Foursquare in June rolled out a revamped app with increased focus on recommendations through the Explore tab. It followed up in July by launching Promoted Updates, its first paid advertising format for the service, along with Local Updates. MediaPost sat down with Steven Rosenblatt, Foursquare's chief revenue officer, to discuss the changes and Foursquare's efforts to ramp up monetization.
Prior to joining Foursquare in May, Rosenblatt was director of advertising sales and strategy for iAd at Apple. Before that, he was SVP, advertising sales, at Quattro Wireless, which Apple acquired in January 2010.
MP: For better or worse, Foursquare is synonymous with the check-in. How has it has evolved over the last few years as a key part of the user experience?
SR: We still get 5 million check-ins a day, and have 2 billion in our system. What the check-in does is give us a lot of data about where you are, what your friends are doing, what you like, where you go -- we don't need to guess. I think if you rewind to three years ago, I think the check-in and game mechanics of Foursquare, it was a great on-boarding apparatus. But with the all-new Foursquare we rolled out in recent weeks, we've recently brought the concept of Explore to the forefront.
It takes these 2 billion check-ins, and all this data, and we're getting really smart about recommending things to you. That's where you're seeing this evolution of Foursquare. Yes, we have a lot of people who still love playing the game, and that's still going to exist, but we're really seeing this broadening of the audience with people using Foursquare to help them and their friends make the most out of where they are.
MP: Foursquare has 20 million active users. Has the growth rate been steady this year?
SR: It's constantly going up -- each week is a lot higher than the week before. We don't announce numbers until we have a new number to announce, but we're certainly getting closer to that 25 million number.
MP: Following release of the revamped app, in July you rolled out Local Updates and Promoted Updates -- can you briefly distinguish between those two new tools for merchants?
SR: So Local Updates, which is not paid, gives businesses this platform to write up to 200 characters of text, photo, and communicate to their most loyal customers. That shows up in your “Friend” feed, and if there's a business you get an update from that you want to turn off, you can turn it off. What we're doing with Promoted Updates -- the paid product -- takes same relevant algorithm we use in Explore, and we push a piece of content to the top [of the feed] where it's delineated as “promoted.”
MP: Foursquare has this partnership with American Express giving cardmembers discounts if they check into businesses via Foursquare. Beyond that initiative, how do you bring on the millions of small and medium-sized businesses not plugged into Foursquare yet?
SR: Yeah, so American Express is using its relationship with 100,000 local business to promote their credit card offers to a much broader audience. So that's a great example of a partner we're working with, getting users to sync their Foursquare account to the American Express card.
I think eventually there will be plans to do a self-service platform for small businesses. Today, small business can go into Foursquare and create a special, and get it up and running. So just think about how that can evolve. I think the big thing, too, is that we've created these flexible products that can work for all business types. If you're a mom-and-pop, and you don't discount, you don't need to discount. But if you have something good about your cupcakes or cookies you want to tell customers about, you can do that with the tools we have.
MP: Is the AmEx partnership something you could extend to other card companies, like Visa or MasterCard?
SR: AmEx has a unique business model because they're the merchant acquirer, they're the bank -- they have the end-to-end loop, which Visa and MasterCard don't have. But we think a lot about it, because we know not everyone has an AmEx card. It's a complicated situation, but one day, hopefully, we'll have a way for you to do something similar with other cards.
MP: Besides small businesses, you're working with national chains like Best Buy, Old Navy, Lowe's and Hilton Hotels. How do you provide the kind of scale big brands and agencies are looking for?
SR: I can tell you we're working closely with all the major agencies -- they drove a lot of the national brands we're working with. The paid part is great, but we have a lot of other tools they can use -- our Connect Apps platform, our APIs, and just getting the data up and accurate for clients. They want to get clients using the Foursquare platform because it's a really effective marketing vehicle. When you talk about advertising, that's going to scale -- but it's a great marketing vehicle, a great CRM vehicle.
MP: What about Foursquare as a vehicle for brand advertising?
SR: I think what we'll see is that Foursquare is great for the upper funnel, too. We're not doing anything yet -- there's no ad product yet for CPG or auto or entertainment because we're really focused on the business, but you can imagine the possibilities. Walgreens sells lots of CPG brands. So one thing we did this spring, we launched at SXSW, was where if you check into a Walgreens, you can see a coupon for Arizona Iced Tea. So we ingested their unique codes and surfaced it as a barcode, and they had 31% redemption rate from that coupon. So you can see where some of these relationships would go.
MP: Do you have any concern about user reaction to paid advertising on Foursquare?
SR: What we've heard from our users in the past is 'We love the AmEx offers,' 'we love the specials,' we just don't see enough of them. We want more. We want to hear more from our merchants. With the paid aspect of things now, we increase the frequency. So I think our users will say “Oh, great, I'm seeing AmEx offers more, I'm seeing special more than I ever did. We never had that mechanism before. So when we talk about Promoted Updates, I believe it really adds to the experience.
MP: Foursquare has been compared with Yelp more lately because of the greater emphasis on recommendations. Is there anything you can learn from Yelp as you build out the business?
SR: What's unique about us is we were mobile-first. We don't have a legacy desktop business we built and now we have to figure out how to make it mobile. And we launched Foursquare from the very beginning to have a social layer -- we didn't want to be a listing service. We want to take advantage of the social graph. So we think those two things -- social graph and mobile-first -- give us a really unique view on things.