Will Snapchat Successfully Follow in Foursquare’s Footsteps?

Opinion: Snapchat needs to pivot into data, and the app is responding with new data products for advertisers

Sometimes the social application everyone thought you were needs to become something different for your business to evolve. Foursquare is a case in point. The company that used to be all about the social check-in has become a data powerhouse and a potential model for the future of Snapchat.

When Dennis Crowley and Naveen Selvadurai launched Foursquare in 2009, there seemed to be plenty of room for more social media apps to capture our attention and interest. Facebook was only five years old, and Snapchat didn’t exist.

Foursquare offered a fresh and exciting idea: an app that connected the digital and physical worlds through our everyday visits to places where we like to hang out, such as bars, restaurants and stores.

Foursquare was banking on the expectation that people would find some inherent emotional value in letting their friends know that they were chilling out and perhaps finding others who shared the same interests and tastes. How else could you explain why anyone would want to accumulate enough check-ins to their favorite Dairy Queen to be named the mayor?

And Foursquare was right. Millions of people signed up for the app for the right to win badges and social status. Foursquare had successfully branded itself as the social check-in app. But there was only one problem: Foursquare was not succeeding as a business.

The company thought it would become profitable by advertising to local businesses, but the model was not working. And Foursquare was missing a big opportunity to monetize the value of all of the user data it had accumulated through check-ins. Third-party developers were using Foursquare’s location technology to perform functions such as location tagging for free. Foursquare was sitting on a gold mine and didn’t know it.

Soon the company became the poster child for struggling social apps that created communities but not business value. Fortunately for Foursquare, the company, with the help of Ex-Apple executive Steven Rosenblatt, discovered a new calling: a location marketing business.

Foursquare realized that it could use the data collected from user check-ins in a number of powerful way, most famously for predicting behavior. For instance, Foursquare could tap into user check-in trends to give businesses insight into peak customer visiting times, as well as declines. Foursquare could predict everything from iPhone sales to spikes or drops in restaurant sales.

Eventually Foursquare would famously predict a 29-percent drop in first-quarter sales for Chipotle based on the data Foursquare had been collecting about user check-ins at Chipotle.

Recently, CEO Jeff Glueck shared how the enormous data assets at Foursquare are an indicator that international tourism to the U.S. is slowing down. How do they know this? Foursquare was able to analyze the behavior of more than 50 million monthly users leaving location trails via their mobile devices as they travel around the world.

Glueck has further postulated that this downturn in foreign travel will have a greater socioeconomic impact on the state of commerce in America. Layer that trend onto the already distressing news coming of the retail sector, and you’ll understand how location data can play a significant role for businesses to transform with their audience or be left out in the cold.

Ultimately Foursquare was able to achieve a turnaround by learning how to monetize its user data. By rolling out new products such as Place Insights, Foursquare provides advertisers data on foot-traffic trends—data that can help a business figure out where to open a new location or adjust the level of its location-based advertising.

Consequently, Foursquare is reportedly finally on a path to profitability. But even though Foursquare has successfully pivoted into becoming a major data aggregator, it now must consider changing again, especially as Instagram ramps up its location-based products How will that impact Foursquare and what direction will it take next?

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