P&G, Pepsi Try Out Foursquare's New App, Swarm

Advertisers Include P&G, Volvo and Shell

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A month after Foursquare unveiled its ambitious plan to unbundle its services by launching a spin-off app for check-ins called Swarm, the company has begun to sell ads on that new real estate.

Ads on Swarm from existing Foursquare advertisers including Procter & Gamble, Hennessy, Volvo, Pepsi and Shell will appear at the bottom of users' screens after they check into a location. It's a format that's currently available on the core Foursquare app, in interstitial form, and had been known as a "post check-in ad."

Swarm ad for Lipton
Swarm ad for Lipton

Now the company is calling them "place-based ads," a rebranding that mirrors its current efforts to distance itself from check-ins. The new Foursquare -- which executives say will launch this summer -- will dispense with check-ins altogether and focus on discovery of nearby venues tailored to users' tastes and will take on Yelp and other local-search sites more directly.

The company is "slowly migrating people from the Foursquare app into Swarm," according to CEO Dennis Crowley, and it hasn't disclosed how many users Swarm has. (Foursquare reports having over 50 million registered users, but the company doesn't break out how many of them access the service on a monthly basis.) In addition to the familiar check-in function, the Swarm app has a new feature: letting users see which of their friends are close by, up to within a 500-foot radius, even when they haven't checked in.

"We wanted people in Swarm to have this sixth-sense awareness of where their friends are in the hopes they would meet up with them more often," Mr. Crowley said.

Foursquare's ad business
The core Foursquare app that's currently being overhauled has three ad products. There are promoted places, which are mentioned in small banners when users open the app; place-based ads that appear after they check in; and the Foursquare Audience Network. For the latter, the company works with ad-tech partners on the buy side to let advertisers use its trove of location data to anonymously target Foursquare users across the web and in other mobile environments.

Foursquare's entry into the world of programmatic buying and selling was formalized with its announcement this winter that it was partnering with Turn to sell audience segments of people who frequently go to the gym or grocery store, for example. Since then, it's begun working with Google's DoubleClick Bid Manager.

While Foursquare is looking to sideline check-ins, they're the foundation of its ad business, at least for now.

The audience network is Foursquare's only ad product that uses passive location data, collected via tracking of users who've installed the Foursquare app, in addition to explicit check-ins, to build out audience segments. But it follows that Foursquare intends to put more of that passive data to work. The company's chief revenue officer, Steven Rosenblatt, said that place-based ads will be present in the new version of Foursquare. A company spokeswoman declined to comment on what those future ads will look like or how they will be targeted.

As for new formats, Mr. Rosenblatt hinted that the "plans" tool in Swarm, through which users can tell their friends what they're thinking of doing later, might be an interesting place for advertisers to run a promotion.

"You can imagine down the road doing some creative things leveraging 'plans' with relevant merchants or brands," he said.

Foursquare has seen more revenue come in so far this year than it did in all of 2013, Mr. Crowley said. According to The Verge, it's on course to make $40 million to $50 million this year, up from $12 million last year.

Separate from its nascent ad business, Foursquare signed a multi-year data licensing pact with Microsoft in February. The tech giant also invested $15 million in Foursquare's Series D funding round, bringing the five-year-old company's total funding to $162.4 million, according to CrunchBase.

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