Foursquare Eyes June for Launch of New Advertising Platform

Promoted Specials Part of Network's Revenue Plans

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Foursquare aims to launch a paid-media platform in mid-June and is pitching brands to become launch partners, according to a person familiar with the matter.

The product will let merchants promote a deal to check in at a given area through its existing merchant platform, which allows businesses to claim their Foursquare listings. When users search for local specials, they can see offers via paid ads on Foursquare. Those ads will be targeted using the same algorithms that power "explore," which recommends establishments based on a users' past check-ins, as well as those of friends and the wider Foursquare user base.

Foursquare founder and CEO Dennis Crowley
Foursquare founder and CEO Dennis Crowley

The person familiar with the matter said Foursquare is developing these offerings in consultation with marketers that it has worked with before and that have had a big presence on the network. Previously, Foursquare has worked with brands including Pepsi, Dunkin' Donuts, Whole Foods and RadioShack.

Walgreens Social-Media Director Adam Kmiec said he had been briefed on Foursquare's nascent paid-media plans but hasn't committed yet. Past Walgreens programs with Foursquare include the company's pledge to donate a flu shot for every store check-in (from either Facebook or Foursquare) and an exclusive partnership to embed barcodes that users can unlock by checking in to a store and redeem for savings. (The daily offer at launch was for a 50-cent Arizona Ice Tea.)

"As Foursquare rolls out its new paid-media platform, we'll certainly be giving serious thought to how it would fit into our commitment to bring social to a local level," Mr. Kmiec said.

Launched in 2009 at the South by Southwest Interactive conference Foursquare became an eager partner of brands such as Pepsi, Tasti D-Lite, Bravo and Starbucks. It was a markedly different strategy from other social-media starlets like Twitter and Tumblr that steered clear of brands in their early days.

The startup, which recently topped 20 million users, has been using those early partnerships as an opportunity to test and learn as it gradually maps out an ad strategy.

American Express has been Foursquare's most prominent and consistent partner. It launched a program that enables AmEx members to sync their cards with their Foursquare accounts to redeem savings by checking in at locations, such as H&M and the Sports Authority. But Foursquare doesn't get a cut of any of those purchases. AmEx Sync also works on Facebook and Twitter.

Media organizations have been among the most avid partners of Foursquare by doing content integrations. For instance, Time Out New York rolled out a Foursquare-powered leaderboard to show the pecking order of users seeking to complete a list of tips from its Best of New York issue.

Foursquare declined to comment on its ad plans, but said in a statement: "Over 750,000 businesses use Foursquare to engage with their customers, and we're continually improving our offerings to make the platform even more powerful for them. Our goal is to build scalable self-service tools that enable businesses to draw in new customers and retain and reward their most loyal ones, while also enhancing the Foursquare experience for our 20,000,000-strong community."

But Foursquare doesn't have the mobile check-in market to itself. Facebook has been urging national retailers to have a strategy for their "places" pages for local stores, and last summer it introduced "parent-child linking" to let brands administer those pages centrally, which enabled them to set up check-in deals and promotions.

There are other signs that Facebook is ramping up its courtship of national retailers. According to Rob Reed of MomentFeed, a location-based marketing platform, the number of likes for the places page seems to have grown exponentially over the past month, which he attributes to a change in Facebook's search algorithms. (For example, if you search for "Chipotle" on Facebook, local pages will rise to the top instead of the main corporate page.)

While Facebook has the scale, Foursquare has engaged users. Mr. Reed noted that Target , for instance, gets much more check-in activity from Foursquare than from Facebook. He attributes that to Facebook check-ins' tendency to be more event-driven and used by people who want to memorialize a night out on their timeline.

Mr. Reed thinks the two companies could soon be more directly in competition because of a recent development at Facebook: its just-launched "offers," which can be published to places pages and also be targeted as an ad. Offers can also be redeemed with a mobile device.

"It's definitely going to compete head-to-head with Foursquare because the offer itself is free [for brands]," Mr. Reed said.

Foursquare has raised $71.4 million, including a $50-million round last June.

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