Foursquare says 1.5 million small businesses (SMBs) have claimed their listings and are using its platform. Now it wants to make some money off of them by opening up Foursquare Ads to all comers around the world.
Roughly 50 percent of the 1.5 million SMBs are inside the US and the rest are scattered throughout the globe but concentrated in Foursquare’s most successful consumer markets. Just over a year ago the company launched its first paid ads product, enlisting major retailers and a selection of SMBs to participate in the beta program. (Earlier this summer we reported on a New York trial among SMBs.) Now after more than a year of testing Foursquare is ready to open up its new ads program to small businesses everywhere:
Today, we’re making it possible for every small business in the world to start using Foursquare Ads – an easy-to-use way to connect with potential customers nearby. We’re moving past the days when business owners have to figure out if a “like” or a “click” has any meaning in the real world. We built this to be simple and flexible, learning from our four years of data and relationships with over 1.5 million small businesses.
As you know, the platform is totally self service. And anyone familiar with the online SMB market will know that self-service has historically seen limited success as a tool for mass SMB advertiser acquisition.
Foursquare’s Noah Weiss, Director of Product Management, isn’t worried however. He says that there’s evidence of considerable “pent up demand” for access to Foursquare Ads among the 1.5 million SMB Foursquare businesses that have claimed their listings.
Foursquare is also experimenting with a small telephone sales force. Right now the company isn’t going to work with resellers or third parties though that could change over time. But Weiss argues that, unlike others, the company isn’t struggling in any way to acquire SMB customers.
Weiss said that the now more than 800 SMBs in the Foursquare Ads beta program have responded very positively. Part of this is because of simple ad creation as well as clear metrics and reporting. Advertisers will get charged for “actions” (taps/clicks) but Foursquare will equally report (though not charge separately for) check-ins, which confirm that consumers actually visited the business.
Immediately below is a screenshot provided by Foursquare, reflecting one presentation of Foursquare Ads in search results.
Check-ins isn’t a foolproof metric to demonstrate ROI. But for SMBs who are often confused about analytics and ROI, it gets much closer to providing a true sense of how ads may be performing and impacting real-world behavior. Indeed, this move can be seen in the larger context of the rise of real-world analytics, which I wrote about last week.
Foursquare Ads will be sold via auction with a minimum bid of $1.00. However Weiss told me that the company will be trying to educate business owners about bid levels and traffic, as well as show them how by increasing bids they can impact clicks and check-ins.
Foursquare CEO Dennis Crowley has described the ads as a cross between AdWords and Promoted Tweets — because they’re social but also reflect intent based on search queries. And like AdWords, Foursquare developed its own version of a quality score: “predicted conversion rate.” Foursquare will use this calculation to optimize for clicks and check-ins and rank ads as well.
Foursquare’s Weiss believes that the check-in metrics will be something of a revelation to SMBs. He also argues that most SMBs don’t want to make the six month and year long advertising commitments that Foursquare’s major rivals often require. He told me that while there is monthly spend requirement of $50 he stressed that advertisers make no contractual commitment and can quit at any point.
“This is the culmination of years of effort in terms of what we’ve been working toward,” explained Weiss. “It’s a huge launch.”
Weiss and his colleagues clearly expect the local market and SMBs themselves to mirror that excitement back to them — by starting to advertise on Foursquare.