Wednesday, June 23, 2010

Are FourSquare and Gowalla Just Shiny Objects?

If you follow my Twitter stream or listen to my weekly podcast, you'll know that the question of whether I think FourSquare and Gowalla are shiny objects is a loaded one. Of course I am bullish on the value location-based services like FourSquare, Gowalla offer large and small businesses alike. Truth be told, however, I've had a hard time telling clients and prospective clients alike that it's time to go guns a blazing with location-based services for two reasons:
  1. There's not enough critical mass... YET
  2. Facebook with it's 450 million users could come in and crush both FourSquare (~2 million members) and Gowalla (~1 million members) in a New York minute if it decides to get serious about geolocation
With that said, that doesn't mean that I don't think companies shouldn't be starting to think about how to incorporate location-based services into their marketing and social media mixes. Fortunately, there are a number of big brands that are already starting to test location-based services (more FourSquare than Gowalla). TO that end, I've provided a list of the companies experimenting with Foursquare below [list is courtesy of David Stutts with a hat tip to the folks at SocialPath for pointing this work out).

  • Starbucks (side note: I'd like to think my wife and I played a role in Starbucks launching this one
  • The Bravo Network
  • Dominoes Pizza UK (I like this one a lot)
  • Jimmy Choo
  • Pepsi (interesting note on this one later in the post)
  • Zagat (this is a no brainer IMHO)
  • Warner Brothers
  • Tasti D-lite (what they are doing is very smart)
  • The Wall Street Journal
  • Marc Jacobs
  • Coach Men's Store
  • The Financial Times
  • HBO
  • Harvard (sounds like fun)
  • Metro
  • VH1
  • Pennsylvania Tourism
  • History Channel
  • Planet Hollywood Las Vegas
  • Huffington Post (not using FourSquare but mimicking what they are doing)
And here is the presentation on SlideShare that David put together. Click through to get the details on each program.

So we've seen who is experimenting with location-based services like FourSquare but let's take a step back and look at why companies might want to engage in location-based services.

At the end of the day, location-based services like FourSquare and Gowalla are ultimately going to be best at creating long-term loyalty with existing customers. Companies like Tasti D-Lite have started to figured this out by feeding their reward programs through point of purchase experiences which in turn check users into social sites like Twitter and FourSquare. And when a customer checks in, he/she earn points toward free food/drinks.

Let's be honest, while it's nice to earn frequent flier or hotel points, the act of earning them isn't all that exciting. Yet earning bragging rights by becoming mayor or even showing off the fact that you are buying jeans at that cool new boutique downtown is much more fun. As a business, incentivizing more checkins and thus more opportunities to buy stuff and share that experience with your customers' networks has nothing but upside for your top and bottom lines.

One of the things I like most about FourSquare from a personal perspective is the discovery element -- both in terms of places and people. As someone that is still feeling his way around Austin, TX, I love watching colleagues like Natanya Anderson (big time foodie), Doug Wick and Kathy Warren alert me to good places to get a meal, watch a game or grab breakfast tacos to go. It's also useful if I'm at a conference or sporting event to see where my friends are. Even if we're not connected, many people cross-post their FourSquare and Gowalla status to their Facebook and Twitter pages.

Discovery also comes into play with people. If I'm at my local coffee joint, it's fun to know who else frequents it. In some cases, it can lead to fun connections that one wouldn't normally make. As an example several months ago my now friend, Jenna Oltersdorf, noticed that I was the mayor of her local Starbucks. Curious as to who the person was who laid claim to such an honor, she reached out to me via Twitter and asked if I'd like to grab coffee sometime (at that Starbucks of course). In related fashion, my colleague, Joe Jaffe, tells a similar story of him bumping into a prospective customer at a restaurant in San Francisco while seeking out the mayor.

Reach and Referrals
The win here is that while customers are working to accumulate points, bragging rights or free stuff by checking into your store on location-based services like FourSquare and Gowalla, they are also sharing you with their network. Better than that, they are also implicitly (and sometimes explicitly) endorsing you by letting others know they patronize your establishment. Think about the power of running a promotion where anyone that checks into your store more than three times over the course of a month gets a one day discount of 25% off all merchandise. In doing so, you've created a reason for customers to 1) visit your store multiple times and 2) let their friends know about it when they do.

Before I get you too hot and bothered, there are few additional obstacles that need to be overcome before location-based services really take off:

  • Scale - while location-based services are growing rapidly, they still only represent a few million people at best. This could change in a hurry if Facebook gets serious about location-based services but in the immediate future, it's really the early adopters that are leading the charge.
    [POST SCRIPT: in publishing the post, I forgot to pay off the "Pepsi" reference above... several weeks ago, I had a hallway conversation with Bonin Bough, director of social media for Pepsi. We were talking about LBS and I told him my theory about Facebook swooping in and crushing FourSquare and Gowalla. He said that he didn't see it that way and that his bet was on someone like FourSquare that truly embraced business and a desire to help them succeed would ultimately win. This was later confirmed when Pepsi announced that they were partnering with FourSquare as noted above]
    Potential impact on growth = BIG
  • Gaming the system - it is still possible to check into a location without physically being in that location. However, Gowalla has always been a stickler about GPS proximity to a location (to a fault when they first launched) and now FourSquare has followed suit by announcing that you can only accumulate points AND earn mayorships by being within a certain proximity of where the location was originally created.
    Potential impact on growth = SMALL
  • Privacy - this is a tricky one. More and more people (including myself) are becoming increasingly aware about whom they tell about what they are doing. I think the way LBS providers overcome this is to increase the security and the privacy around who can see what and when.
    Potential impact on growth = TBD
  • Pain in the ass factor = while checking in can be fun, it also requires a conscious effort that can sometimes take up to 3-4 minutes to accomplish. This is particularly awkward when you are meeting friends out and they have to wait for you to check in before they can talk to you. My belief is that location-based services over time will allow you to preset places that you frequent (similar to wireless spots that you've connected to in the past on your laptop or smart phone) that will auto-check you in. This would go a long way in increasing the checkins by customers with a lot less aggravation.
    Potential impact on growth = SMALL
While there are obstacles that could stand in the way of companies adopting location-based services, I am a firm believer that the rewards far outweigh the risks. In fact, if someone were to give me a truth serum and demand that I tell them what the next "big thing" was, I'd be hard pressed to not say location-based services. Don't take my word for it though. Instead, keep your eye on the twenty companies mentioned in David Stutts SlideShare presentation above and see if they continue to embrace these new tools.

