Facebook Fires Torpedo at Foursquare
August 17, 2010
Rumors abound that tomorrow Facebook will be announcing their own location-based or “geolocation” check-in product. For sometime, there has been a lot of noise from industry watchers that Facebook has been working on such a push into the fast growing location-based market. Now, it appears that the rumors may become reality.
In my humble opinion, this seemingly inevitable launch represents the biggest challenge Foursquare has seen
to date, and ultimately could lead to extensive collateral damage they can’t recover from. Not only is Foursquare struggling to get its arms around its monetization and revenue plan, more importantly it is dealing with execution. This is outlined well by Augie Ray’s recent post – Foursquare’s Starbucks Mistake: Five Ways Foursquare Advertising Is Getting Less Interesting.
The big issue here is that Facebook has 500 million users and company fanpage listings in their system already and can easily connect them within a geolocation platform. Turning the “like” feature and fanpage “check-ins” into a mobile marketing realm of engagement, which connects back to feeds AND fanpages. Foursquare can’t touch these immense challenges with their current or foreseeable platform.
If our poor start-up friend Foursquare hasn’t planned for this inevitable torpedo attack and developed evasive maneuvers to avoid the hit and be able to counter attack effectively, we might all KNOW “who sank this battleship”.
The bigger issue that has not been resolved within this marketplace is the revenue model and consumer value solution. I suspect Facebook will be using this tactic as a way to push their advertising network into the mobilesphere. A good idea? Possibly for revenue and advertisers, but what about the consumer?
An effective delivery platform of “deals” for the consumer, as well as a clear marketing ROI solution for businesses to utilize within the geolocation space, that my friends represents the hole that needs to be filled. Both companies should have built a delivery and consumer benefit platform first, then worked on the check-in side.
I actually know who is already working on doing this effectively. More to come on that…
By Robert M. Caruso
CEO fondalo, Inc.
www.facebook.com/robertcaruso
www.twitter.com/fondalo
August 18, 2010 at 11:50 am
Facebook users have shown themselves to be highly interested in privacy. This is one of the many reasons why facebook has more users than twitter or myspace. I am not sure the user base wants to be involved in what some consider risky online behavior. My gut tells me that this will be a hit, but it will take some time. From a physiological stand point I don’t think we are there yet.
August 18, 2010 at 12:01 pm
Very True about Privacy Mike. Unfortunately, Facebook has not been real sensitive on that issue as of late and could potentially make this potential new feature one that doesn’t reach as far as it could. Any privacy issues remain to be seen on a location-based system if and when it is announced and/or released.
Geolocation check-in type systems have already established their market and users are accepting them more and more. I think the main question is how it will be monetized and will there be enough value to the end-user.
Great input Mike!
Robert
August 18, 2010 at 3:35 pm
It is sad indeed that foursquare will be facing this torpedo. But I guess this is the survival of the fittest and as you said with 500 million users, oh man that is going to be very hard to beat.
August 18, 2010 at 3:40 pm
Very true on all points. If Foursquare has been smart with their funding and seriously planned for this, they could make it. That remains to be seen. Thanx for the comments!
Robert
August 18, 2010 at 3:51 pm
Facebook definitely has an edge with 500m users and its business fan page ecosystem. But what will keep consumers checking in? I think it comes down to what Foursquare has been riding this entire time. Game mechanics and discounts/freebies/specials. I don’t think that Facebook currently has the ability to power these 2 things, which will leave their “check-in” simply a platform for additional context on their users. If Foursquare can hurry things up and launch their Foursquare 2.0 upgraded game mechanics and continue to motivate businesses to keep adding check-in and mayor specials as well as upgrade the analytics they provide to businesses, they will remain one of the leaders in the location space.
It may sound silly, but I think game mechanics and rewards play a big part in this.
August 18, 2010 at 4:03 pm
The game and reward portions of this are HUGE! It’s what it’s all about and what makes location-based platforms appealing. The problem for Foursquare that I was trying to get across is that their platform isn’t remotely close to effective in the rewards/deals area. (See article I link to within my post). Mayor specials wont make Foursquare able to lead. It will take a far more sophisticated deal system integrated into their platform to make it a winner.
Facebook on the other hand has significant business relationships through fanpages and their advertising platform. This gives them a HUGE advantage to making geolocation check-ins valuable to the consumer.
Only time will tell Gary, but this is going to be a battle worth watching. I think the battle in and of itself is good and should benefit the consumer and business. We hope, right?
Robert
August 18, 2010 at 6:07 pm
[...] 18, 2010 This post is meant to be a follow up to my post yesterday Facebook Fires Torpedo at Foursquare as well as be my personal coverage of the [...]