As 2009 draws to a close, with Twitter undoubtedly this year's media darling and Facebook continuing on its path to global domination, you may wonder which social-media service will become tech's poster boy in 2010. Among the Web's early adopter set, the answer is nearly unanimous: Foursquare (full article...).
CNN.com | Next year's Twitter? It's Foursquare (by Pete Cashmore, Mashable)
There's a lot of buzz out there about Square these days, not just because it was started by one of the original twttr folk, Jack Dorsey. Like all innovation and social media observers, I see a lot of very interesting applications come through my Google Reader every day but Square was of particular interest to me. Earlier in my career I worked in a card merchant services product management organization and remember being impressed by the wireless card terminals that enabled people to accept credit card transactions remotely. As passe as that seems now, back then, that was pretty cool. This wireless offering was targeted as somewhat of a niche market - transient or mobile merchants like cab drivers, flea market booth sellers, etc. While there were obvious benefits to the solution (chief among them: being able to accept credit cards as payments and lower interchange rates) there was one key problem. The cost of the equipment and the contract required to use the service. I forget the exact cost, but even today, these devices aren't cheap. However, merchants had few alternatives.
There is no doubt that word of mouth marketing is one of the most effective types of marketing. We watch what our friends watch, read what our friends read, eat where our friends eat, and wear what our friends wear. And we don’t just listen; each day we all make countless product or service recommendations.
Surprisingly, most mainstream ads still speak to us like we are a captive audience. These traditional advertising channels like billboards, print, and online banners are becoming less effective as the number of captive audience opportunities decrease. We don’t read magazines that much. We’ve completely given up on newspapers and we blast by TV commercials using TiVo or our DVRS. Online banners don’t work either, only about 8% of us are generating 85% of all online banner ad clicks. In other words, we’ve tuned out marketing messages we don’t want to receive.
Alternatively we seek out recommendations from our friends and people we look up to. In 2000, Malcolm Gladwell proved the marketing power of “connectors”, “mavens”, and “salesmen” in The Tipping Point. Back then Gladwell defined a “connector” as someone with a “truly extraordinary knack [... for] making friends and acquaintances” and categorized those individuals as having social networks over 100 or more friends. Now-a-days, tools like facebook and twitter have allowed us to expand our influence dramatically. On facebook the average user has 130 friends. Connectors aren’t unique anymore they’re commonplace.
What's intersting is that the word-of-mouth marketing channel is almost completely untapped by brand advertisers. Out of the 650+ billion dollars spent on advertising worldwide last year only about 2.1b was paid out to affiliates for successful referrals. I’m excited to see this number increase significantly over the next 5 years. A couple signs indicate that we are moving in the right direction. A few weeks ago Amazon started blazing the trail by launching twitter integration into their Amazon Associates affiliate referral program. I think this is the first of many services that will help users cash in their personal brand equity and social influence while optimizing marketing effectiveness for brands. Foursquare has also begun establishing themselves as players in the word-of-mouth marketing picture:
“So far, about 200 venues, as diverse as bars and frames shops, have promotions offering discounts and other perks to Foursquare users in the system. Later, those businesses will be asked to pay to include their promotions, [Tristan]Walker said. In New York and San Francisco, where Foursquare's popularity is high, "mayors" drink free at their favorite bars and loyal customers get discounts.”
It’s exciting that businesses have used Foursquare to identify and compensate influencers. I expect this trend to gain a lot of momentum in 2010. New services will sprout up to help advertisers find and compensate individuals. I also expect the affiliate referral revenue to at least double. Do you think the word of mouth market is a viable marketing channel? Let me know what you think in the comments.
In addition to the above, I am also grateful to Engaged Media for*:
There are so many other reasons that can be highlighted to why Engaged Media is such a great tool - not too mention the impact and enrichment it brings to our daily lives.
What would be some of your contributing reasons to be thankful for Engaged Media?
*Examples used are by no means exhaustive
Over the last six months just about all of my tech friends have started using Foursquare
, a geolocation-based game that was built by the creators of Google-acquired Dodgeball. Some of them will literally pull out their phones as soon as they enter any restaurant, event or even TechCrunch HQ and check in just so they can be named ‘mayor’ of that establishment (whoever checks into any particular location the most times becomes mayor of that location). It’s fascinating and a bit bizarre to watch, and it clearly shows that Foursquare has tapped into something powerful.
But all this time I’ve had a nagging feeling that Foursquare, at least in its current form, is not going to be the next Twitter
While the world’s largest social network has been almost totally silent with regard to its plans for geolocation, we’ve been hearing an increasing number of rumors about Facebook finally coming close to launching these features. Such rumors have come and gone for a long time, but all signs point to the most recent batch being true. For one, Facebook recently edited its Privacy Policy to explicitly allow for location-based features. And perhaps more importantly, the clock is ticking: Facebook’s rival Twitter just launched its Geolocation API, and Facebook can’t afford to be left in the dust. Facebook absolutely needs to implement location if it’s going to maintain is status as the top social network.