What do you think? Am I living in my own universe? Feel free to tell me how you feel about the future of location-based services in the comments below.


  1. Aaron, this is a great post. As we see search and social trending towards geography and location-based services, I think that FourSquare and Gowalla (or versions)are here to stay. However, features like the point system on Foursquare have to go. Like a video game, I am intrigued until I beat the game. Then I'm over it.

  2. Ja-Nae, thanks for stopping by and gracias for the kind words. I would tend to agree with you that the game aspect of FourSquare is probably short lived. One thing I would like to see is for them to expand their mayorships to more than one (or maybe tier it so that you have a mayor and then selectpersons or something to that effect).

  3. Based on what we've seen so far with the likes of Facebook (and to a lesser extent, Twitter), I'd agree with you that scale is a - if not THE - major factor here. Now that Facebook has opened the social graph to the Web, there's a wider array of people exposed to what Facebook is and can do.

    Don't expect a mainstream push from the likes of Foursquare, Gowalla, or even Yelp. Twitter's recent announcement of location-based updates includes the integration of those services, which is fine - but again, it's not quite mainstream.

    My money is actually on Google and Yahoo to use their existing map services (Google Maps and MapQuest, respectively) to allow users to make location-based updates. And believe me, from the perspective of someone whose customers are mobile in our products, that's a huge benefit - especially as Ford has announced that you can use Google Maps with our SYNC system.

    We're not far of from contextual advertising and mobile updates that are tied to your specific location at a given time. The growing capacity and intelligence of every smartphone that's rolled out will make this a possibility before we even begin to think about social networks. The social networks on top of that will give users an added layer of relevance with where their friends are at any given moment. So picture a day when you're driving down the street and your navigation map includes a real-time notification that your friends have just checked into a bar or restaurant around the corner. Hit the Active Park Assist button and head for your friends.

  4. I'm still not convinced location-based services will pan out to be that impactful. There are some strong uses from a retail perspective to drive people, etc. But only while there's interest in the services in the first place. I could be wrong, but I just think people will eventually realize publishing their whereabouts and monitoring the whereabouts of others is kind of pointless and boring. I don't think location based updates will go away, but will settle into a utility we use on occasion, not addictively like many of us do now. It's nice to be out and about and see where your friends may be hanging out to supplement your choice of watering holes. But obsessive check-ins I think will go the way of auto-play favorite songs on MySpace pages. They're neat for a while, but get old really quick.

    Two cents from a dumb guy.

  5. I've been thinking along the lines you express in this article. I think there's some potential for LBS to take off to a degree, but I don't think it'll turn out to be a huge marketing tool. That is, except for restaurants (like your Starbucks example) and, perhaps, specialty stores. I can see a lot of potential there. This would be especially true if (when) sites like Yelp or SocialSmack start incorporating location with their services.

    Scott's comment about Google and Yahoo! coming up with a Foursquare- or Gowalla-killer is interesting. Google has a service like this tied to the mobile version of Google Maps called Latitude ( I had a few invites to it when it first came out, but I didn't have a phone capable of using the service at the time so I didn't get into it. I wonder if Google will push this again as a competitor.

  6. @Aaron: I completely agree that more needs to be done with the mayorships. If Foursquare was smart they would continue to reach out to national and local companies and encourage incentives.

    @Scott: I'm with you. I see Google and Yahoo taking that route with their maps. However, if I didn't invite someone to dinner, I don't want to get busted for it. :-)

    @Jason Though I agree with you within that context, I do believe that we will see more and more ways location-based services could be used.

    Aaron, I think you inspired a post, buddy. Great stuff before morning coffee.

  7. The specific networks you mention are certainly getting attention for SOS, even though, as you list, there are some cute examples of some business success. Overall however they are simply not capable of making it on their own, and they do not understand the importance that geo-based advertising will play in this game.

    Apple's new ad platform, combined with the geo-location ad-based platforms that Google is throwing out there will force this issue much more than the SOS of Gowalla and Foursquare. There are two elements at work here, the hardware (phone) and the software (mapping, apps, ads and GPS). The clear dominant players will be the handset manufacturers who can offer up another revenue stream and the mega-huge software vendors who already have an ad platform, mapping, etc.

    Scott and I are in agreement in this sense. Scale will not be an issue for Google and they are just biding their time while people are introduced to the concept through Foursquare/Gowalla. I think Google has learned form their forays into social networking and will wait until one of them is a bit more mature and pony up for the network.

    The smartest thing Gowalla/Foursquare could do is grow as fast as humanely possible and start to integrate as many Google options in the next 12 months.

  8. Great post, Aaron. I'm also bullish on LBS, though it's clearly too early to pick a winner. Fortunately, I'm platform agnostic, and given the low cost of entry at this point, I think most businesses can be as well. I'm betting that lessons learned during this early experimental phase will translate well to whatever service eventually wins the race to scale. More importantly, their feedback and preferences will drive future development in directions that amplify the business/marketing benefits of the technology.

