Foursquare’s Starbucks Mistake: Five Ways Foursquare Advertising Is Getting Less Interesting

Foursquare screenshotFoursquare, the geolocation social tool, has been a media darling as of late.  Not only is it growing, but people innately understand the monetization model, which is not something you can say about every social site and tool.  As people “check in,” or report where they are to their networks, Foursquare serves them offers from nearby businesses.  It’s a win-win-win situation: Businesses can market to people who are able to immediately take action; Foursquare earns revenue; and users get valuable offers they can use.

But Starbucks’ current program on Foursquare may kill the goose that lays the golden eggs (or at least demonstrate how that goose may die a slow, lingering death of neglect).  I believe (and I’m curious if you agree) that Starbucks’ ubiquity combined with the offer’s difficult redemption is decreasing attention for Foursquare’s other offers.  If other large chains follow suit with similar promotions, those “Special Nearby” tabs within Foursquare’s mobile apps won’t get as much notice, and that means problems for advertisers on the Foursquare platform.

If you’re a Foursquare user, you’ve undoubtedly seen Foursquare offers, but for those who are not yet acquainted with the joys of mayorships, here is how it works:  When you check in at a location, Foursquare will alert you when an offer is available in close proximity. With a click, you can view that offer.  The first couple of times I saw this, the offers were interesting and immediately relevant. For example, I checked in at SFMOMA and was alerted I could get free entry to an art museum across the street.

But I am now finding that Starbucks’ promotion, which offers a buck off a Frappucino for the mayor in any of their stores, is becoming noisy and bothersome for five reasons: 

  • Oversaturation:  First, since Starbucks are everywhere (Jerry Seinfeld once joked the company was beginning to open Starbucks inside of other Starbucks), I now seem to receive no offers other than Starbucks.  Every time I check in, there’s the same offer over and over again. It’s a little like watching a 30-minute sitcom and seeing the same Starbucks ad eight times! No one can find an ad so enticing that they want to see it repeatedly. 
     
  • Difficult redemption: The second problem is that the offer isn’t one that people can use immediately. Becoming a mayor takes many check-ins, and few people can and will visit a Starbucks location enough to claim this offer. I’d guess that becoming the mayor of an average Starbucks store probably takes 30 or more check-ins in a 60-day period — and after all that, the customer is rewarded with a discount of a whole buck! 
     
  • No behavioral targeting: The third reason the Starbucks offer has become irritating is that it isn’t targeted based on users’ preferences or data.  Considering what Foursquare knows about us, wouldn’t you think relevant and interesting advertising would be a slam dunk?  I’m not a coffee drinker, and Foursquare should know this; probably fewer than 1% of my checkins are at coffee shops, and I doubt I’ve checked in at a Starbucks more than once.  
     
  • No geo-targeting:  The fourth problem may at first seem odd for a company in the geolocation business, but the Starbucks ad lacks sensible geo-targeting.  I just checked in on Foursquare in Boston, 3,100 miles away from home, and there’s that darn Starbucks ad again. Foursquare knows where I live and hang out, so why display a mayor offer in a location where I cannot possibly become mayor?  Doing so make this offer completely irrelevant. 
     
  • Employee competition:  As marketers begin to leverage geolocation for loyalty purposes, they face a major headache: No customer can possibly visit a business more than a full-time employee. With check-ins from employees and customers going into the same pool, mayorships are being claimed by the paid help and not the paying patron. Complaints are surfacing that customers checking in at Starbucks are finding their barista is the mayor, effectively blocking them from earning the discount. 

The steady stream of irrelevant offers is causing me to pay less attention to the “Special Nearby” tab, and a small survey of my friends says I’m not alone.  People generally hate advertising — we block it in our browsers, skip it on our DVRs, and listen to purchased music on our MP3 players to avoid ads on free broadcast radio. But when advertising is relevant, we love it — we sign up for emails from our favorite retailers, comb through Sunday circulars, and are signing up in droves for group discounts on sites such as Groupon

Foursquare and marketers win when they make advertising relevant. If they do, people will want and pay attention to the offers.  But if consumer attention and interest in those offers wane, then advertising attention decreases, revenue shrinks and Foursquare advertising goes the way of so many ad channels before it. 