When it does launch, Facebook is going to have a massive impact on the current location based service environment. Much of this still-nascent space will change. And those that fail to evolve quickly will die.
Deconstructing Foursquare
I’m singling out Foursquare because it’s currently the hottest startup in location. But many of the issues affecting Foursquare apply to other promising geo-based startups like Gowalla
During our Realtime CrunchUp, Foursquare VP of Business Development Tristan Walker described Foursquare as a company that “makes things that make cities easier to use. We try to get folks to get out and explore the cities in which they live, or visit, and incentivize them to do so. It’s a little bit of a friend finder, a little bit of a social city guide… and we use game mechanics to tie that all together.”
First, let’s look at Foursquare the game. Whenever you check in on Foursquare, you’re rewarded with points and (sometimes) badges with clever names. These are fun initially, because you can easily compete with your friends for bragging rights. But while these game elements are a good way to entice users, they’re ultimately just a gimmick. In two year’s time, will any of these people seriously care about how many checkins they have? I doubt it. Certainly not enough to motivate them to check in every time they enter an establishment. If there’s one thing I’ve learned as a lifelong gamer, it’s that even the most engaging, addictive games out there get tired after a while. And Foursquare’s gameplay simply isn’t that engaging to begin with.
Then there’s the social city guide element of Foursquare, which could one day be a full-fledged social recommendation feature. But right now it revolves around leaving ‘tips’ about the locations you visit. This is Foursquare’s weakest point. When I look through the tips of various restaurants they’re usually filled with things like “try the chicken noodle soup”. These are occasionally helpful, but they lack context. Most of the tips I’m seeing were left by people who I don’t know at all, and they’re too brief to be any more useful than something I can already find on Yelp. I certainly haven’t reached the point where I want to see the available Foursquare tips every time I check into a restaurant.
Finally, there’s Foursquare the friend finder. The first thing you see when you boot the app is a list of where your friends have checked in recently. This is the driving force behind Foursquare’s growing popularity. There have been other services, like Loopt
Why Facebook Already Won
The most compelling part of Foursquare is the ability to see at a glance what your friends are up to. Unfortunately, most people don’t know all that many people on Foursquare yet — my current Friends List on Foursquare is dominated by folks who live and breathe tech, without a single person from my ‘regular’ social circle on the service. Twitter has always suffered from the same problem, and even a year of stellar growth and constant press attention hasn’t yet given Twitter an on ramp into mainstream use.
Facebook doesn’t have that problem. At most, there are probably a few dozen people who you’d like to share your location with. And you’re already friends with all of them on Facebook. You may even have separated them into a Friends List of “real” friends — the people you hang out with on a regular basis. And that’s why Facebook has already won the battle. Unlike Twitter, where you may be interested in following people you don’t know well, your circle of close friends on Facebook and the people with whom you’d probably like to share your location are one and the same. If Facebook really wanted to, it could probably even look at people you’re commonly tagged alongside in photos to help suggest who to include on your list of ‘location’ friends.
There are plenty of other things Facebook has going for it. Facebook already has a robust system for managing privacy settings. Granted, they’re confusing as all hell, but Facebook has made it clear that it’s working on making them easier to use. And over the years millions of people have come to trust Facebook as a relatively safe service — something that is key given the sensitive nature of location. Foursquare is a looming privacy disaster.
The other key component is Facebook’s ubiquity on GPS-enabled smartphones. These are essential for updating your location on the go (which is where most of geo’s utility comes from). And Facebook is already dominating here. Facebook is the most popular iPhone/iPod Touch app of all time, and it has a strong presence on other platforms as well (it comes preinstalled on Android and Palm’s WebOS).
It is hard to overstate how important these advantages are for Facebook. It may not be particularly difficult for other services to implement privacy features and friends lists, or even to build nice iPhone apps. But getting people to start using them will be incredibly difficult.
The Big Question Mark
Facebook has made it quite clear that location based something is coming. We’ve heard rumors about it for months, and in their most recent Privacy Policy change they actually included language directly pertaining to location based services. Here’s how it reads:
“Location Information. When you share your location with others or add a location to something you post, we treat that like any other content you post (for example, it is subject to your privacy settings). If we offer a service that supports this type of location sharing we will present you with an opt-in choice of whether you want to participate.”
So it looks like it’s coming soon, but we still don’t know the direction Facebook is going to take.
There are two obvious ways Facebook could treat location. It can act as a direct competitor to services like Loopt, Foursquare, and the rest by allowing you to directly check into locations from your phone or via the web. Or, it serve as something of a central hub for location that third parties could update via an API. In other words, updating a service like Foursquare could then update your Facebook location.