    Jason, I tend to agree with you as far as the existing LBS are concerned, but that's changing rapidly. As businesses push the platforms to add value for in-market consumers (and yes, that includes me sitting in a bar and getting an offer for a half-price appetizer with a check-in at the restaurant next door), LBS will become less a novelty and more a tool to enhance my consumer experiences. If & when that happens, scalability will take care of itself.

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  10. It's been interesting to watch this trend develop over the past year.

    We've gone from brick, to brick and click, and now this sort of hybrid where physical stores and products are the focus, but enhanced by digital platforms.

    For some time now, more and more businesses are moved online. Now online is moving back offline with check in software gaining popularity and this impending wave of augmented reality applications that tech pros keep promising.

    Will checkin's be a big game changer moving forward? Hard to say.

    The concepts of check-in's are still in their first iterations. They're still pretty closely tied to the tech addicts, which as we know, isn't necessarily representative of general social trends.

    One interesting new iteration is werewards that izea is working on. They'll actually pay people to check in to locations. Once they launch and mainstream media catches wind of it, I think it has the potential to be a game changer for the check in space.

    So I think in it's current iteration, check in apps are indeed just shiny objects. How they will change over the next couple years will determine whether or not they're serious game changers.

    David, Scribnia

  11. Hi Aaron, great post as always. I agree with scale and how this service has to reach the masses to generate value. But to take off, shouldn't early adopters be thrilled for one? Forrester analyst, Augie Ray, talks of difficult redemption at Starbucks(for Mayors only) or special nearby tabs that aren't relevant to customer needs (that they should know by now since I've been there x nb times. See full article Advertisers send out an iffy message: "if our usage base increases by 1000, we may find it worthwhile to customize our ads". For now, it's just wait'n see. This said, Foursquare as other LBS services is just the start. Integrate e-commerce capabilities (for those customers who don't actually check-in ;) and wow.

  12. One key development in whether LBS takes off, or not, is how rapidly HTML5 is adopted. Add that to the amount of funding for "other" LBS firms out there and the "value" picture for LBS gets muddled very quickly.

    While not quite a foregone conclusion, HTML5 is an eventuality for most (all?) websites looking for a refresh; and, since Geolocation is an interesting AND more immediately useful aspect of the HTML5 release, we will shortly see an uptick in geolocation capabilities provided by your basic website.

    This may have the net effect of taking the luster off the BSO's of the location-based game as it's manifested itself today.

    Great post Aaron!

  13. What has been proven so far is that people like points and badges and are willing to collect them. We have also proven that people are willing to do something if they get something in return, particularly if it gives them some kind of (real or perceived) status. The question of scale comes into play as Joe and Jane average probably are not willing to go through the trouble to download an app and check in.

    The most interesting thing I have seen thus far is the Tasti D-Lite case. Those guys get it. The check in is simply another way to leverage the social graph to build loyalty and get impressions.

    Tasti D-Lite goes ahead and builds their own loyalty program using twitter, Facebook and foursquare APIs. It makes everything passive for the user. The tweet, the post and the check in are handled by the system (I'm told, have not tried it yet, there isn't one near me). You score points with Tasti DLite, you get more stuff. It's pretty simple and highly measurable and it rewards both loyalty and evangelism and solves the pain-in-the-ass problem.

    The problem for LBS is that the brand does not to pay the social networks anything. They are just using existing tools like Facebook connect and Twitter and Foursquare APIs to build their programs. The programs probably don't care if a service goes away, they can just plug into the latest flavor of the month as they start to realize critical mass.

  14. @Scott - thanks for your insightful comment. And you are right, definitely too early to rule Google OR Yahoo out of this game. If they win, however, I think their flavor of LBS looks a lot different than FourSquare, Gowalla or even Facebooks.

    @Jason it will be interesting to see if your "MySpace" prediction for LBS comes true. It just might (although as you can tell from my POV in the post, I'm on the other side of the fence). BTW, if you're a dumb guy then where does that leave me? IQ of sub-25? ;)

    @Kyle, as much as I hate to agree with you, it's hard to argue with the power of the almighty ad dollar.

    @DavidB - thanks. I'm trying to maintain my neutrality as well.

    @DavidS - you bring up an excellent point, one that I am equally bullish on i.e. offline to online to offline is playing an increasingly important role in customer experience/engagement with brands. Thanks for weighing in.

    @Dianay yup. now is the time to start thinking about LBS even if it hasn't reached critical mass. And for those companies that are experimenting (including Starbucks), shame on them for being sloppy.

    @psalvitti demonstrating my tech ignorance here... I know from what I hear that HTML5 is a game changer. I don't know enough about it yet to know why. But if you say so, I'll trust that it will play a big role in the fate of LBS.

    @Mike thank you for weighing in as I know that you are probably one of the few people in this world that is more passionate about LBS than I am. Two things: 1) you mentioned THE key item which is the "give to get" theory (which is really key in any customer interaction - even if the thing you're giving is a "thank you" or an acknowledgement." 2) I think that brands SHOULD be paying folks like FourSquare to build custom apps (or at least pay someone like your agency or mine for that matter) to help them build a unique experience. Ideally, the LBS players can win through either ads, sponsorships or selling rich CRM data to marketers ala Twitter.

  15. @Elmer - oops, missed you in that last round of replies. Who knows. It will be interesting to see what happens in a year from now.

  16. I think that mainstream adoption and user participation are going to be the missing pieces that these companies are going to have to figure out.

    I live in a small city and can verify that the amount of people actually using these types of services is incredibly small, if I was to travel to a small town I would assume that there would be even less user participation.