Because Foursquare is new and the Starbucks offer is the largest program to date, I’m sure it’s proving relatively successful, just as the very first Web banner ad performed so remarkably.  But if Foursquare and other geolocation platforms (are you listening Facebook and Yelp?) want to build long-term success, it’s going to take unique, customized and relevant offers, and not the same “Please check in here a lot and we’ll give you 100 pennies” offer.

So, Foursquare users, are you seeing those Starbucks ads all over like I am?  Are they changing your purchase behavior?  And are they increasing or decreasing the attention you give to Foursquare offers?

Comments

On similar lines are we

On similar lines are we underutilising the interactive media as revelaed by emarketer search which says brands are being talked abt 1/3rd of poulation online.. http://tinyurl.com/2azhhpb - are the brands responding back as much??
Too much or too little - always debatable...

Expand specials beyond Mayorships

The ubiquity of the Starbucks specials has one interesting consequence. I've gotten used to those being the *only* specials I see when I check in somewhere. Last night, I checked in to a bar here in Boston, and I saw the usual Special Nearby message. I didn't click it, thinking it was a Starbucks offer. Another person checked in, and clicked the special. Turns out it was for Ben & Jerry's.

This is really a problem of the earliness of Foursquare and these types of promotions. One the specials expand, it won't feel like it's just Starbucks specials.

Targeting based on specific interests would be great, but it will take a good volume of specials to make those relevant. Foursquare has to go with what they've got so far.

Last thought. Specials are targeted for mayors now. But what behavior do the companies want? They want you to let your various social networks know that you're checking in to this place. How would one reward that? Maybe 10 check-ins that you push to both Twitter and Facebook earn you a free item or discount.

Mayorships are tough to earn, but consumers engage in other activities which are of value to companies.

I agree. I moved to Canada 2

I agree. I moved to Canada 2 weeks ago and since I have been here, the only special offer message I have seen is the ubiquitous Starbucks one so I have just stopped even clicking them. I think the rewards should be more plentiful and of a low cost - e.g. check in 5 times and get a free coffee (MojoCoffee in New Zealand use it like this). I do use the Tips section mroe than ever though - it takes a bigger market for this to become truly useful, and the tips for places in Clagary have been really useful so far - especially the one about ordering the 'bucket o bacon' at District - I highly recommend!

Couldn't agree with you more!

FourSquare is interesting because it is different than other social networks for these reasons:
*Geo-aspect makes immediate and LOCAL offers
*It's a fun "in-the-know" sort of experience
*Sharing info and experiences with friends

Unfortunately the Starbucks/FourSquare's partnership fails because it is no longer authentic: it is the same offer nationwide and the frequent ads that appear everywhere feel a lot like traditional banner advertising. As you point out, it is just plain distracting from the genuine local experiences. And in the end, I'm not bragging to my friends about saving $1 on a coffee and will definitely pay less attention to FourSquare if this is the course that they stay on.

Thanks, Artee, Hutch and Christine

Sorry for the short response to the three of you, but I'm on the road!

I appreciate the input. Christine, I agree with you wholeheartedly, the Starbucks offer feels as authentic and interesting as a banner ad (which is to say, not at all authentic and interesting.)

Hutch, I agree that mayorship offers are reletivly uninteresting, and perhaps you're idea (for an offer after a number of checkins) is better. If I was advising Foursquare, I'd suggest that mayorship offers shouldn't be "Special Nearby" offers but a different sort of offer made to people AFTER they check-in. I think "Special Nearby" offers are great for awareness and driving traffic, but not for loyalty. They need to align Foursquare advertising to the proper place in the funnel!

Thanks for the input, everyone!

Seeing the same thing in Maine

Spot on; in fact, I had a similar post earlier this week. http://www.flyteblog.com/flyte/2010/06/how-not-to-advertise-on-foursquar...

I hadn't thought about how it might negatively impact Foursquare, however. They may need to tighten their requirements for advertising.

Glad I'm not alone

Thanks Rich, Glad I'm not alone on this, and I appreciate the link to your blog post.

