A BIA/Kelsey report published in 2015 estimates the location-targeted mobile ad revenues in the US to grow from $6.8 billion in 2015 to $18.2 billion in 2019. The researcher believes that location-based advertising has been a primary driver of mobile advertising growth. After struggling for a while, geolocation services provider Foursquare has finally figured out a sustainable business model and is on the way to profitability.
New York-based Foursquare was founded in 2009 by Naveen Selvadurai and Dennis Crowley as a social media site to let friends know about places that the user had “checked in” to. Soon Foursquare expanded its offerings to help consumers connect and share their experiences. Foursquare has two key apps for its consumers. The Foursquare City Guide allows consumers to discover new places based on recommendations from their community. Foursquare Swarm is a gamification-enabled check-in app that lets users earns points, rewards, and gaming titles based on their usage.The consumer apps have been well received in the market. More than 50 million people use Foursquare City Guide and Foursquare Swarm each month and it recently surpassed more than 10 billion check-ins. It sees an average of 9 million check-ins a day on Foursquare Swarm.
Foursquare also helps enterprises address location-based advertising through the Location Intelligence technology. The service lets brands locate, message, and measure their own consumers. It assists developers and enterprises by offering hosted technology and data to build context-smart, location-aware apps. It is powering location data for the likes of Apple, Uber, Twitter, Microsoft, and Samsung.
But its biggest evolution in the recent years has been in the development of other enterprise-focused services like Pinpoint, Attribution and Place Insights. Pinpoint is a digital advertising system that helps brands target consumers based on where the consumer goes. Attribution helps advertisers analyze the performance of a digital message. Place Insights can place users at locations even if they don’t check in and thus allow organizations to provide recommendations to users and foot traffic information to organizations. It used its technology to predict the number of iPhone sales that Apple would make through foot fall in the stores and how weak Chipotle sales were going to be. The tools were clearly well made as the forecast was surprisingly accurate. The accurate predictions also helped bring the spotlight back on Foursquare.
Foursuqare is upping the ante on its enterprise offering through several tie-ups as well. It is working on monetizing relationships with developers and enterprises by enhancing the data capture and analytical capabilities of its apps. It entered into an agreement with Snap to improve its geo-filtering service. Through the agreement, Foursquare is now able to track and analyze movements of Snap’s users. It entered into a partnership with Nielsen that will allow it to integrate consumers’ purchasing data with advertisements.
Fourquare is privately held and does not disclose its financials. Advertising has traditionally been its chief source of revenue. Advertising solutions allow brands to target users based on their location and check-ins. Brands can target potential customers by offering services focused on the place where they are checked in. Additionally, Foursquare also offers analytical tools to track performance and visits. It also earns revenues by charging developers of large enterprises a fee for its API and by selling data for targeted advertising capabilities.
The past few years have seen Foursquare manage a gradual turnaround. From a company with barely any revenues, it is getting to the $100 million mark and losses are expected to be scaling back. The change in Foursquare occurred primarily when it went from being a consumer app company to realizing that its value lay in becoming a location data company instead.
It has been largely venture funded with $207 million from investors including Union Square Ventures, O’Reilly AlphaTech Ventures, Andreessen Horowitz, SV Angel, Spark Capital, CrunchFund, and Silver Lake Partners. Its last round of funding was held in January 2016 when it raised $45 million at a valuation of $250 million. Valuation had soared to $760 million when Foursquare raised funds in 2013. Valuations should now begin to increase as investors see the value in Foursquare’s offering. From being a rather lackluster consumer check-in app to one that provides meaningful and actionable data to organizations is a feat worth recognition.
Foursquare may eventually become a legitimate billion dollar unicorn.
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