    If you are the only individual checking into a location the game portion of the game is nullified and you will eventually lose interest in using the service.

    For me I think the highest chance of success and survival for LBS would be when Facebook unveils their location service, as this would introduce the concept of location based services to their close to 500 million users and those users once familiar with the concept may choose to then seek out other services such as Gowalla and Foursquare.

  17. Chad - it's funny. I actually LIKE going to small towns because my opportunity to create new locations and then become mayor is like shooting fish in a barrel. WIth that said, I hear ya. Most people don't share the same, overzealous passion for mayorships that I do. And to your last point, I am still a big believer that Facebook will play a BIG role in the LBS space over the next 12-18 months.

  18. I think you're a little too optimistic. LBS isn't the next Facebook or Twitter because location is a much different beast than social profiles or random real-time communications (which are often self-serving).

    I actually think that the current LBS providers are just showing the bigger players how to do it effectively. The market will look a lot different in 3-5 years as these are just features of bigger platforms.

    I wrote a bit about this before on Mashable expecting the worst but got nothing but positive feedback from the community.

  19. Love the post Aaron - you always seem to be able to spark a great debate. I'm splitting my comment into two parts to make it fit...

    I'm going to be true to myself & go with "shiny new object" for LBS in general, Gowalla & Foursquare in particular.

    I'll start by talking about adoption.

    I just don't see mainstream users playing this game without some really good incentives. FWIW, I don't consider giving the current mayor "$1.00 off a Frappucino" a good incentive. Who drinks that crap? And $1 off - really? Let me break this down:

    I'm out there telling all my friends about your shop, effectively marketing how much I love you so often that I beat out every other local to become Mayor & you offer me essentially 20% off something I might not even like?

    I'm sorry to be the wet blanket, but it sounds like I'm being used. Give me something I care about (& want) & make it meaningful. Make it mean something... make it free and/or give me stuff. I'd rather have an "I'm the Mayor of Starbucks" tshirt than $1.00 off a Frappucino. And that tshirt has a lot more residual marketing value for Starbucks than a sweet, sticky coffee-like beverage. The early adopters might spend time checking in & playing this "game", but most of the people I know in the real world aren't going to play unless there's something much more tangible in it for them.

  20. Great post Aaron. I mentioned to you I presented on this at a restaurant industry conference last week. I think there is HUGE potential there.

    Starbucks offer for a dollar off their new frappucino for mayors rewards loyalty, promotes a new item and may in turn have its biggest ambassadors (its loyal mayors) spread the word about the new item.

    There is a generation out there that LOVES to tell people what they are doing and who doesn't love loyalty rewards and free stuff? Just the fact that some businesses pay attention to me and tweet me after my visit goes a long way.

    During the NCAA tournament I checked in and said that I was watching a team which I shall not mention (with Jason in mind). When they played again that location tweeted me asking if I was coming in. I hadn't intended to but they reminded me what a great place it was to watch the game. I now suggest them to friends all the time.

    I've been educating some restaurant companies on how to use LBS now and will do my best to anticipate it evolving in case the apps out there now go the way of Friendster and MySpace. I believe it will definitely evolve but won't go away anytime soon.

  21. Part two...

    Now let's talk about privacy.

    1. Limited network effect - Among our friends in the social media world, who are arguably some of the most transparent people of the planet when it comes to sharing their personal info through social media, Foursquare & other LBS's are their most restrictive social network. They don't share their whereabouts with just anyone. They need to have an existing relationship & trust them. This doesn't help the niche LBS players sell their service to establishments/partners.

    2. Facebook. A lot of people are talking about how Facebook will enter the LBS fray with either their own service or by buying one of the niche players. Given Facebook's record with implementing new services that impact privacy, this should be fun to watch. Will people want all their "friends" and "friends of friends" knowing where they are at all times? I can only imagine the outcry if Facebook decides to implement a opt-out posture for their LBS offering. Ouch!

    3. Exposure to not-so-cool people. We're in the midst of the halcyon days of LBS. It's actually quaint. People check-in, there are badges ("look I got a badge for being on a boat - cool!"), every so often there's a swarm, fun times, really. But it's all fun and games until someone gets poked in the eye, and that's gonna happen; it actually already has. People are talking on social media about taking a wonderful vacation to the Bahamas and some criminal element is taking advantage of that info to rob their house. Right now these seem to be one off's, but it'll become more coordinated when the not-so-cool people realize it's like taking candy from a baby. And if you dismiss this with "I'm not concerned with people taking material goods", then you've never been robbed. It's really not about the stuff… it's about being violated.

    The other not-so-cool people may not be interested in your stuff, but instead are interested in you. Stalking you, maybe worse. You may think this is far-fetched, but it's already happening. Just Google "Foursquare stalker." Women seem particularly at risk, but I've heard of guys being mugged too. This one is truly scary.

    Finally, it's about trust. I mentioned this earlier and it's especially important when you talk about brands leveraging LBS. I need to trust that brand before I'm going to share my whereabouts with them. There are a few companies I trust, but a whole lot more I'm not so sure about. I trust people inside companies, but they're just one part of a much larger company. Scott commented earlier so I'll use him as a case. I trust Scott and by transitivity I trust Ford to a certain extent. But I'm not ready to expose my whereabouts to Ford in order to get a 20% discount on a Fiesta (no disrespect intended - it's just an example). I think most brands are going to find it challenging to get past the trust hurdle with the mainstream.

    So call me a curmudgeon, but I think we're on a slippery slope and it's only going downhill. If you're a brand and you're interested in targeting early adopters, have at it. But don't expect the masses to jump in with them. I'd love to be proved wrong, but I'm not convinced this is going to end well.

