• by Frank Maggio , August 23, 2011

On June 24, location-based social network Foursquare trumpeted an infusion of $50 million in VC capital -- a piece of news that deservedly received the attention of hundreds of news outlets.

The day earlier, however, Foursquare announced a myriad of strategic alliances, which included one with American Express, allowing users of the Foursquare mobile app to receive credits applied directly to their Amex cards when purchasing goods (after checking in) from participating Foursquare-tagged locations.

The $50 million announcement quickly overshadowed the prior day's release -- but in hindsight, the Amex news will likely have much more historic value.

Having now seen and tested the Foursquare / American Express process firsthand, I can honestly report that Foursquare has bridged the complexity of couponing in one of the most seamless ways imaginable.  And I'm excited about the implications this will have on TV advertising, direct response, and home shopping content.

First, let's be clear -- there are some pretty cool "ease of purchase" apps out there.  Let's take the Starbucks app, for example.  Load a Starbucks gift card with $25+, register the unique card number within the Starbucks app on your smart phone, and you can pretty much leave your card at home.  Visit any of the hundreds of Starbucks enabled with their special scanning technology, open the Starbucks app on your phone,  hold up the special QR code it displays as you confirm your purchase, and the total is instantly deducted from your gift card balance.  Seconds later, your phone reflects the reduced balance on your physical (and virtual) card. 

This is good stuff; elegant, fast, and slick.

But the Starbucks experience is primarily confined to, and within, the Starbucks environment.  The location needs to have the enabling hardware installed, the consumer has to display the app's QR code to the cashier as part of the payment process, and the cashier must hold the scanner up to the phone to scan the code, in order to complete the transaction.  Training and retraining staff (and newly hired staff) adds another, hidden burden to the app's overhead. 

By way of comparison, what Foursquare has accomplished is more complex in the background, yet provides consumers and retailers with an even more seamless, less labor-intensive experience than the Starbucks example. 

Since we're using coffee shops as illustrations, let's look at Dunkin' Donuts.  By visiting participating Dunkin' Donuts, and then "checking in" using Foursquare, you'll see a special offer on your phone's display (at least in the Tampa Bay markets), offering $2 off any purchase of $10 or more, during the month of August.  The caveat: the purchase must be made using your American Express card. 

Once you link your Amex card to your Foursquare account, there's really nothing else you need to do, other than spend the requisite minimum using your American Express card.

Here's the cool part:  At the retail level, the cashier does nothing out of the ordinary. There are no codes to scan, no text messages to verify, no coupons to tear out, deduct, and mail in to redeem, and no end-of-day accounting needed to balance out the account.  No training is necessary; in fact, the cashier and management appear to be completely unaware of anything special going on.

 

At the consumer level, once you check in using Foursquare, you behave as you would with any other transaction   Select the food, get a total, and give the cashier the Amex card.  Done. 

I checked in recently via Foursquare, saw the offer, bought three Turkey Bacon and Cheddar flatbreads, and placed the charge on my American Express card.  Viola. 

I remember thinking that some form of digital receipt would have been helpful, but quickly acknowledged, mentally, that this would require a massive amount of coordination, and would have required involvement by the retail outlet.

Seconds later, my iPhone chirped as this new message arrived: "Congratulations! You just saved $2.00 off your purchase of $11.20 at Dunkin' Donuts by using your Amex Card.  Expect a statement credit in 2-3 business days."

I'm completely blown away.  I can only imagine how sophisticated this infrastructure must be, to allow five parties -- American Express, Dunkin' Donuts Corporate, a local Dunkin' Donuts outlet, Foursquare, and a consumer -- to transact "direct credit coupons" without burdening either the consumer or the retail outlet.

So, you might be asking, what does this have to do with TV? 

Let's imagine, for a moment, another transaction between multiple parties.  The currency: consumer attention.  The parties include the advertiser, the cable or broadcast network, the MSO or Satellite service provider, Foursquare, American Express, and the consumer. 

Current ITV technology, and upcoming SmartTV technology, all still require considerable levels of cooperation between devices, MSOs, networks, and advertisers.  Set-top boxes and even more capable SmartTVs struggle with version control, application conflicts, scale, and mass adoption.

The Foursquare technology and American Express alliance provides the framework within which a consumer can now watch a commercial, "check in" using a combination of QR code and Foursquare's location-based technology, which can then load a special (even demographically targeted) promotion, tied to the advertised product and retailer, directly onto the consumer's phone: in real time, or during time-shifted viewing.  While they're at it, the advertiser/retailer could ask a question that proves the consumer paid attention to the ad  (NOTE:  shameless plug for our patented CRAVE process) as a condition of being rewarded with the promotion or discount. 

Instructions, QR codes, and the actual interaction can completely bypass most of the hardware, though STBs and SmartTV's can enable or ease the process.   

And just like the Dunkin' Donuts cashier, the content and MSO / satellite networks can do what they already do, without being burdened -- or tolling the gate.