Forrester: Why Most Marketers Should Forgo Foursquare

Report Finds That Only 4% of Online Adults Use Location-Based Services

by Kunur Patel
Published: July 26, 2010

NEW YORK (AdAge.com) -- Marketers, hold off on Foursquare -- for now. That's the verdict of Forrester Research on location-based start-ups, which, despite their reputation as the hot new media, are still too small for major marketers. The research firm finds that these heavily-hyped apps currently make sense mainly for brands seeking male influencers.

In a study out today, Forrester finds that only 4% of U.S. online adults have ever used location-based mobile apps such as Foursquare, Gowalla and Loopt. Only 1% update these services more than once per week. What's more, 84% of respondents said they are not familiar with such apps, leaving the vast majority of Americans online still in the dark about location-based apps, which have had the marketing world obsessing over them in recent months.

The report could also be a wake-up call for social media on mobile phones, especially when comparing the location services to the last social-media darling, Twitter. The micro-blogging service reports 35% of its 125 million registered users are in the U.S. and only a fraction of that number accesses Twitter via mobile. In April, Twitter said 37% of its usage comes via mobile clients. Apply that percentage to U.S. tweeters -- we must extrapolate because the company does not break out U.S. users via mobile specifically -- and the 16 million Americans using Twitter via mobile is about comparable to the location-apps audience in total.

Almost 80% of location-based service users are male. Close to 70% of them are between the ages of 19 and 35, and 70% have college degrees or higher. Forrester also found these location-app users to be influential (the report finds they're 38% more likely to say friends and family ask their opinions before a purchase) and they are especially receptive to mobile coupons and offers. This set is up to 20% more likely to consult their phones before a purchase, and are far more likely to research products and services and read customer reviews.

This small audience is still attractive to some marketers. Forrester recommends that gaming, consumer electronics and sportswear marketers lead the way with testing these apps. Location apps have already proved they're not only for male-oriented brands. PepsiCo, Starbucks, Oil of Olay, Bravo and, most recently, Campbell's Soup have all launched campaigns with location apps.

Forrester analyst Melissa Parrish believes that male-oriented brands should forge the way and other marketers should hang back until these apps get bigger audiences. To date, Foursquare has more than 2 million users; Loopt 4 million and MyTown 2.5 million. Scale could come to the category if digital behemoths such as Facebook, Google and Twitter, which have already made moves toward location services, develop their own products.