As consumer apps companies ramp up efforts in geo-targeted ads and hyper-local search, Foursquare has responded by turning check-in data into marketing services opportunities.
Following a February announcement that Microsoft would invest $15 million in the location-savvy startup after its $35 million Series D in December, Foursquare’s revenue stream – and data reach – may get a substantial boost as a result of the licensing deal.
The company is next making a push into Latin America, working with IMS Internet Media Services to scale Foursquare Ads in mobile-centric emerging markets in the next few months. The independent marketing and media company has served as the exclusive sales partner for many major consumer apps companies including Google-owned Waze, Spotify and Twitter.
Eric Friedman, director of sales and revenue operations at Foursquare, spoke with AdExchanger about Foursquare’s Latin American aspirations and its 45-millon-consumer-strong data differentiator.
AdExchanger: How has mobile penetration in Latin America fueled your expansion plans?
ERIC FRIEDMAN: We’ve seen pretty serious growth in marketplaces like Brazil, Argentina and Mexico and we’re looking to bring a lot of what we found success with in the US down there, targeting the late spring/early summer time frame. We like to prove out a lot of things we’re doing before we move into other markets and then want to step on the gas in that area. We’re really excited to work with IMS because they bring cultural expertise to the table. We built out a sales team in the US here, and we were really excited to talk to the brands and agencies down there, but they’ve had feet on the street so to speak for years, which is going to be really helpful bringing our products to Latin America.
How will you determine success metrics? Will you price on a Cost-Per-Action (CPA) basis?
You see [that pricing model with] some of the other companies IMS is working with (such as Spotify, Waze etc.) to prove out ads that are similar, but Foursquare is really looking at place-based advertising and driving people through the door of all those places where people check in. It’s driving people to interact with the ad or through the door. [This is] oversimplifying it, but the impression is free. When somebody interacts with an ad or somebody goes into an individual location, that’s when [advertisers] get charged. Advertisers and agencies really like that model because they can quantify how many times somebody saw an ad and they’re only charged when somebody actually goes to a place.
Can you talk about formats?
We’re essentially bringing a Web AdWords model to the real world. The formats are impression-based and only cost on a task or visit basis and for me that’s great because you’re only talking about, “How do you get more foot traffic or broadcast this message to people around my store or restaurant?” And I think in an ever-growing mobile world, that’s what people want to see more than anything else. Not so much messaging when they’re at home on their computer but when they’re out and about searching for something or when they’re looking for a great place for lunch. And if they’re advertising, that restaurant would know that they were driven in from a Foursquare ad.
How will Microsoft’s recent $15 million data licensing deal affect your reach?
That was a great validation for us, and obviously we talked to a ton of different partners. It was nice to see Microsoft was interested in building the data capabilities of Foursquare into the suite of their products, which you can expect to see hopefully in the near future with their mobile OS, Bing and things like that. We’ve had a lot of other folks reach out about the validity of that data for its open API and 50 million places in our system. They say, “There’s no way to get this data better or fresher, and we would love to use that data to power our search and discovery experience.” That was helped dramatically by Microsoft choosing Foursquare to power their apps and operating systems and hardware.
Publisher premium inventory continues to be a challenge in Latin America. How is your data differentiated?
I run something at Foursquare called the Foursquare Audience Network, leveraging our entire audience and activity history into the DSP world ourselves. To be super clear, we don’t resell that data to anybody. I actually operate a trading desk seat at Foursquare and have a team of folks who do that, but it’s really the best way to leverage 100% first party, registration-based location data on where somebody has checked in to speak to them and message to them.
How will you tailor messaging?
We have in-app ad units – the place-based advertising – and then we leverage that to reach them outside of Foursquare with mobile, display, video and even social leveraging that Foursquare Audience network, to speak to consumers about things they really did. If a brand or agency wants to talk about a new sports drink for people to go to the gym or to yoga, there’s a difference between someone who reads about it on a blog and someone who gets up early in the morning to run or who goes to yoga three times a week. And that’s a very important part of our story, and something IMS will bring to market.
Talking futures of Foursquare Ads Latin America, what’s the plan?
There are so many people who use the mobile phone as their primary device. In Latin America, it’s mobile-first and mobile always. There is a different pattern of behavior with people accessing mobile sites and apps. [This] speaks to the core of Foursquare, which has always been mobile first. In the US, you hear people talking a whole bunch of different mediums, but in Latin America, everyone has a phone and that’s their primary computer. The [World Cup coming up] is a big event for brands and advertisers, but I think we’re in it for the long haul with IMS. So we’re bringing these ad units to market late spring early summer, but we are committed to the region long after.