Patience- good things come to those who wait

If @Dens and co are as smart as I think they are, they're at this very moment building a transaction tracking mechanism. I don't know if you partner with square and local businesses and offer a square payment processor specifically for 4[ ] based tracking or try and use QR codes like I suspect MS and Google are shooting for.

What matters is being able to show deliverable results to businesses, only then will you be able to get a local resto to offer a free drink to anyone that checks in. When you can say to that business owner that your service generated X dollars, then they can evaluate their ROI and determine the proper compensation (free drink, app etc) for a check in or x amounts of check ins or mayorship.

Right now anyone can sit outside a starbucks and check in without ever purchasing anything...you say you need to check in 5 times for a free latte so joe schmoe checks in everytime he walks by without ever entering the store....its too big a risk for most businesses. Kudos to Starbucks for taking the plunge, it shows their commitment to experimenting with traffic driving programs.

You are right about employees checking in though, organizations involved in 4[ ] offers need to educate their workforce about the service.

This service is in its infancy but will soon be the defacto advertising platform, gps + maps seem to be the search engines play, it will be interesting to see if social media (facebook, yelp, twitter, 4 [ ] ) can keep up and or scale.

Can Facebook and Yelp keep up?

Your comment about Facebook and Yelp "keeping up" made me smile. Both have FAR more users than Foursquare, but as you point out, the question is if they can take away momentum from Foursquare's geolocation services. (The funny thing is that Foursquare's founders first launched Dodgeball, which was purchased by Google. Somehow, Google was perfectly positioned to own this space but managed to miss out on the opportunity.)

I think Facebook is the one to watch in this space. They already own SO much of people's time (but perhaps not their trust). If Facebook moves quickly and appropriately, I think they could give Foursquare a run for it's money. Dennis Crowley has made some awfully boastful pronouncements about Foursquare's future, but our data shows few people are using geolocation checkin tools yet. This remains a very nascent space, and anyone can yet "win" in the long run.

Agree Wholeheartedly

When I first saw the special nearby button, I was psyched that someone finally started using Foursquare to drive business. But, I'm experiencing the same as you mentioned in your post. I go to Starbucks 4 times a week, but its unlikely I'll ever become the mayor to get the $1 off. Come on Starbucks...step up to the plate and reward your regulars.

Would love to see other businesses jump on board with specials and deals...otherwise, the cool factor of Foursquare will quickly wear off.

Thanks Jess

This does seem like a rather weak play at a loyalty program via Foursquare--only instead of rewarding loyalty (repeated purchases) it rewards one lucky person with a VERY modest reward. Had Starbucks stepped up to the plate and offered even 50 cents off a Frappuccino with a check in, this would've moved some serious traffic, created a large uptick in purchasesm abd been the most buzzed-about social ad program of the year.

Right on the money!

What a great post. I am always amazed at how even the biggest, most "sophisticated" marketers can completely miss the boat when it comes to relevance. I love how you identified Starbucks' lack of relevance with respect to geography, behaviorally and attitudinally as well. Great job.

Red Robin is even worse

Red Robin has launched a special that only requires users to check in, which I think is probably the best for driving traffic through the door. They've missed one key component, though: actually offering a discount. The deal is exactly the same as the one advertised on their website to everyone who walks in the door, whether they check in or not. It's this kind of thing that will drive users to become blind to Foursquare specials like they have banner ads.

http://aboutfoursquare.com/red-robin-launches-foursquare-checkin-special/

4square must be more aware of when & how to make "mayor" offers

I would suggest that mayor offers ("become a mayor and we'll give you...") are best left to people who have actually checked in at the location. "Special Nearby" offers are better when they are immediately actionable ("check in here and get...")

Advertising is not the answer

Augie, you are spot on. In this day, especially on social platforms, advertising (if not relevant) is just a buzz-kill.

I don't understand why Foursquare's revenue model is based on advertising. If I had 5 minutes to sit down and talk to their executive team, I would show them how much more value there is in collecting and sharing (selling) data.

There are things they could be doing to generate intense loyalty between customers and the establishments they visit, thereby making their social platform even more useful and necessary for businesses. They had such a great start, but they may be making a wrong turn with the way they advertise their specials...

