CHICAGO (AdAge.com) -- Facebook is preparing to launch location-based status updates for its users. But the social network is also planning to offer it to marketers, including McDonald's.
As early as this month, the social-networking site will give users the ability to post their location within a status update. McDonald's, through digital agency Tribal DDB, Chicago, is building an app with Facebook would allow users to check in at one of its restaurants and have a featured product appear in the post, such as an Angus Quarter Pounder, say executives close to the deal.
Facebook is not directly charging McDonald's to build the app; Facebook generally does not charge developers to build on its platform. But executives with knowledge say it was negotiated as part of a bigger media buy on Facebook, and McDonald's will be the first marketer to take advantage of the service.
The fast feeder won't be alone for long. While McDonald's is expected to be involved in the rollout in the next few weeks, execs at 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.
San Francisco-based digital marketing firm Context Optional is working on Facebook location features for its retail clients. "It's supposed to come out this month," Context Optional CEO Kevin Barenblat said. "So we're getting ready to incorporate it. We just don't know exactly when it's going to be available."
The new feature is a direct threat to other location-based social networks such as Foursquare, Gowalla and MyTown. While these services are small, marketers have taken an intense interest in them as a means to drive offline sales. Marketers such as PepsiCo, Starbucks, Bravo and MTV have all experimented with campaigns on Foursquare.
McDonald's has dialed up its digital presence in the U.S. over the last year, most prominently in its launch of McCafe, sponsorship of the Winter Olympics and a recently overhauled consumer website. McDonald's and Tribal DDB declined to comment.
Facebook has acknowledged that it's looking to incorporate geolocation technology into its platform. It was widely expected that the company would make an announcement at F8, an annual developer conference, held last month. The company declined to comment on the McDonald's relationship.
Yesterday, Kevin Colleran, director-national sales at Facebook, was asked about such a capability at Resource Interactive's iCitizen Conference in Columbus, Ohio. "We're still trying to figure out what our strategy is," Mr. Colleran said. "When we launch, whatever our product in that space, we will figure it out."
He also underscored that Facebook wouldn't attempt to monetize geolocation capabilities in the near term. "We never launch a functionality with the intent of monetizing it," he said. "The best case in point would be [advertisers] are frustrated. We will not allow them to buy an ad on mobile."
Mr. Colleran noted that Facebook has the world's largest mobile application, with more than 100 million users each day. "We don't make a single dime off it," he said. "And that is our intent." Facebook, he said, is profitable because of the advertising on Facebook.com alone.
Therefore, it's unclear whether Facebook is charging marketers for inclusion in the geolocation platform or if consumers will opt in to post a company's logo with a status update.
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Contributing: Jeremy Mullman, Edmund Lee, Jack Neff and Michael Learmonth