Last month we explored Foursquare's evolution into a local discovery engine -- representing a trend in mobile local search apps. Since then, I had the chance to interview Foursquare GM Evan Cohen on stage at BIA/Kelsey's ILM East conference.
We talked about Foursquare's evolution, directions, monetization, and the collision of mobile and daily deals. According to Cohen, all of these can be seen in its recently released v 3.0 iPhone App. Below is an excerpt of the interview.
Mike Boland: Some successful mobile products are operating on the paradigm of local discovery and moving away from search, which ruled the desktop. You've told me that you want to be the Netflix or the Amazon of the real world. Explain.
Evan Cohen: That's one of my favorite analogies. Netflix has done such a good job knowing who you are and what movies you've seen, and can now make really smart movie recommendations. And of course Amazon is killer at that for products.
We're trying to do that for the real world using the same principles of data analysis. We'll continue to hone that engine and it's a hugely interesting and complicated mathematical challenge. I'm sure we'll be iterating it for years but version one, we're very happy with.
Beyond mathematical analysis there are other interesting and useful areas that we'll continue to mine and productize. In particular I'm thinking about social discovery and advice and recommendations from experts because sometimes you can never quite replicate the insight of the person who knows Chicago better than anyone else, or the person who has lived for six months in Paris and can tell you about the best cafes.
MB: Moving on to the merchant or advertiser end of the equation, you have 250,000 businesses signed up. Do you have any sense of how that breaks down in terms of national brands or regional franchises versus mom and pops?
EC: It's pretty evenly split, but a big chunk of it is chains and we count things like all 3,000 radio shacks. In terms of our interest going forward, we want to build products and focus on both constituencies because that's how users' experiences in the real world are evenly divided. They have very different needs of course and it's hard to service both constituencies, product-wise and marketing and selling to them. But we want to service both.
MB: With your most recently launched specials, you have a pretty clear value proposition in driving in tangible foot traffic for advertisers that self serve. To augment that, do you have an interest to work with local resellers?
EC: Our existing platform directs SMBs and big chains sign up at foursquare.com/businesses. It's generated a lot of activity but it's not enough as a business, as we scale in the coming years. So we're thinking a lot about different channel strategies. One of them is trying to figure out how we can work with partners who already have pre-existing sales channels and relationships in local communities to distribute foursquare specials. It's still in the oven still but it's very much on our minds.
MB: In terms of how companies can work with you, there is kind of a spectrum of options, some of them being lower barrier such as utilizing your API. Can you explain?
EC: We have a very open and robust API that is "read" and "write." We modeled it after Twitter so it's very open. That's an easy way for third parties to partner with Foursquare and implement cool things. And again foursquare.com/businesses has a set of tools for merchants to verify and get access to venue stats. Lastly, we do deeper partnerships with certain national merchants and brands and those are pretty one-off and some of them are around custom badges like what we do with Starbucks.
MB: Panning back to a cultural standpoint, one thing that Foursquare and other companies like Groupon have ignited is deals. Clipping coupons formerly carried a cultural stigma for both users and advertisers. But now it's a hot area as mobile is colliding with deals and group buying. What is the opportunity there?
EC: There's huge potential and we're in a great position to mine those kinds of opportunities. Flash mobs and group buying dynamics in a mobile atmosphere are behind some of our [v 3.0” specials and certainly we'll be doing more in the future. To the point about coupons becoming cool, it's an interesting point but I do think there is a danger of coupons being a little bit marginalized and déclassé if it's overwhelmingly about the 80 percent off, or $100 spa treatment for $50, and then I never come back.
So some of the front-end customer acquisition models like Groupon and the next 400 imitators are interesting to watch. But I'm not so sure how sustainable or how deep the demand is because it's attracting kind of a weak super discount-hunting customer. We're thinking more about loyalty. We want to help merchants to get people to come 5 and 10 and 20 times and not just that first time. So that's a different way to look at the puzzle.
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