It seems likely that Facebook will wind up doing both. Twitter is already trying to become the central hub for geo-positioned status updates through its own API, and Facebook isn’t going to give that up without a fight. Given Facebook’s moves to bolster its other API functions, I think it’s safe to say they’ll be allowing developers to push a user’s geolocation from their service or app into Facebook.
Facebook would be foolish to rely exclusively on third parties as a source of location data. Many people update their status messages and photos exclusively through Facebook.com and their official mobile applications, probably without realizing they have other options. The big question is what form this native location functionality that appears within Facebook will take. Facebook could simply allow people to geotag their status updates in the same way that Twitter does. Or it could adopt a robust location feature that more closely resembles Foursquare and Loopt. The Terms of Service change leaves room for both of these. Again, I think Facebook will do both. Third parties may be able to tap into this data via Facebook Connect, but they won’t own it.
I don’t think Facebook is going to set out to beat Foursquare. Far from it, in fact — I think Facebook is going to readily accept geo data through its API, which makes Foursquare a great potential contributor. But if Facebook chooses to own your location and that of your friends, it will severely undermine Foursquare’s primary feature.
Nothing Is In the Bag
All of that said, Facebook could still mess this up. The company has been thinking of location for a very long time now, and has held off largely because of the concerns over privacy. These concerns are certainly valid. Attorneys general from multiple countries are clearly keeping their eyes on the site’s potential safety risks. In light of this scrutiny, there’s a chance that Facebook will roll out location too slowly. Or that what they do roll out will be handicapped. Given how much is at stake I don’t think they’ll let that happen, but it’s possible.
How Foursquare And The Rest Can Still Thrive
If Facebook does nail geo, that doesn’t necessarily mean Foursquare is doomed. It just means that Foursquare needs to build a product whose core value extends beyond showing where your friends are. That’s why I think their social city guide is probably the best thing it has going for it. It may be lacking now, but if Foursquare can build out a compelling recommendation engine that introduces you to new people to meet and places to see based on your past checkin history, it could be very cool. It could also continue building out its gaming elements to keep them fresh.
Looking forward, services like SimpleGeo
Website: facebook.com Location: Palo Alto, California, United States Founded: February 1, 2004 Funding: $716M Facebook is the world’s largest social network, with over 300 million users.
Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard… Learn More
Website: foursquare.com Founded: 2009 Funding: $1.35M Foursquare is a location based social network that incorporates gaming elements. Learn More
A survey this week from 24seven inquired about marketing trends I think will decline or go away in 2010. Among those I cited was phone-a-friend because viral activities are moving so rapidly toward online application domination. A similar question can be asked as to what will be this coming year’s new growth trends, and high on my list is location social, the process of combining location with interactivity and discovery of places, akin to being the Netflix of local recommendations.
In marketing it often asked about a new product if it serves a need. In the case of location social, the answer is yes. Here is an example/opportunity from my own recent experiences: I was at a charity function for a local school earlier this month. Several people I know are associated with that school, so I was casually looking around the crowded facility to see if any of them were, by chance, there. Imagine how much easier it would have been to be able to confer with a widely used app that could alert me if they were actually in attendance.
One more trend I expect to see more of in 2010 is app-to-app linkage, and indeed foursquare is already all over this, with Twitter integration already part of its offering.
After eating the best meal of your life, it's hard to forget the experience. It's not unusual for individuals to spend a decade in search of the perfect New York-style pizza in California or the best ramen in London. At this level of obsession, you simply can't be satiated by reading menus or scouring the blurry restaurant pictures and user-generated diatribes of regular review sites. Whether you've got a fixation on fresh lobster ragoût or a hankering for hickory smoked ham, Foodspotting lets hungry users peruse through what can only be described as food porn.
Founded by Adaptive Path UI designer Alexa Andrzejewski and Get Satisfaction engineer Ted Grubb, Foodspotting lets users upload photos of their favorite dishes along with a restaurant address. In Posterous-style fashion, you can also email your finds to food@foodspotting.com. From here you can rate dishes and users, add additional details, earn reputation points and follow places, dishes and community members. The difference between Foodspotting and Yelp is that every review is a positive one. Instead of showcasing restaurant rants, Foodspotting offers a visual menu of customer favorites.
ReadWriteWeb got an early look at the duo's upcoming iPhone application. Set for release in early 2010, foodies will be awarded points for their uploads as well as the particular foods they've tried. In Foursquare, users become the "Mayor" of a particular establishment, but in Foodspotting users become the "Champion" of their favorite dishes. And because so many towns are famous for a particular dish, you're likely to see stiff competition for the "Champion" of Maine lobster or Chicago hot dogs. Users will also compete to collect dishes through scavenger hunts and a food passport system. In the future, as we begin to record more dishes, the system will amass our flavor profiles. These profiles will later form the basis for a dish-related recommendation system.
While the mobile application will not hit the market for at least a month, Foodspotting is well on its way to offering salivating diners a chance to discover nearby favorites on a per-dish basis. To register for the site's early alpha visit foodspotting.com/ilovefood.