    Jim | @jimstorer

    ps... Dave McClure wrote an excellent post (diatribe) on LBS back in April ("Check Ins Are Coupons").

  22. Chris - as I mentioned on Twitter just a few minutes ago, I LOVE it when people disagree with me. It makes things so much more interesting. With that said, I'll respectfully disagree with you for one reason and one reason only. The loyalty industry today (traditional, not LBS) is a multi-billion dollar business. However, most efforts are quite tactical and certainly underwhelming. As a result, it is my full belief that the role that LBS will play in the loyalty 2.0 world is going to be huge.

  23. Agreed there entirely. Loyalty is going to be redefined when this is all said & done.

    The question though IMO is whether or not current LBS providers are the ones to do it. I doubt it because current LBS providers can't scale fast enough to be truly important/mainstream. To be truly effective at loyalty, you need a huge audience. In that respect, there are only a few players & they'll figure it out before the LBS companies grow to be significant enough to matter.

    LBS is just an innovator phenomenon right now & is looking to just get to the early adopters. It's TINY in the scheme of things.


  24. another question for the group perhaps -- what makes anyone think that people actually regularly use LBS?

    none of the LBS providers share any data that indicates repeated/habitual use... does that strike anyone as being a little fishy?

    and who's to say that these apps just don't get installed & used every 4-5 days if at all? my guess is that the lack of meaningful metrics means that the #s are actually quite ugly.

  25. Not sure on the big scheme but whenever I check in some place I'm always surprised at the number of others checked in at the same time and I tend to stick with Foursquare so there may be more checked in on others...

  26. @Aaron Experimenting is good. Sloppy, bad ;) All I'm saying is that it may be too premature for some companies to run loyalty programs in a random fashion.

  27. The privacy argument is interesting-- I think exposure to these tools desensitizes people to privacy concerns a bit (as long as they are being smart about it), just as it happened with online banking and retail 10 years ago.
    - At the same time, though, Millennials may be rediscovering their privacy concerns and meeting us in the middle. -

    The focus on the usefulness of LBS for offers- coupons, and retail/hospitality establishment may be too narrow. I think a lot about what other companies might use it for, and come up empty, until I read posts and comments like these and realize--

    -- data--
    What a rich source of data, preferences, trends. It doesn't have to be an engagement tool for companies- let us users engage with each other- but companies can mine the data (or the LBS' can mine it and sell it). That's not as creepy as some of you might twist it to make it sound.

    Think on that.

  28. @Doug I've actually had conversations about mining the data too. That would be invaluable, especially if its coming from Facebook where you can see other demographic information.

  29. @Jim/Jill - as I just tweeted, I LOVE the fact that Jim's comment(s) crap on the Starbucks FourSquare offer while Jill's comment (sitting in the middle of Jim's) is giving it a high five.

    @Jill - great examples (couldn't agree more)

    @Jim/Chris - want to spend some time responding to both of your comments. May take another blog post.

    @DianaY - sorry, my bad. I was actually trying to agree with you but my inadvertent terse response didn't come off that way. ;)

  30. Very nice post, Aaron. As usual, Mr. Storer sets the comment bar high. I'm skeptical about whether interest in LBS can be sustained among any but the geekiest among us (and I include myself in that). Here are a few random thoughts on the debate in general:

    1. Duration of the Check-In Process -- In order for this to be adopted outside the current user bases (how close are we to plateauing here?), checkin's will need to be easier. To your point Aaron, it often takes entirely too long to do so which is annoying for both the person checking in as well as their friends. Fast mobile devices and networks will help here, but quickly enough? I'll let you know when I get my new phone. ;-)

    2. The Starbucks Debate and Rewarding Fidelity-- I'm in the camp that doesn’t believe Starbucks deserves a pat on the back for anything other than being the first major brand to experiment with the concept of LBS customer fidelity. This particular mayorship reward program fails in two important ways: it rewards a single customer only, and not in a way befitting the investment that person has made to ascend to their lofty office.

    Think about the cost of becoming a mayor of a Starbucks. I actually tried to become the mayor of one for the purpose of writing a blog post on it. Turns out among the 10 or so anywhere near me, the one with the fewest check ins by the mayor in the last 60 days would still require *24* check-ins within two months to oust the current mayor. Loyal Starbucks customers and dedicated Foursquare users are frequently the same person, so no surprise there, I guess. As a result, these venues are generally ruled by their mayors like warlords. And for all that loyalty and all those $5.00 coffees, I'm offered... a dollar off of a new product they're trying to market? Even a dollar off my coffee of choice is kind of lame. A dollar off *each time I come in* during the duration of my term in office? Now we might be talking…

    As Jim points out, I’m out there giving you free marketing (in addition to my custom in some cases). You’re going to need to incent people with more than just a dollar off the most recent thing you’re flogging. And the mayor aside, what value is there for anyone else checking in at that same Starbucks whose mayor is there so often the staff have started featuring his favorite Wilco and Dylan selections on the CD racks? While he sits there lording his (slightly less expensive) Café Vanilla half-cafe Frappuccino over me, unless he gets transferred to Spain and doesn’t check in for two months, I’ll never get that dollar off my portmanteau beverage of choice. Where’s the incentive for the common residents of Starbucks Town?

    3. Location Accuracy and Gaming The System – In order to prevent gaming of the system (ala drive-by-checkins) as well as in some cases to simply enable checking in at all, I think we will need better accuracy from a GPS perspective. Anyone who’s tried to check in on GoWalla, for example, only to be told that they are, in fact, 1.6 kilometers away from the venue they’re trying to check in at will know whereof I speak. This is apparently an AT&T 3G issue, but even switching to the Edge network doesn’t fix the problem. The average consumer’s not going to have the same patience the people commenting on this blog post do for this kind of thing.

