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Posted by Augie Ray on June 15, 2010
Foursquare, 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:
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?