming Data Mean to Advertisers

As it targets Yelp's mobile-local lead

So now that Foursquare Labs Inc. has two mobile apps, the newest version of the Foursquare namesake and the two-month-old Swarm, what do the moves mean to advertisers? Quite a bit. But let's start with its emerging mobile-social data

Swarm's check-ins—formerly a Foursquare staple where consumers self-report if they are at a store, bar, diner, etc.—are being synced with Foursquare's combination of search, discovery and GPS-based location data to help target ads. In theory, the two apps will make each other's ads smarter. After the reorganization, Foursquare units include placed-based ads (appearing at the bottom of the app's "Here" tab), search-esque promoted places and serendipity-styled home-screen promos. Swarm only has place-based ads at its young juncture. If Foursquare users want to personalize the experience, they can select different "tastes," such as coconut milk, paninis, museums, arcades and iced coffee during the app update. The New York-based tech company isn't using such interest-level data to target ads right now, but it's not eliminating the idea from future consideration.

Even the current Foursquare-Swarm data cocktail, said Harley Block, a marketing exec at ad agency Rokkan, makes the company "a more attractive buy for brands that are looking to connect with folks they know already have a base level of [interest]. While this is not a new practice, we’re interested to see how deep this type of personalization can go without being creepy or invading on privacy—to truly deliver value on an individual basis."

Guillaume Lelait, general manager at mobile agency Fetch, said, "Marketers could use data from each app to target different types of behavioral audiences. Targeting Foursquare could be a way to find users who are 'hand-raisers' but not necessarily acting on their research, while targeting Swarm users who are at your location in a more social environment among friends." 

Lelait also commented on what the mobile apps' data could mean to Foursquare's ad-based developer partners. "What will be more interesting is that Foursquare/Swarm is continuing to give programmatic partners such as the [demand side platform] Turn access to their location data," he said. "This allows unique retargeting opportunities based on [interest-based] audience segments ... and running those ads across massively reaching inventory sources such as Facebook Exchange, OpenX and Doubleclick."

Yet Block and Lelait had mutual contentions, mainly that the apps need to garner many more users before they can rack up serious ad dollars. Approximately 50 million people have downloaded Foursquare's five-year-old app, which reports indicate brought in as much as $20 million last year in revenue. Steven Rosenblatt, chief revenue officer at the company, suggested that 2014 has already been a much bigger year for sales. 

Ad Sales May Build on 'Triple-Digit' Growth

Rosenblatt proclaimed that advertisers such as Unilever, Samsung, AT&T and Procter & Gamble "love this product." He said the platform has three to four times the number of brands buying compared to six months ago. Ad sales this year, Rosenblatt said, have already exceeded the entire 2013 while overall growth could represent a "triple-digit growth" by the time the calendar flips to 2015.

"Where else are you 100 percent guaranteed reaching people at the places where your products are sold," Rosenblatt said, while pointing to CPG brands. "It's a performance-driven ad product, and it works."

Advertisers have taken the recent product upheavals—potentially disconcerting for them—in stride, Rosenblatt said, asserting, "We are seeing a lot of excitement throughout all the changes."

Such excitement, really, can only be about the data, which, before the aforementioned changes, Foursquare seemed to finally begin leveraging in earnest for its ad business. Anyone who has utilized the app in the last several months knows Rosenblatt isn't fibbing about a notable uptick in multinational brands on the platform. (At the same time, how that commercialized experience sits with users remains to be seen—it may backfire or already be backfiring.)

And whether the ads produce great statistical results is still up for debate. HotelTonight, a mobile bookings company, ran a brief app-install campaign six months ago on Foursquare and anecdotally gave the effort a passing grade.

"We were happy with the quality of users that we gained, and overall view the campaign as a success," said Kevin Kwon, HotelTonight's mobile marketing manager.

The Plot to Steal Yelp's Viewers and Ad Dollars

CEO Dennis Crowley & Co. will likely eventually plug Foursquare's nascent "tastes" data into the company's ad-targeting mix, and the move could attract more local marketers. For instance, think about a Chinese spot homing in on dim sum aficionados based on "taste" and check-in indicators at a street level. 

Foursquare has been touting its abilities to compete with Yelp for viewership and restaurant marketing for more than a year. To say that Foursquare has aligned its app as an alternative to Yelp would be an understatement. 

But according to comScore, Foursquare's mobile and desktop traffic in July was 10.3 million viewers, up 13 percent year over year. By comparison, the Reston, Va.-based researcher said Yelp drew 72.5 million viewers in the same month, up 15 percent year over year.

At the same time, Foursquare sees an opening on the local-mobile front.

"No one is passionate about Yelp," Rosenblatt remarked. "They use Yelp, they like Yelp, it gives them what they need."

He added,  "We've been growing our local team. Of course, local advertising is definitely going to be an important growth area."

Yelp CEO Jeremy Stoppelman has strongly dismissed Foursquare's comparisons to his company in the past, and his San Francisco-based digital player declined comment for this story.

More back-and-forth from these opposite-coast tech alley cats can probably be expected.

But data will go much further to determine the victor in the end than talk ever will. And for now, that reality bodes well for Yelp.

So just like when it debuted at South by Southwest Interactive in 2009, Foursquare again plays the role of the challenger. And also akin to that long weekend in central Texas a half-decade ago, it seemingly has momentum—but now thanks to a complete reboot. Will the mojo last? 

Maybe two apps will be better than one. Or maybe not.

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