Location-based social networking brand Foursquare has rolled out self-serve ads to US advertisers, in an effort to monetize their audience of 40 million users.
Foursquare Ads use a pay-per-action model; advertisers are charged only when a user clicks through to see their business information or checks in at their physical location. Ads are displayed to people nearby who are searching for relevant information or have visited similar locations. Foursquare will not display ads to users already checked in to the business.
Ads appear when users first open the Foursquare app; they may see an ad based on their usage, location and history. Ads may also appear on a search results page.
Local businesses face a specific problem, Foursquare says in their blog post announcement: they want to get people in the door, but tons of people walk by the storefront without coming in.
They’ve used data acquired over their four years of consumer interactions–and relationships with over 1.5 million claimed businesses–to inform their new advertising offering, they say.
The ad creation process is relatively straightforward. Advertisers are asked to first search for their business, to ensure it’s been claimed.
After logging in, advertisers then upload a picture and add content, in the form of a discount offer, tip or review. They can set a monthly budget and control their ads through the Foursquare advertising dashboard, where they can see data on views, spend and actions taken.
Foursquare is celebrating a few early successes, based on testing with a select group of 1000 advertisers that kicked off in July. Bronx Beer Hall, located in the Arthur Avenue market in the Bronx, saw 6,500 impressions and 155 percent ROI on their campaign, according to Foursquare.
Moscow’s Propaganda Club claims they saw a staggering 2000 percent return on every dollar spent. “Our Foursquare Ads performed three times better than our Facebook ads,” Dmitry Kirillov of the KittyHug agency that runs the campaigns for Propaganda Club says in a success story on Foursquare’s site. “I like the idea of spending money to attract real customers. It’s not just somebody doing something online, they’re actually visiting our club.”
Noah Weiss, the product manager in charge of Foursquare Ads, tells the Verge, “We’ve had over a million ad impressions during the private beta, and that was with a very small group of hand-picked customers. Once we roll this out to the more than 1.5 million businesses who have claimed their venue on Foursquare, we think it can be a really significant driver of revenue.”
The move to monetize is a critical one for Foursquare, who took on $41 million in convertible debt in April this year, after failing to raise a new round of venture capital at an attractive rate.
At the time, founder Dennis Crowley shared his vision for the future of Foursquare:
“Four years ago when we started Foursquare, it was really hard to discover a new retro arcade that opened up on a side street, or to make sure you weren’t overlooking the best dish on the menu, or to know a good friend was just around the corner. Sometimes, we think of Foursquare as having the ability to give people superpowers for exploring the real world.
But we’ve got a ton left to do. We’re building tools for local businesses to connect with their customers. We’re making search better, every single day. We’re building that location layer for the internet – the platform that all other companies use to power location in their apps.”
Foursquare’s promotional video shows their new ads in action:
Foursquare has partnered with American Express to offer a $50 ad credit to early adopters with claimed businesses, valid until December 31, 2013.