Forrester: Wait Until Location-Based Services Hit Scale

foursquare

Location-based social networks are presently on the tip of everyone's tongue -- and arguably with good reason. Fresh off a funding round worth $20 million, Foursquare just hit 2 million users, Twitter is busy revamping its Places feature, and CNNMoney just tapped Gowalla to support its annual "100 Best Places to Live" list.

Yet based on some preliminary research, Forrester analyst Melissa Parrish doesn't believe the time is right for marketers to begin investing significant sums on their LBSN strategies.

"Though many LBSNs are gathering steam, the landscape is fragmented and the programs can't scale just yet," says Parrish. Indeed, Forrester finds that just 1% of U.S. online adults are actually using LBSNs weekly, while 4% of them have tried them at least once.

"The sample size of this 1% of adults who use LBSNs regularly is small, so our findings on their behaviors is directional only, but our research shows that these users are typically young, male, well-educated, and influential," Parrish explains.

Highly influential individuals, LBSN users are 38% more likely than the average U.S. online adult to say that friends and family ask their opinions before making a purchase decision.

As such, Parrish isn't surprised that many marketers are interested in LBSNs and their users. "Given the directional breakdown of the users, it's not surprising that marketers who are already dabbling with these services are those that often experiment with new technologies as a way to stay current and to reach key portions of their consumers," she writes in a related report.

One early-adopting marketer, Chili's Grill & Bar, recently offered a limited-time promotion in which subscribers to Foursquare could receive a free order of chips and house-made salsa for checking in at their restaurants nationwide. To date, Foursquare has also partnered with Bravo Media, Zagat, Warner Bros., and HBO.

Still, Forrester's Parrish believes that most marketers should wait on the sidelines until larger industry players -- like Facebook and Yahoo -- can offer location-based services at true scale. "With large companies preparing to enter the market (I'm looking at you, Facebook and Yahoo) the time for marketers to get involved is coming," she writes in her report.

 

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