    It could be that GoWalla, Foursquare and the like will one day be seen as the grandfathers of something else to come, but for a variety of reasons (some above, some listed by others), I’m not sure this will have legs long-term.

  31. Aaron, as always a great post. As you know a subject very close to my heart. The reality is that the Check-in service is already dead. Any platform that stops the engagement at simply providing you (the user/consumer) with the opportunity to say "I'm Here" has so little to offer that boredom quickly sets in. Hence the content deals that we have seen with Foursquare, Gowalla, MyTown et al. Where things start to get interesting is how all that data can be used. Top Guest is a great example of how those check-ins start to translate into something tangible for you as a consumer. Instead of trying to change your behavior they are rewarding you for your existing behavior - as any parent or pet owner knows this always an easier path.
    Do I believe Facebook will crush the opposition. Frankly no. They have not created any off property (e.g non offering to date that has been compelling. In fact I would say Twitter has a better chance of creating a stir. That said both are still trailing the field in that they are still at the "check-in's are cool" stage of the game. While Gowalla is already creating "experience" and Foursquare is dominating in the Rich Content provision portion.
    As for those who don't see the marketing opportunity with these services, what did you say when you first saw Twitter? These services are so nascent I truly don't believe we have even begun to scratch the surface. I also believe that they will become so integrated into how we interact with brands that they will dominate the "status" update field by the end of 2011

  32. Aaron,

    Really liked your post and the discussion too. It gives me (as an Marketing LBS professional) the perspective of people not necessarily working for companies in the LBS industry - those that I meet in most of the conferences.

    LBS and Location Based Social networks are not something new. As a matter of fact I start listing them on my blog and I make a pause when I reached 150 different Location Based Social Networks.

    FourSquare, Gowalla (and Loopt also) are different in a sense they are not just a friend finder and offered a different user experience. Still I’m wondering when people will become tired and stop checking in at every place they go. Will Yahoo and Google do something in this area? I bet they will try better than their no so popular projects (Latitude and FireEagle). As a matter of fact you could share your location with your friends in Facebook two years ago with applications like Ipoki or Friends on Fire (from Yahoo). The question is where the value (for the user) in doing that is.

    The problem with the brands in general is that for them 2 million people is not a mass market. It can work for companies that would like to target the profile of the people that use that application that is relatively homogeneous. There are though, companies going in the right direction, like placecast, that provides location based advertising over SMS.

    In discussions with people in the industry we keep debating “is location a feature – or can you build a whole business model/concept around it?” “Where is the money in location?”

    People talk about Facebook entering the location based market. They are already there!!!! If you read the privacy policy of Facebook you can see that “…“…When you access Facebook from a computer, mobile phone… we may collect information from that device about your… location” . No opt-in no opt-out. I believe that Facebook is making no noise about location because all the pressure they had regarding privacy. Bottom line, they are collecting your location if you like it or not. Why? Because now they will be able to make location based hypertargeting advertising. Not only advertising based on your profile, likes or dislikes, but also based on where you are, where you were and who was with you. Should I add anything about privacy? See more about this topic here

    I enjoy this conversation. Gives lot of material to think about. Let’s keep in touch and exchange some more ideas.


  33. Holy shit... it could take days to respond to all the fantastic comments here. I think I'm going to take a Jim/Derek approach and just number my responses and limit them to five (sorry BDL):

    1) Scale - yes, FourSquare and Gowalla both lack scale now. They may always lack scale. But to Kyle's point, they've grown like crazy and look to be on a similar trajectory to Twitter (I'd say they've done okay in the last twelve months and for a long time, people doubted their utility and adoption).
    2) Privacy - the good news here is that most people AREN'T like those of us commenting on this post. They are normal dudes and dudettes that have on average, 150 REAL friends on Facebook and 100-200 mostly real friends on Twitter. When they check and and share their location, it's with people they went to high school and college with. Or people they are friends with (or work with) in real life. For that reason, whether it's Facebook, FourSquare or even Friendster, I don't think this will be as much of an issue over time.
    3) Gaming - someone on Facebook questioned the gaming aspect of these LBS. While the current format may not work, I'm going to go out on a limb and say have y'all heard of Farmville and Mafia Wars? Both extremely stupid in my mind but millions of people have literally wasted billions of hours on this stuff. Oh yeah, social gaming is also growing at a 10X year rate (okay, I made that number up but it's growing by leaps and bounds).
    4) Starbucks - yes, their first offer is a little underwhelming but at the same time, they had no idea what their take rate was going to be. What if they gave away a free coffee every day to the mayor. With 17,133 stores in 49 countries (I didn't make that number up, I looked it up on Wikipedia), that that could be a LOT of coin in a short period of time for something they didn't understand the ROI on. And to the point of "it's hard to become a mayor/they need to widen the benefits" that point I totally agree with. And btw, I LOVE Jim's suggestion about giving away a mayor t-shirt.
    5) accuracy - yup, this needs to be fixed (as does the ability to game the system). at the end of the day though, i think you get around this by only offering things on things like the 1st and 10th checkins. FourSquare and Gowalla will figure this out sooner rather than later I'm sure.
    6) Okay, I know I said five things but this is my blog dammit. Data - as Doug and a few others point out, data is huge. And quite frankly, could be the BIGGEST reason why businesses sweeten the pot and the LBS exist (think of them as the new Acxioms and Epsilons of the world).

    More coming later tonight...

  34. To point number 5 (accuracy/gaming), you could build a an entire product on the back end for companies to use to design and manage these campaigns. Not sure what Foursquare and Gowalla have in place, but I'm sure it's primitive compared with where you could go with this. And good point on testing the waters w/ Starbucks.

