Foursquare rolled out their first advertising model at the end of July, an inevitable progression for any successful social network. However, this is also the moment that every user dreads because of the possibility of hurting the experience. There has been speculation for a long time as to what direction Dennis Crowley and his team would go to drive revenue besides brand partnerships (ex. badges) because that didn’t seem to be a sustainable and scalable revenue creator.
The first generation of advertising on Foursquare is almost identical to that of Twitter and, more recently, Tumblr. Twitter has Promoted Tweets, Promoted Accounts, and Promoted Trends, while Tumblr recently announced Highlighted Posts. Foursquare’s recent announcement about their Promoted Updates shows that they have been unable to find a better model than Twitter and are avoiding (wisely) display ads that would anger their user base as with Twitter and Tumblr.
It appears that many social networks have found what they believe to be the key to advertising with promoted content. The only issue with this is that the more major advertisers spend, the more freedom they will want with their advertising type – Facebook already ran into this issue in a major way.
In the short-term, this may be a smart way for Foursquare to dip their toes in the world of advertising, but I do not believe it is a long-term solution that will entice large brands to invest serious dollars. So, here are what I see as a couple of potential options for Foursquare:
- Similar to Facebook Promoted Posts, Foursquare could allow brands to pay for the ability to reach a larger audience using a recent feature that allows merchants to send out updates to their “best customers” that are nearby. They currently only allow merchants to send a short amount of text with three photos to their best customers nearby – decided by check ins, whether people like it, and other information.
- Brands always want to control their own properties, and Foursquare could leverage this by creating a program that allows businesses to pay for a premium, customizable location page. This would complement the existing Promoted Updates well because companies could create a more powerful experience for the user once they have been pushed to the check in page.
While these may not the final answer for Foursquare, I believe they need to take a risk and step out of the shadow of Twitter to really convince major brands to spend money with them. What do you think of Promoted Updates?
