Location-based social networks are the latest confusingly-named thing that have venture capitalists and Internet companies excited.
But for small businesses, the enthusiasm should be a little more muted. In the long run, these services present an opportunity to win over new customers. Today, they are still niche.
Location-based social networks, like Foursquare, Gowalla, Brightkite and Loopt, allow users to share their location with their friends. If I stop by a grocery story or a bar, I can tell my friends where I'm at.
It sounds goofy in the abstract, but it's actually a really useful service. If you live in a bustling area like I do, odds are you're pretty busy. So are all your friends. It's difficult to keep on top of what everyone is doing. With Foursquare -- the location-based service I use most -- I can see if a friend is drinking in my nieghborhood, or if a friend is in a bar near me. Without much coordination, I can go hang out with said friend.
Since they are built around "checking-in" at restaurants, bars, and stores, location-based services provide a great commercial opportunity for small businesses. For example, if I check into one bar, the bar next door could offer me a dollar-off beer through the app, and entice me to leave and head over to them. Or if I'm standing in a neighborhood, I can open up one of these apps see what's around and what sweet deals they're offering.
You're probably (hopefully) thinking, "Okay, all that sounds great. Why did you tell me not to get excited?!" Because, as of right now, only a handful of people are using them. A new study just revealed that 93 percent of people haven't even heard of these location based networks.
I recently spoke with a digital executive who works with smaller 'local' business like restaurants, bars, and SMBs. He said that small businesses are getting a 6-10 calls a week from people promising to get them better performance on the web. Between Google, Yelp, Facebook, Twitter, and dozens of other opportunities, it's tough for a small business owner to figure out what matters and what's going to help them the most.
If you have time on your hands, then it's a good idea to check out these networks. For example, Foursquare has tools for managing your business on its site. But it's much more likely that you're too busy to just fiddle around with 'the next big thing.'
My advice: keep an eye on the space, but wait to see how things pan out. It's heavily fragmented, and, currently, there is no guarantee any of these companies are going to emerge victorious with tens of millions of users.
A nice way to hedge your bets: if you see customers in your establishment whipping out their smartphones, ask them if they're using these services. If they are, then find out how they use them, and if a deal would even matter to them. And take it from there.