• by Mark Walsh  @markfwal, February 8, 2010

Competition is heating up in the social location space, with companies like Yelp, Gowalla and Foursquare recently raising fresh capital and adding new features and partners. And then there's Google, entering the fray with tools like Near Me Now and Latitude.

To keep up, Loopt has partnered with Mobile Spinach to provide special offers and discounts from local businesses through its social mapping service. The deal will allow mobile users in San Francisco to get offers on their phones from nearby restaurants and retailers. The promotions can then be redeemed directly at venues by showing the messages or sent via SMS text message or email.

The offers will be available only through the Loopt mobile application, not its Web site.

"We love adding fun to the Loopt experience, especially when it brings real value to our users by allowing them to save money on everyday things they want and need," said Sam Altman, CEO of Loopt, which shows the location of a user's friends and what they're doing on interactive maps.

Loopt says it has 3 million users, a third of which are on the iPhone. While the company has previously run advertising from national chains like Jack-In-The-Box, the new initiative is its first foray into small business advertising.

The effort pairs its mapping technology and demographic data with Mobile Spinach's database of local San Francisco offers and deals to send people the right promotions in the right place at the right time.

Altman did not provide details of the business arrangement between the companies or on what basis Loopt will get paid for carrying the new advertising. But he said the program will provide dozens of new offers weekly and eventually be expanded to other major cities such as Los Angeles and New York.

The local ad push follows other recent steps by four-year-old Loopt to enhance its service including adding local ratings and reviews and the ability to "check in" at restaurants, bars and other venues. And more ad-related features are on the way. Loopt will soon introduce offers similar to 10-drink coffee punch cards, where the 10th drink is free.

The twist is that the promotions will try to reward certain behavior, like a coffee chain that only punches mobile drink cards between 2 p.m. and 5 p.m., when business is slow. Or they provide some type of "social credit," credit, encouraging people to invite friends to join in the deal. Altman said Loopt already has several national chains on board for the program kicking off in about a month.

"We're seeing the market really focus on these offers with a lot of excitement around them," he said. And will Loopt venture into the gaming territory carved out by Foursquare, where users earn honorifics and points for going out? "That's a logical assumption," added Altman. Looks like the local mobile sector is turning into a tough neighborhood.