frankly speaking

The LBS Wars

There’s an emerging technology emerging from Silicon Valley, Austin, Texas and New York that’s going to change offline consumer behavior and customer acquisition. It’s called location based services (LBS for short), and quite simply it allows people to ‘check-in’ with their mobile phones and tell people where they are.  It has tremendous benefits if you’re a product or establishment owner because you can send personalized marketing promotions to your consumers whenever they check-in at your store or restaurant.

Lots of companies have jumped into the LBS space. Some of them include Loopt, Wrrl, Gowalla, Foursquare and most recently Facebook (with Places). The two players that have emerged as the one’s who will be around for the long-term are Foursquare and Facebook. I’m not saying the other companies won’t survive, I’m just saying that based on current user behavior (i.e. number of users using each company’s respective app), the number of advertisers they work with and the popularity of the service, it’s hard to see how the other companies will be able to compete. For the purposes of this blog, I’ll focus mostly on Foursquare and Facebook.

Product

Let’s face it, in order to be an LBS company, you have to have a good product. This is where Foursquare and Facebook separate themselves from the rest of the companies out there. Foursquare has been around for about a year and a half and had a chance to develop the premier LBS product.  Their product was so hot that I remember a year ago I was emailing everyone I knew to try and get their Beta Blackberry app. The product is simple – you fire up the app, choose your location and check-in. You also have the option of syndicating your location to Twitter and Facebook. One small but I think huge difference between Foursquare and Gowalla’s product is that with Foursquare,  the way locations are presented to me is much cleaner, crisper and less redundant. For example, when I was testing out Gowalla’s product, I was frequently given two options for one location to check-in to. This is a horrible user experience, not only for the end user, but for potential partners as well.

When Facebook launched their Places check-in product only a few weeks ago, they made the simple but effective decision of including it in their current iPhone App. In order to check-in via Facebook simply launch the app (as you normally would if you were going to catch-up on your newsfeed) and click the location button which is conveniently and strategically located next to the ‘What’s on your mind’ entry box.



Advertiser Depth

We all know Facebook has been extremely successful in acquiring a huge advertiser base to advertise on its web platform. It will be interesting when they start allowing advertisers to advertise when users check-in to Places. Imagine for instance that you’re just checking in to the Cheesecake Factory and up pops an ad in your app promoting the fact you can get Adam’s Peanut Butter Fudge Ripple Cheesecake for 15% off when you checkin. Tell me you wouldn’t take advantage of that! What’s more, advertisers could, theoretically, service the ads themselves when they log into Facebook to check on the other ads they are running with the platform.

Likewise, Foursquare has done an incredible job of lining up major brand advertisers with their products. I still think some of the mom and pop advertisers will struggle with their ability to run ads on Foursquare. Why? Because it’s just one more thing they have to do during their extremely busy day. Foursquare would be doing themselves a favor by creating a simplified web interface that lets advertisers and location owners start and manage their Foursquare promotions.

Customer Base

Foursquare is one of the pioneers in LBS apps, and therefore has a headstart in terms of the number of people who are actively using their product. Like other company’s before it, there has been massive adoption by geeks, hipsters and people who work in technology.

The problem I see with Foursquare is mass-customer adoption. It’s going to be difficult for them to convince Joe Schmoe who lives in Ames, Iowa to get the Foursquare app, let alone use it. Sure, there’s a huge value proposition for using Foursquare, but the question is, are there enough Advertisers (Big Box shops and Mom and Pop shops) running promotions in Middle America to encourage users to download and actively use another app on their mobile phone.

Facebook, as you may have heard, just signed-up it’s 500 millionth customer. While, by no means, are all 500 million actively using Places yet, because their mobile app has such great distribution, it wouldn’t take much from Facebook (or their Advertisers) to incentivize  them to use Places. However, like Foursquare, the success of Places is more dependent on Advertisers using the product; customer adoption will come with time.
 
End Game

Who do I think wins the LBS Wars? If you held a gun to my head, right now I’d say Facebook. The reason I think Facebook wins is because they clearly have the advantage when it comes to Advertiser and customer depth. I’m not saying Foursquare doesn’t have a chance, because they certainly do. Foursquare has a great team in place from it’s investors, its CEO, and its Product and BD team. However, we all know that living in an era where barriers to product development are low, it’s very difficult to keep out the 800lb gorilla who knows what he wants.

I think in the end, Foursquare will sell itself to Facebook, and Facebook will then start to rival Google for web supremacy.

Tags: mobile marketing

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Date: 09.12.10 Time: 18:17 PM
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Checking Out of Foursquare…

Look, I like foursquare a lot. It has added a lot of value in the way customers and small time merchants interact with each other. As I posted earlier this year, it’s a marketing tool that rewards customers for their loyalty - you check in enough, you become the mayor, and possibly get a discount at the merchants store - easy, peazy. But, as I tweeted earlier this week, I’m starting to get over it.

I’ve been a steady user of foursquare for about six months now and have become the mayor of more than a few establishments. However, the only time I benefited from a Foursquare check in was when I happened to tweet my check in to a local coffee establishment and it was picked up by the establishment’s social media team on Twitter. Sure, foursquare has scored deal after deal with merchants willing to run social media campaigns and promotions through it, yet, even in the middle of Silicon Valley (where I live) I have yet receive any reward for multiple check ins to a location.

So why isn’t it working? A couple things come to mind, first, most offline merchants, while very business savvy, don’t understand the life time value of their customers and can’t manage it effectively enough to know how to run a mobile marketing campaign that targets their most loyal users. Sure, it’s easy to target mayors, but why not target users who come and check in to your establishment multiple times. And, maybe it’s not that they don’t know how to value that customer properly, or even to run the campaign, maybe it’s just that they don’t have time.

Secondly, where’s the value to the end user? Even if I’m the mayor of my local frozen yogurt shop, who cares if it doesn’t get me $1 off of my next purchase? What is the point of checking into a location, if said location does not reward my loyalty? Further, people use foursquare to let people know where they are. Can’t I let those same people know where I am via SMS, Facebook or Twitter (odds are more than pretty good that my foursquare followers are also my Twitter followers and Facebook friends).

Finally, foursquare is also missing the boat online. There’s tons of potential on allowing people to tell their friends where they’re shopping and what kind of deals they are finding. Sure, companies like Blippy and Swipely are trying to jump on this, but foursquare already has all the credibility, brand recognition and the technology in place to make this happen, cheaply and effectively for both online merchants and consumers.

I’m not saying I’ll never check in again, but for the time being, if you want to find out where I’m at, hit me on the text or twitter.

Tags: Foursquare Mobile Marketing Start-ups

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Date: 05.30.10 Time: 17:31 PM
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