  35. @aaron adding # 7) I don't think we're arguing that this is going to be an end all be all. It IS has great potential for many and probably will exist in some form for some time. Would be pretty silly for some segments to ignore it. There have been naysayers of social media in general for years. Imagine if we all threw in the towel...

  36. - big 'IS' is a typo
    - Can't see how data mining potential can be ignored. Huge reason to incentive.

  37. I leave for five minutes and look at this wall. ;-)

    Some amazing comments!

    1) Privacy: I have a real issue with letting people know where I am. As a single woman, that is rule #1. Luckily, my phone picks up locations miles away, so I barely sign into a spot where I am actually located.

    2) Rewards: As the mayor of my Starbucks, I am actually pissed that I can't have a free coffee (or a dollar off) my morning coffee. I'm not interested in a Frap. Venti Pike would make me the happiest girl ever.

    3) Measurement: I am having an interesting conversation on my FB wall about measurement and LBS. A referral system where you can pass on your review/tips of a business and maybe a coupon, is the way. I am sure that there are ways to pass on "referrals" to a person's Foursquare/Gowalla friends that may or may not be unlocked. There if used, just measure with a promo code the way that you would a direct mailer.

    The business can then give you a reward for every referral you give and is used.

  38. Typically stimulating post, Aaron -- and the comment thread has so much fodder that you could start outlining your first book from it. ;)

    Three observations & one question I'd like to call out here:

    1. Peplau: "The average consumer’s not going to have the same patience the people commenting on this blog post do for this kind of thing."

    This is HUGE HUGE HUGE for those of us who work in social media. Most people still don't give a f*** about Twitter, much less Gowalla etc. Making predictions about the future is always a mug's game -- but especially so when we are inside the funhouse, surrounded by mirrors that make it look like our favorite social toys are widely permeated in the consumer market.

    2. Salt: "These services are so nascent I truly don't believe we have even begun to scratch the surface."

    Agreed -- and in fact I would say this is a great reason to be skeptical even about the prediction that Simon made right after that. He's far likelier to be right about this than I am -- or maybe anybody else on this thread -- but the not-even-tip-of-the-iceberg degree of penetration of these location-based technologies makes it even harder than usual to guess right about where things are going.

    3. DATA. Especially because I've worked for a business-information company for 10 years, I'm prone to place a MUCH higher emphasis on this than many of the people I read. E.g., I've always assumed that Twitter could make more money from consumer-preference data-mining and B2B-oriented social-CRM relevance than it could from straight-out advertising. But it requires new ways of thinking for a lot of marketers in the consumer space.

    That last point helps set up my question:

    ~ What are some of the B2B applications of LBS? Consumer-facing tech is great, but in some cases things *really* take off when they can start commanding enterprise-grade B2B budgets.

    Thoughts, everybody?

  39. Wow, tough to add anything without piling on. Great post with great comments. When I finished reading and plotted my comment, my sentiments ending up being almost exact same as @DougH - Privacy, Data & Offers (particularly for small businesses)

    Right now it is a shiny object, and I am patiently using just in case it is a diamond (but it could be a bottlecap)

  40. Just an aside - I've been linking to "Maneki Neko", a 1999 Bruce Sterling story, quite a bit lately to give people an idea of how transcendent geolocation may become:

  41. Aaron, thanks for opening up a discussion on LBS.

    My biggest question around LBS is what role the purely social element has to play. Most social networks tap into people's passion and desire to share. LBS seems to currently be fixated on interactions with businesses... with the side-effect that your network will also see what you're doing.

    In addition to that, Loyalty programs via LBS look like "Push the Button, Get a Pellet" systems -- which require no network. As early adopters in the social space, of course we are going to share what we're doing. But from a mainstream perspective, the incentives don't seem to include a social component.

    Am I too cynical on this? If the option to connect with people is available, then people will do it because they just want to share? It seems that the privacy concerns may outweigh that axiom on this one.

    What I'm wondering is if LBS are inherently social networks, or if they have social features because that's what is popular at the moment.

  42. Fascinating discussion and great post Aaron!

    I think LBS currently IS a shiny object, but it is once that shine wears off of it that it will become truly interesting. I'm not currently using LBS in any way, but I continue to observe. As a UX guy, I am always interested in how the common person will approach the tech, why they will adopt it and what the tipping point will be to get them there. We are still in the "geeks & nerds allowed only" phase and as commented earlier, it hasn't infiltrated small-town America in any real way. Users have to be in cities to make good use of these tools.

    Right now there is an aspect of the user being proactive through using services like the ones mentioned, Gowalla, Foursquare. It is when the GPS and LBS tech merges to become an integrated part of the hardware OS that I believe things will change. When the use of the LBS functions are elective and passive, where brands are fishing for consumers rather than consumers being forced to compete to earn rewards that the flop will happen.

    I imagine a world coming quickly where I may have to go to the store to get a package of hotdogs or diapers while at a relative's house, where I don't know the area, that the LBS will kick in big-time. Put in a search for hot dogs, and the closest 5 stores will pop-up with offers from national brands, including supemarket's add-ins like double coupons, and away I go to the best, closest offer. I get what I need with less hassle and a good price, the market gains a customer and the brand gains loyalty. Win-win. Gone are the ridiculous paper wasting streams of coupons with my receipt, that I have to bring back NEXT time. Instead, I walk into the store, grab the hot dogs, check to see if there are promotions on the diapers, grab the brand that vies for my dollars most effectively and have the checker scan my mobile coupons or electronically x-fer data that shows I opted to come there based on the offer, and I'm off again.

    When that kind of need fulfillment begins to occur, LBS will become a part of everyday life in towns both large and small. The mind boggles at the possibilities...

