Last summer we told you Foursquare was working with ad tech company Turn to deliver ads to its users on PCs, tablets and phones.
Now, the five-year-old social network is talking about it.
Foursquare is formalizing its entry into the programmatic ad world as it moves to diversify beyond ads within the Foursquare app and generate more revenue from its trove of location data.
The company's director of sales and revenue operations, Eric Friedman, says that Foursquare has been working with Turn to show display ads to users on the web since late spring of last year, and mobile inventory was added to the mix in early fall.
The deal allows Foursquare to target its users when they're browsing the web and other mobile apps. Since it began last year, Foursquare's ads have been appearing on Turn's ad exchange partners, which include Facebook's exchange.
Foursquare is selling the ads directly via its 30-person national sales team, buying on the ad exchanges via Turn and then selling to brands and agencies on a CPM basis and pocketing the difference.
Horizon Media has been using the "Foursquare Audience Network" for its client base, but Mr. Friedman declined to name specific brands and other agencies that have bought the offering.
Foursquare's notion is that the real-world location data it captures from users via their check-ins -- through which it can build audience segments of people who go to the gym or grocery store frequently, for example -- is a powerful indicator of what people really care about.
Chief Revenue Officer Steven Rosenblatt says he thinks the company's location data will have unique value in the programmatic world.
"Everyone's got the same commoditized data sources," he said. "[They're] getting the same data from Acxiom and Experian and the same publishers over and over, and I think there's some fatigue in the market."
How it works
Foursquare can anonymously match user email addresses to web cookies for desktop targeting through a third-party match partner like LiveRamp, which then subsequently matches to Turn. (Users who log into Foursquare.com can also be matched for web targeting, but that's a less common use case, since the lion's share of Foursquare activity occurs on mobile.) For targeting via mobile ad exchanges, the matching is facilitated via device IDs.
Conversion marketing isn’t just a trend or tactic. It’s a fundamentally new way to approach marketing -- yet it’s based on the most timeless of principles: that the key to success in business is to drive sales today, while building stronger brands for tomorrow. Brought to you by Catapult.Learn more
The targeting only extends to users, and Foursquare isn't expanding the reach of campaigns through lookalike modeling, though Mr. Friedman doesn't rule out the future possibility.
It's also only using explicit check-ins -- is has 5 billion in its history to date -- and not any other location data that it may be possible to capture from users who have the app installed on their phones but aren't actively checking in.
For example, users may see push notifications from Foursquare alerting them to fact that they're close to restaurants or bars they might like. But Foursquare isn't putting any of that passive location data to work for ad targeting, though it also hasn't been ruled out.
"You can imagine a time where we get smarter about where people spend their time," Mr. Friedman said.
But as is often the case when the prospects for Foursquare's ad business are raised, the underlying question is scale. The company has 45 million registered users but doesn't break out how many of them are active on a monthly basis.
"Two years ago, we were asking, how do they get scale of download, and we're still asking," said Chris Copeland, CEO of GroupM Next.
Foursquare won't disclose its revenue, but Fast Company projected that it was on course to bring in between $15 million and $20 million last year, up from $2 million in 2012.
Going into 2014, the 170-person company is trying to make its data a revenue-generating asset, separate from its nascent ad business.
It signed a multiyear data licensing pact with Microsoft earlier this month, when the tech giant also invested $15 million in Foursquare's Series D funding round, adding to the $35 million the company had already raised in December.
How Microsoft intends to use Foursquare's data hasn't been specifically disclosed, but potential applications include baking location data into Bing or even into the operating system for Windows Phone.