Location-based service networks have been nervously anticipating Facebook moving into their space in 2010, but when nothing was announced regarding geolocation technology at the company's F8 Developers Conference last month, many thought it was a back-burner issue. Not the case. With over 400 million users compared to Foursquare's one million, this David and Goliath scenario could prove to be the LBS death knell.
As early as May, Facebook will allow users the opportunity to post their location within a status update and McDonald's is the first to take a test drive with that ad vehicle. McDonald's is building the app with Facebook which like Foursquare will let users check-in at one of its restaurants and have a featured product appear in the post - for example- a Big Mac!
Back in February, I speculated that "cost-per-check-in" would become the new ad model for location-based services (see "Cost Per Check-in: Has Foursquare Initiated A New Ad Model?"). According to an Ad Age report, while it's noted that Facebook is not directly charging McDonald's to build the app (since Facebook doesn't normally charge developers to build on its platform), there could be a "cost per check-in" transactional fees built into the media buy.
Ad Age also suggested that "while McDonald's is expected to be involved in the roll-out in the next few weeks…other digital shops have begun to spec out location-based campaigns in anticipation of Facebook's impending functionality, which will allow users to include their location in a status update with other products and services.
To date, Foursquare and Gowalla have led the charge in the location-based service space, with Foursquare becoming the darling of TV sponsorship deals cut with the likes of Bravo, MTV, HBO, the History Channel and VH1 (see "While Facebook Conquers The Web, Foursquare Targets TV"). Pepsico's "Pepsi Loot" app is launching this month as well, and just became the exclusive non-alcoholic beverage partner with Foursquare, which will customize programs and retailer-specific experiments for the company in June.
Out of Facebook's 400 million users, the social network also has the world's largest mobile application population, with more than 100 million users per day. While reports indicate Facebook won't be selling mobile advertising, this is hard to understand. If McDonald's, PepsiCo and other products are positioned to increase revenues exponentially out of these geolocation campaigns, it's difficult to fathom that Mark Zuckerberg et al won't be taking a cut of that action.
If not packaged into the partnership deal, there must be an undisclosed monetary transaction that is currently unknown to the public. You can rest assured that Facebook is not just going to hand over its millions of users so others can reap the benefit. Guaranteed in the next few months - all will be revealed - as well as where Foursquare stands as result of Goliath taking a walk on the "geolocation wild side." Fee Fie Fo Fum!