Advertising can be PART of the answer

Nate, I agree with you that the value of their data is substantial, but I also think advertising can have a place on Foursquare. The idea of serving relevant and actionable offers to people is great, I think. It's beneficial for both consumers and advertisers! But Starbucks' offer is so irrelevant. Honestly, this should be so easy for advertisers and Foursquare, but they seem to be making it hard on themselves!

Good luck getting that five minutes with their exec team!

Alternatives for better marketing of Foursquare Specials

Great post, Augie - and great to meet you!

As I mentioned on Twitter, you have some excellent points here - and as an avid Foursquare user as well as a mayor of a Starbucks (and many other locations) I can certainly substantiate your claims here. Why show a "Special nearby" sign in the app when 99% of the people who see it can't take advantage of it, and the 1% who *can* take advantage of it probably don't need to be reminded? And of course why continually make this mistake? And why limit the offer? (I realized by the second day of this promo that I did *not* want a Frappuccino every day...)

I was thinking about this, and also had a discussion with Jennifer Scott (@jennalyns) about this at the #BVBoston tweetup. Here are some thoughts:

* Clearly, Foursquare offers need to be much better, especially if they are targeted at only a single person per venue. That one person who is their most loyal customer should just get coffee for free - or at least 50% off - maybe within some reasonable limit like up to $10? At the moment, these offers are not good enough to incent customers to try and win mayorships, thus changing behavior to drive business (which should be the point here).

* You bring up behavioral and geo targeting, but in fact both can be solved much more simply - venues with mayor deals should only display "Special nearby" signs to people who are *close* to becoming mayor (say, within 1 or 2 check-ins)! This ensures that they are loyal customers of the venue and are at the right location to be targeted

* Related to this is the suggestion that Foursquare should replace the city-wide leaderboard with venue-specific leaderboards, so you could see who the "deputy mayor" is, etc. Competition for mayor one of the most interesting aspects of Foursquare, and right now it's a very mysterious game. This would also allow venues some flexibility in offering deals to not just a single person, but, say, the top 3 or 5 customers.

* You and Hutch argue that the above could also imply that offers should simply be based on a check-in (or a certain number of check-ins) rather than mayorship. This certainly makes offers more broadly applicable. But then you lose some of the incentive to increase going to the venue more than others. I do know there are places in Boston with these exact kinds of specials - for example Aquitane: http://foursquare.com/venue/68054 - free glass of sparkling wine for every 4th check-in.

Hope this all makes sense! As someone who is literally a card-carrying Foursquare mayor ( http://twitpic.com/1ws3au ), I am very interested in this topic and expect enormous amount of improvement over the next year in this area.

Excellent Points, Eric

You raise many great points. Thanks!

I think driving traffic and trial is one goal of a marketer, and thay can be accomplished with simply "Special Nearby" offers that give a discount for a first check in.

I see your point about making loyalty offers to people who are close to becoming mayor, but I also don't see any problem with making a loyalty offer (a la Starbucks) after someone has checked in a several times or even a couple of times. Making a mayor offer AFTER someone has checked in is relevant, but doing so merely because they are nearby and checking into some completely different sort of business is noisy.

I like the Deputy Mayor idea. Foursquare can provide more information to drive loyalty/mayor programs!

I had another idea after posting my blog post--why can't I reject or rate Foursquare offers the way I can with Facebook? How great would it be to be able to say, "I never way to see this Starbucks mayor offer again because it is irrelevant"? Or, better yet, what about Foursquare collecting a list of brands from whom I'd WELCOME an offer? Any time Disney cares to make me a relevant "Special Nearby" offer, I'm listening!

More on settings/personalization for Foursquare Specials

Thanks, Augie! I agree that additional customization of Foursquare specials is an obvious next step, so I would hope that they add these kinds of features soon. Hopefully they'll allow users to turn off/on Special notification by location or possibly by brand, though frankly I think making brands opt-in would significantly decrease the impact/coverage of specials so this would be tricky waters to navigate. I'd guess most people would not take the time to opt in - enabling opt out 1-time, by venue, or permanently more likely to happen at some point.

