It was inevitable the game-like features of Foursquare's 'mayorships,' 'badges' and 'check-ins' would ultimately pave a path to paid advertising. Yes, that unassuming little geolocation-based app that launched three short years ago at South by Southwest and has amassed over 20 million registered users has decided to monetize. Finally slipping into their big boy pants, Denis Crowley and Naveen Selvadurai's company have launched "Promoted Updates," with clients Madison Avenue ad agencies have been known to court over the years.
Promoted Updates being billed as "search ads for the real world," signed recently a pilot group of big brand advertisers that even include one of Don Draper's old accounts: Hilton Hotels. And if the venerable Conrad Hilton was alive today, I think he would have approved of this deal whole-hardily. Known for his infamous quote, "location, location, location," he was the first hotelier who believed that a hotel's primary marketing strategy was its address.
Geolocation apps are just an extension of that philosophy. Foursquare will use Promoted Updates to sell a brand's product or service (usually at a discount) when a Foursquare user is close enough [to a business location] to be attracted by the offer. This is a new spin on the age-old marketing strategy: right place, right person, right time.
From the days of "Mad Men" up through the beginning of the 21st Century, the marketing paradigms of 'push and pull' existed in supply chain management as the exchange of a goods between two parties. On the supply side, the brand traditionally 'pushed' the message out to the consumer, while on the market side, those same consumers 'pulled' the goods or information when they had a need.
If TV, Newspapers and Billboards are Push Marketing - and Web 2.0 and user-generated content produces Pull Marketing, what prompts 'Magnetic Marketing?'
Magnetic marketing is when the consumer and brand are drawn together at the right time and the right place, without the need for either side to take an aggressive action. Like a magnet, the customer and brand come together naturally because the mutual attraction is that strong.
Based on this paradigm, magnetic marketing allows the brand to meet its its customer at the one point in time when both are traversing the "same wave length.” For instance, in the travel industry, this occurs when a guest books a hotel room utilizing the property’s online booking engine. During the confirmation process, if they were to receive a branded message, they would be more inclined to share this info with their social connections on Twitter, Facebook and LinkedIn.
Flip.to, which is a brand advocacy platform for hotels uses incentives to motivate guests right after they have booked a guestroom online. And the results are significant. Magnetic marketing for them has generated return on engagement rates that range from 15-25%, way above the 2-3% returns from traditional adverting of the past. And their client's return on investments generated from new customers receiving that type of messaging has risen as high as 66X ROI.
Differing slightly from the Flip.to model, with Foursquare launching Promoted Updates, magnetic marketing for them will be signaled by a "location" versus "time of booking" trigger. Here the "same wavelength" will be based on one's proximity to a hotel, and the offers that would appeal to Foursquare users who are within easy walking or driving distances. This same model holds true across all travel verticals including airlines, restaurants and airports. But for the highly competitive hotel market, magnetic marketing is a particularly powerful new construct that can make major contributions to online and mobile marketing.
Since Hilton and several other major brands will be first to pilot Foursquare’s initial Promoted Updates, this new platform is not yet universally available. However, for brands that are interested in testing the waters during the apps next iteration, you can sign up for requests and updates here.