Foursquare—the popular app that lets people "check in" at various venues—is launching a new advertising program for small businesses.
The program will allow local merchants to target custom-created deals and promotions at Foursquare's 40 million users when they check in at places nearby their business. (The company tested this program on a sample of more than 1,000 advertisers in New York last summer.)
Businesses that participate in Foursqare's ad program can use an auction-based platform to bid on a set number of user actions, such as check-ins to a particular venue. The business only pays when people actually claim the offer. For example, a coffee shop might pay $1 to $3 for each action, while an upscale restaurant—which will have much larger customer tabs—might pay $5 per action, according to Forbes. Foursquare will provide metrics for the ad, including number of views, actions, action rate and cost per action. "This is the first at-scale global platform that lets small businesses all around the world buy on a hyperlocal level to find nearby customers," Steven Rosenblatt, Foursquare's chief revenue officer, told Forbes.
The company hopes that the new program will appeal to businesses that want to offer coupons and other promotions to customers, but which may have become frustrated by programs like Groupon, Living Social and other "daily deal" sites. Unlike those programs—where customers have to purchase the coupons in advance—this would let businesses better control the number of people who claim offers and presents more immediate results, since the consumer would already be nearby the business.
The new advertising program could also greatly help Foursquare's revenues, which are expected to total less than $20 million in 2013. The company aims to get 1.5 million businesses signed up to advertise.
The company also says it will allow businesses to pay for results-oriented advertising—rather than paying for Facebook ads or Google pay-per-click ads that may or may not boost revenues. "We're moving past the days when business owners have to figure out if a 'like' or a 'click' has any meaning in the real world," Foursquare writes in its blog post about the advertising platform.
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Photo: Courtesy Foursquare