Analyst: How Local Businesses Tap Mobile Social Networks

foursquare/yelp

The promise of social networking on mobile devices has triggered a flurry of partnerships and initiatives among handset makers, social networking sites and wireless operators. Exactly how marketers stand to benefit from the growing convergence of social media and mobile, however, remains somewhat elusive.

For local businesses looking to tap into mobile social applications like FourSquare, Yelp and Gowalla, at least, Jeremiah Owyang of strategy consulting firm Altimeter Group has outlined steps for tackling this emerging market. These include things like offering special deals via social tools, catering to top customers and allowing mobile users to comparison shop more easily.

Location-based social network FourSquare, profiled in The New York Times Monday, has just started to incorporate offers and discounts from local as the fast-growing friend-finder service develops its business model. Owyang noted that while using the app recently to check a movie theater location, it showed him an offer for 50% off a wine-tasting flight from a nearby wine shop.

This approach, in time, could lead to ads from retailers and restaurants that tie more directly into the social aspect of the app. "We should expect FourSquare to evolve and eventually offer advertisements based on your friends' interests -- John, Amy, and Allen all like Los Taqaritors, invite them now for a 20% off discount," according to Owyang. "Location-based ads will soon connect with social information.'"

His blog post also highlighted the game element of FourSquare that lets people win points based on how often they frequent a particular establishment. The top customer can become the "mayor" of that location. Similarly, Yelp recently launched a program for restaurants to offer a prix fixe menu for users. "Expect to see Yelp's mobile application advertise these special deals for Yelpers as they search for restaurants online using mobile devices," wrote Owyang.

The idea behind such efforts is not just to drum up business, but also to cultivate an "upaid army of advocates."

The Altimeter analyst also recommends that even businesses consider using a service like RedLaser, which allows mobile users to scan product barcodes to find any cheaper prices from nearby retailers. "This means that retailers with higher-priced products may miss out as consumers can quickly buy it from a competitive store down the street or find it online." Companies will have to respond by reducing prices or offering special deals to undercut higher prices.

Despite innovation, Owyang also warned that location-based marketing is limited by factors such as the adoption of mobile social networks and mobile consumers' interest in taking up mobile offers. One key for businesses is to monitor their brands on services like Yelp and FourSquare to find out what the perception of customers is, both positive and negative, to learn more about their market.

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1 comment about "Analyst: How Local Businesses Tap Mobile Social Networks ".
  1. Brian Hayashi from ConnectMe 360 , October 20, 2009 at 6:40 p.m.

    Shortly after this post was published, Jeremiah Owyang noted his displeasure that Foursquare had published a tweet on Owyang's Twitter account without his permission:

    "I just ousted Ray L. as the mayor of Taqueria Pancho Villa - San Mateo on @foursquare! http://bit.ly/3demFZ"

    Upon seeing this, Owyang noted,

    "That last tweet about FourSquare was NOT created by me. It was auto-created by FourSquare. I'm not happy about that."

    Now...I wonder how many consumers would *feel* the same way that Owyang did - that somehow, the rights of their online persona were somehow being abused - but not say anything, not knowing what the "official" rules of decorum were.

    At the same time, how many local merchants are going to take the time to watch what's being said about them throughout the day? All it takes is for one ill-timed comment to ruin a dozen other positive experiences.