Foursquare - Can it make money???

What is Foursquare?

"Foursquare is a location based social network that incorporates gaming elements. Users share their location with friends by “checking in” via a smartphone app or by text message. Points are awarded for checking in at various venues. Users can connect their Foursquare accounts to their Twitter and Facebook accounts, which can update when a check in is registered. By checking in a certain number of times, or in different locations, users can collect virtual badges. In addition, users who have checked in the most times at a certain venue will be crowned “Mayor” until someone surpasses their number. Various venues have embraced Foursquare, and offer special deals to users who are “mayors”.
Foursquare has applications for iPhone, Android, Blackberry, and Windows Mobile".

Why would anyone want to use foursquare?
Well for a few reasons:

• It is like a game and you can uncover as many badges as possible by checking in wherever you go. Look here for a list of more than 150 Foursquare badges.
• You can check in at your favorite establishments more than anyone else to earn Mayor titles for those particular places - and possibly "Mayor Specials" from those businesses.
• You can earn points for every check-in to see if you can outscore your "friends" and all other Foursquare users in the area.
• You can know where your friends hang out often. For example, instead of getting the online reviews for the best Sushi restaurant in your place, you can just go to the restaurant your friend visits often. If he/she is a frequent visitor of the place and checks in saying ‘Best Sushi ‘, there are more chances that you would like the food at this restaurant.  One could argue that ‘I can just ask my friend which place to go to and why should I use foursquare?’ But, you know definitely that one of your friends loves sushi, but you don’t know who. You could send a mail to all your friends, but how many of them would have time in their busy life to respond to you whenever you ask. Instead, whenever they go to their favorite restaurant, they check in to foursquare and you’ll know without ever asking them.
• If you know that a group of friends are hanging out in a bar very close to your location, you would want to go and join them.
• Or you could use foursquare as an online place where you maintain a log of all places you visit.

How does Foursquare plan to make money?
Well, if they are putting their energy and time to create and maintain such an application, they will want to make money. But where is the money???
Well, there are a lot of people who consider foursquare just as a game and a waste of time. (I felt the same too :)) But I realized that if a lot of my friends start using it, it could be useful. I, like many other people have a hunch that foursquare has the potential to change the face of online advertising. In today’s online world, advertising is a joke. Online advertising is not reaching the potential customers. Let’s see if foursquare can revolutionize this area.

- Would businesses want to pay some money to foursquare to get statistics of how the foursquare visitor patterns are?
If they know the statistics, they would know how to provide better services to their customers.  Once a steady stream of people start checking into a venue, the stats Foursquare provides could start to become a meaningful dashboard for local businesses.
http://techcrunch.com/2010/04/22/foursquare-business-friendly/

- Would businesses pay some amount, if Foursquare increases the loyalty of their customers?
For example, consider there are two cafes close to your school, both relatively good places. You visit either place every day to get a coffee in the morning. Now you start using foursquare and check in whenever you visit one of the cafés. But now, you want to be the mayor of a café, because you could get a free coffee once in a while, if you maintain your mayor title. What would you do? Since both of them are relatively good, you will stick to only one café everyday to maintain your title and to get a free coffee once in a while. So your loyalty to this café has automatically increased because of foursquare.

- Would businesses want to pay if their customers visit their place regularly to keep their mayor titles?
This idea may seem ridiculous that people would regularly visit a place only to compete in a game and to keep their titles. But on second thought, it’s not. Competition is something that is inherent in many people. By nature, we would want to compete in anything we put our leg into. How many people spend their time playing online games and competing with others? Do you know how many people play Farmville on Facebook? Well, you get continuous updates, so you will know :) But do you know how many actually buy game credits from Facebook? A lot of them.

- Would businesses want to pay some money to provide you with location specific advertisements and coupons?
For example, say I am at a restaurant for dinner with friends and I check in on to foursquare. Once foursquare knows where I am, a bar close to my location would love to advertise and so will send me a discount coupon. Well anyways, me and my friends were planning to get a drink after dinner, and now we have a discount coupon of a bar ten steps away. What would we do?
Lets look at a little different possibility. It is possible that me and my friends had no plans to go for drinks after dinner, but once we get the discount coupon, we may like the idea of going for drinks and will eventually end up in the bar. From the bar’s point of view, just by giving us a small discount, they are making us visit them and they have reached their potential customers effectively. Now, would the bar want to pay Foursquare for this service?
"From a broad strategy point of view, there's a huge potential with the ability to connect people to promotional experiences," said Bonin Bough, PepsiCo's global director of digital and social media. "We know where people are and can talk to them from a geo-located perspective -- that's a huge opportunity."
http://www.businessinsider.com/foursquare-plots-its-business-model-2010-2

- Would businesses want to pay foursquare, if its users become a medium for word of mouth campaigns?
When your foursquare account is linked to your facebook or twitter account, all your check-ins are published on to the respective sites. So whenever you visit a place, all your facebook friends will know. And it so happens that for most users, most of their friends live in the same city. So when you publish these details and say you liked a restaurant, you are automatically providing word of mouth advertising to that restaurant.

- What about the smart phone companies? If more and more people start buying smart phones so that they can use foursquare, would the smart phone companies want to help or pay foursquare?
It seems like a strange thought. But if it improves smart phones sales, who knows, maybe. It should be remembered that it took Foursquare just over a year to get to a million users.
http://techcrunch.com/2010/04/22/foursquare-one-million-users/


As said by Charlie O’ Donnell, “being able to connect web advertising, recommendations, and social media buzz to an actual person walking into your store has long been the holy grail of the advertising world.  We spent lots of money and effort online to drum up our brand, but does it actually drive food traffic?  Foursquare knows.”
http://techcrunch.com/2009/07/16/foursquare-shows-the-business-potential-of-location-based-services/

But foursquare may end up with same problems faced by twitter. Like, research firm Sysomos estimates that 5% of Twitter users generate 75% of activity. And also much will depend on whether it can maintain its cool. "The X-factor appeal of Foursquare is in its social currency," Mr. Berkowitz said.

Foursquare could be the next “thing” happening in the online world, but we’ll have to wait and see.

References:
http://www.crunchbase.com/company/foursquare
http://www.businessinsider.com/foursquare-plots-its-business-model-2010-2
http://www.businessinsider.com/foursquare-gets-its-local-ad-business-model-on-the-road-2010-4