    For instance, what if a college student could earn a coupon for discounts on big brand beer for their weekender by attending classes? The kid autochecks in at their class, doesn't leave the location for 40 minutes, and for every 10 or 20 cycles, they earn an electronic discount on their favorited brand of beer, which becomes redeemable on Friday afternoon. The school keeps the kid in class, the beer company makes a sale, and the parent's groups feel fuzzy that the breweries are being responsible. Those kinds of direct, interactive rewards are the types of engagements that I feel are going to drive LBS as time goes on, from a consumer/brand relationship side. Becoming the "mayor" of a coffee shop and getting $1 off of what THEY want you to buy won't amount to much, but earning cheap libations for attending your classes, or buying your kid's emergency diapers in a strange city with a minimum of hassle and at the lowest available local price? That's worth something and only LBS tech will fit that kind of niche.

    None of this requires the end user pushing out information about where they are, where they are NOT and what they are doing unless they really want to. The system does what it does best. Brings data IN.

    How it gets used in B2B is a whole different can o' worms and will likely spawn another revolution...

  43. You say, "How it gets used in B2B is a whole different can o' worms and will likely spawn another revolution.."... but have you ever been to CeBit, the big [HUGE] German trade fair? Imagine if you had basically the system you describe for daipers, but for getting a drink on the Android stand - but who you talk to is based on what they knew about you... so kind of micro location based, with some degree of scanning a user profile. Could sure as hell cut the crap of talking to the wrong person at a trade show.
    [Big shout out to everyone on stands at Marketing Week live in London this week. I escaped!]

  44. @Nigel, I agree. It starts to become a sort of espionage game at a trade show, where if everyone enabled their profiles as a matter of course and were broadcasting who they were and where, you may be able to track your quarry (the people you want to engage at a particular company), find them at a booth they are visiting and strike up a conversation. It is one of those double edged sword things. Convenient and cool, useful and yet creepy and easy to abuse at the same time... Like a mashup of LinkedIn and Minority Report. It would quickly degenerate into a blocking/friending/"My connections only" kind of thing where an organic evolution of specific etiquette would need to be used. THAT'S a whole thread all by itself!

  45. I definitely agree with you, and I actually just wrote a post today on Daily Axioms talking about Foursquare's latest window cling promo.

    I think a big hurdle is also going to be for mobile GPS technology to keep up with the accuracy demands of location-based services. There's been a number of times my phone's GPS has been off for multiple apps, not just Foursquare.

    Great post.

  46. I'm a little late to the comment stream and have been thinking about LBS a lot. I agree with a lot of the scale, privacy concerns and lackluster programs like Starbucks, but one think I haven't seen people talk about is the mainstream. For LBS to have a chance, it has to appeal to a mass audience. Right now it's not even close. The best analogy: if my mom starts using it, it will take off.

    There is a little chicken and egg syndrome going on - what incentives and reductions in barrier of use will bring in the mainstream population? The value exchange has to be so compelling and simple in order for that to happen, and few of the examples out there have achieved that.

    Simple use cases of the tools are going to make or break it. For starters, if all my friends are using it, it really does make it easier to find people and meet up. Think of a small group of teenagers in an urban environment, not the social media types connecting to many more than a "normal" person would. (Mea culpa). LBS is also useful to find locations in a city I've never been in. I was in Wilmington, DE recently and used Foursquare to find the nearest breakfast shop with no Starbucks in the vicinity. Both of these types of use cases (finding friends and navigating new places) - along with improving ease of use - are *essential* to the scale and value exchange, otherwise it's a pile of businesses fighting for ad space in the yellow pages.

  47. FYI - I've read ALL of the fabulous comments here even if I haven't directly responded. I think my approach is to do a recap post summarizing the points made in the comments. But, just so folks know that I "see them," thanks to: Claudio, Tim, Rob, Darin, Nigel, John, Michael, Steve and Adam for you fantastic additions. As I said on Twitter, Darin's beer/college example wins the prize for most clever.


  48. So much fun to read a blog post with this much insightful discussion! Now I have to try to add to the pile!

    In my opinion, one thing that has been mentioned, but not specifically called out and is a huge value of LBS, is that LBS is in many ways advantageous to traditional social media b/c it more actively tackles the problem connecting people online AND offline where they naturally tend to be. We've only seen the beginning of this but business that learn to leverage it will create a much more meaningful experience for their patrons and that can (and will) drive loyalty.

    Is it a shiny object, will it wear off? Definitely shiny, and despite what I wrote in "What Foursquare Learned from Pavlov's Dogs That Will Rock Your Business" even the badges won't drive usage forever, but if Foursquare and Gowall can work with business to make the process rewarding (up the stimulus, or just change it to keep it fresh) then they may be able to fuel their growh curver for some time, though I agree with everyone suggesting the next 12 months are critical.

    To me, what is mostinteresting about LBS's isn't how we think people or businesses will use them, but rather the myriad of ways that will be dreamed up by businesses actually solving problems for their business, not just social media pundits like us sitting around trying to figure it out.

    Restaurants and hospitality are the easy targets and answers and the most common examples, but there are a lot of ways LBS can be used that (no offense) we'll never think of because we don't experince all of those other businesses on a day to day basis they way their owners/managers do. And to me, this is exactly why we need to stop thinking about Social Media for the sake of Socal Media.

    To Jill's point on Data Mining. I've been discussing this with some colleagues for sometime and the opportunity is absolutely huge and may represent the best monetization opportunity for LBS's. Understand how people acually behave (not just how they say they behave) and you've got a goldmine!

    LBS will evolve and it's going to be fun where it goes.

  49. Finally posted a blog with my continued thoughts on this. Its amazing what more has come out on LBS in these three weeks. Tomorrow my post will probably seem outdated.