Foursquare could make brands a preference, not an opt-in

I agree with you about opting-in to brands on Foursquare. I don't see that as workable, but stating a preference could be valuable. Data on user-preferred brands could be used to prioritize offers, extend "Special Nearby" coverage areas, or serve more loyalty-based mayor offers.

Thanks for the feedback!

Starbucks didn't honor Foursquare special

The Foursquare deal doesn't work at a Starbucks location in Tampa, FL. My coworkers and I went there one day and the employee in the drive-thru would not honor the foursquare deal. So we asked for the manager and she said the same thing! Plus, she added that they ONLY accept printed coupons and nothing from Foursquare. What's funny is that the special was specifically for that location.
I think Starbucks needs to inform all of their branches if they are going to put this kind of promotion on.

Agreed--Foursquare deals must be honored

Thao, I agree with you--it's important to Foursquare and Starbucks that the deals be honored. I'm sure this was just an isolated situation, since I've not seen any buzz on failures to honor. Good luck in getting your dollar off a Frappucino!

I definitely agree...

I definitely agree... FourSquare needs to customize ads to match your interests, much in the way that Facebook promotes products related to the things you list on your Facebook page.

Re: Employees checking in

Many good points are being made here about the problems with the Starbucks offer being near ubiquitous and therefore worthless. The point about the employees checking in raises an interesting point. If companies are having Mayoral offers, should using geocaching apps and services be included in a companies social media guidelines? As geocaching becomes more integrated into loyalty and rewards programs, this is going to become more and more relevant.

Agreed!

A great post Augie!

I agree with all of your comments above. When you take a LBS company like Foursquare and add a mega company like Starbucks it should add up to more than $1 off a drink every 30+ days. There should be easier and stickier and more relevant ways to convert on your loyalty. I used to go to Coffee Bean and Tea Leaf stores ONLY for the Vanilla Blended Mocha. That was my drink and each time I bought one, they punched a loyalty card. After 10 drinks (or maybe it was only 8?) I got a FREE one. That kept me going to CB&TL shops all over for a few years. I kept the cards in my pocket with my cash and CC's and if it was a hot day and I saw ANY CB&TL shop, in I'd go. No need to be the "Mayor" of only ONE shop. No competition against other patrons or staff. (I'm frankly AMAZED that staff are allowed to compete in this regard, since its basically universally true that employees cannot compete for prizes and products from their own company without claiming it as income)

If an age old, analogue loyalty program like punch cards can beat out a new-fangled, SmartDevice enabled one, then there is something wrong with the model.

I was the mayor of a

I was the mayor of a starbucks about a month ago. When I asked them about the foursquare discount, none of the employees had ever heard of foursquare before.

Foursquare

Hi Augie,

I am a big fan of your site. You've always got great info. Anyway, I know that you are interested in Foursquare, so I thought you might like to check out the Foursquare app I've just built for Facebook and Wordpress.

"My Foursquare makes it easy to show off your badges, mayorships and checkins on Facebook, your blog or your website".

http://www.myfoursquare.net/

If you want more info I can send you a detailed blurb and screenshots etc. Thanks, and keep the good info coming!

Dave McKinney
My Foursquare

Foursquare Overload

I was a heavy Foursquare user when it first launched, but I've gotten bored with it. I try to follow what's happening with the social media service to see if there are any relevant reasons for my customers to pay attention to it.

I agree with your reasoning with Starbucks saturation. With a store every other mile where I live, I stopped paying attention to the offers. I also found ads that were too far away or not relevant to me...causing ad blindness.

If Foursquare were to combine with some of the instant notification power of Twitter, I think it would be a stronger platform. If local advertisers could push our relevant, real-time offers to help drive new business it would be a winning combination.

For example; a barbershop I frequent during the week is usually very slow during the day. If they could push out a special offer that could bring in business during normally slow periods, with unique offers that create loyalty....WOW

I hope Foursquare offers get better or it won't be long before I delete the app from my iphone and HTC Evo.

Agreed!

Thanks, Richard. I couldn't agree more.

I agree with all ofthe people

I agree with all ofthe people who have commented above. When we see a LBS company like Foursquare and add a mega company like Starbucks it should make a difference. At this point, I agree with the reasoning with Starbucks saturation and they really need some changes to be in the business.