Foursquare has started rolling out ads to users immediately after they check in to a certain location as part of a push on increasing revenues through better targeted ads.
According to Ad Age, the company started rolling the service out this month, with the Diageo-owned rum brand Captain Morgan among one of the first to use the new ad system. The company is using the new ad service in certain locations, like some bars and restaurants, to suggest that Foursquare users order “Captain and cola” or “Captain and ginger”.
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Toys R US is also said to be using the system to lure in potential customers, but rather than taking the hyperlocal approach of Captain Morgan it is using family-friendly locations (theme parks, restaurants, play areas etc.) to push discounts of up to 20 percent in-store.
Ad Age reports that pricing for the service is done on an (undisclosed) Cost Per Action (CPA) basis. An action is defined as either clicking on an ad, like Cost Per Click (CPC) or by that person checking in at that advertiser’s physical location within 72 hours of being served the ad.
Naturally, we got in contact with Foursquare but the company hadn’t gotten back to us at the time of publication.
Foursquare’s decision to start making better use of its vast amounts of check-in and user data is underpinned by a need to generate larger revenues and continue to stay relevant with users. In March this year, Foursquare co-founder Dennis Crowley, said the company had only started to generate revenues in the second half of 2012, with most of the focus to go on luring brands to advertise on the network.
Whether or not the new post-check-in ad units will be able to generate significant enough revenues to allay fears over the company being overvalued – previous funding rounds saw the company reach a roughly $600m valuation while it was only reportedly driving revenues of about $2m – remain to be seen.
Foursquare has the advantage of a widely-used and well-established geo-location platform with masses of data, however, which not all of its rivals can boast.
This article has been updated to reflect that ads are priced on a CPA basis rather than CPC.