For a while now I haven’t used Foursquare – and for a while I have been wondering what the REAL idea of it was. The check in thing didnt make sense to me – but geo location and advertising certainly did.
So it is interesting to thing about Foursqaure with it’s new redesign and potential pivot perhaps in a different way.
Perhaps Forusquare peeps always knew it was to fail in one way – but the by product of this would be success. As an app, as a standalone, it failed but as a data mine – it succeeeded and then some. How can I say that …. hmmm Foursquare nabs $41M to fuel mobile advertising ambitions
Foursquare has secured $41 million in financing from private equity fund Silver Lake Partners and venture capital firms Andreessen Horowitz, Union Square Ventures, O’Reilly AlphaTech Ventures and Spark Capital.
Bloomberg Businessweek reports that a multiyear loan from Silver Lake makes up the bulk of the money–the remainder is convertible debt that can later be swapped for shares. By assuming debt instead of giving investors equity stakes, foursquare can delay discussions about its true market value–previous investment rounds valued the mobile social networking startup at $600 million, although a source familiar with foursquare’s finances reveals the company raked in just $2 million in revenue in 2012.
Which makes sense – as does this new version of Foursquare’s iOS app released today which marks a significant milestone in the location-based social network’s reinvention as a local search engine, but its Chinese counterpart Jiepang points to another tack the company could have taken to address users’ lack of enthusiasm for checking in to local businesses.
The chinese company has opted to appeal to its users to continue to check-in, not just by serving up check-in offers—though it has those, too—but also by enabling users to check in to activities and states of mind in addition to businesses.
“The app is more like a journal or a diary in the way that users have been using it. They use our locations and our design to share life activities. Some people post a lot of photos that don’t even have locations. Some people check in to virtual locations,” CEO David Liu explained.
Jiepang is looking to roll out ways to check in to common social activities, such as eating out with friends, that put the social factor first and don’t highlight the particular business.
Foursquares new cash says it is going the other way. As the co-founder and CEO Dennis Crowley says the new financing will support the rollout of expanded mobile advertising services. In mid-2012, the startup introduced Promoted Updates, leveraging opt-in user location infor9mation to spotlight deals from nearby merchants. While more than a million retailers and restaurants have added their businesses to foursquare’s database, the company had previously offered Promoted Updates inventory to only about 50 of them, mostly national chains like Walgreens and Starwood Hotels; beginning this summer, foursquare will open the program to all merchants and will build out its sales team to accommodate the move.
“This [financing] allows us to get closer to being able to prove that there’s a real business here,” Crowley said, noting that his slow, steady approach to monetizing the foursquare platform is vindicated by the struggles of rivals like Groupon, whose stock has declined 69 percent since its November 2011 IPO. “We’ve looked at the way other companies have grown very, very aggressively with products that seem to be working but are not the ones that end up changing the landscape,” Crowley added.
Foursquare will sell advertisers on its service by promising a wealth of consumer insights: More than 40,000 third-party applications have integrated the foursquare platform instead of building out their own location databases, enabling the firm to collect data from popular social media apps including Facebook (NASDAQ:FB)-owned Instagram, Twitter’s Vine and Path.
Foursquare Chief Revenue Officer Steven Rosenblatt states that between 3 percent and 5 percent of users who receive a targeted advertisement after searching for a nearby restaurant or retailer click the ad or visit the merchant within 72 hours, far ahead of the average mobile click-through rate of less than 1 percent.
Crowley said foursquare also will strive to improve its search and discovery tools, which he admits were “buried” in previous iterations of the app. Earlier this week, foursquare revamped its Apple (NASDAQ:AAPL) iOS app: Version 6.0 shifts the Explore feature–which highlights nearby points of interest based on the user’s check-in history and their friends’ foursquare activity, complete with consumer reviews and merchant offers–from a separate tab at the bottom of the device screen to the top of the navigation bar. An overhauled auto-complete search engine delivers speedier local business and entertainment results than previous foursquare incarnations, and a retooled friends feed now includes recommendations, trending destinations and nearby contacts. Foursquare’s signature check-in button also transitions to the bottom of the screen.
Fair play to Foursquare – almost the perfect circle of mobile marketing 😉