Cost Per Check-in: Has Foursquare Initiated A New Ad Model?

We know about ad deals based on impressions and  we are familiar with banner ads and pop-ups. Google Adsense opened us up to cost per click-throughs. But as social networking moves from the desktop to mobile devices are we ready to engage in a brand new business model Cost Per Check-in? And will local establishments and brands be willing to pay for it?

As social networks services like Twitter search for ways to monetize, Foursquare, the location-based social network has been successful in expanding on the buzz it started in 2009 - namely check-ins. Check-ins are the game-like component of Foursquare that incents users to check-in to local establishments like restaurants and bars to gain points on a leader board and earn "mayoral" bragging rights. Becoming a mayor basically means you are the "top dog" patron - the user with the most visitations.

The ramifications of this model is a virtual gold-mine in the making. Hotels have been actively involved with loyalty programs since the early 1980s, and restaurants have followed suit over the years. However, while we are familiar with accumulating 'frequent diner' collateral from a number of restaurants in the past, it was a cumbersome chore to keep track of all of them. The onus fell on the users and their bulging wallets or purses to organize and store all the loyalty cards, only to lose them or forget them at home when you needed them. However with mobile devices and smartphones, we now have the technology that can monitors all such programs and transactions with the ease of a couple of clicks.

As a result of the geolocation feature built-in to the Foursquare model and the ability of our smartphones' GPS systems to tag our where-abouts, restaurants and bars have the opportunity to promote their facilities at little to no cost. Why? Because to date, Foursquare has not charged any of these establishments for the service.

Similar to its forebearer Twitter, Foursquare knows they have to scale their user base to a critical mass level before they can show value to a restaurant (or a brand) and begin to charge for their service. Today, its been announced they have reached the milestone of 300,000. This according to a Sparxoo study by Ethan Lyon puts them at the 'Early Adopter' stage, the juncture just before they jump to the their 'Early Majority' phase of their life cycle.

Adoption Curve:

According to the study, Foursquare's initial followers were 'Innovators' or what some have called the 'tragically hip urban hipsters.'  Three years ago, Twitter attracted a similar demographic before its 'Early Adopters' moved to its 'Early Majority' stage.

Feb 5, 2010
by Anonymous

4sq revenure from check-in or advertising

Interesting. I think the service has to become more valuable before people will be willing to pay for it. We are starting to see that trend now, but from the consumer side it's still a game. I think the revenue model will have to come from the advertising.