Foursquare Rolls Out Ads for Businesses

Very exciting news from Foursquare today:

Expanding Foursquare Ads to more small businesses around the world | Foursquare Blog: “The idea behind these new ads is simple – connect people looking for somewhere to go with businesses that want to drive traffic to their stores. Foursquare is the best way for those businesses to reach nearby customers. In our ad pilots over the past year, we’ve been honing our targeting technology, using the same algorithm that powers our Explore recommendation engine.”

Foursquare rolled out post-check-in ads for brands last week, but this is good news for businesses since Foursquare is a unique but diverse community that’s ultimately very locally focused.

The reason these ads are so unique and will matter a great deal to local businesses in the coming year or so is that the return rate on them is fairly solid. 78% of people who search on their smartphone end up making some kind of purchase. Foursquare has long needed a solid business model that could drive revenue its way and the ad program is pretty much the icing on the cake.

On the business side of things, the ads are billed to businesses on a CPA (Cost Per Action) basis, meaning you don’t have to pay for the ad unless a check-in at your business originates from it:

Foursquare Ads — Foursquare for Business: “You won’t pay a cent for your ad to show up. You’ll only pay if people visit you.”

Pretty cool.

I love Foursquare and I’m happy to see them moving forward. Advertising on mobile, particularly geolocation-based, has long been an enigma to many companies and marketers alike and I think Foursquare is definitely on the list of companies to watch.

Rising Cost of Pay Per Click

We like to preach about discovery (social media + organic search engine optimization + paid search) because we realize that channels such as Facebook Ads or paid search are not as effective at getting people to your site and performing an action there alone as they are in a healthy combination.

This report in the NY Times today comes as no surprise to us…

This concern has become increasingly common as online advertising has become a standard channel for large companies. Attracting those additional advertisers has been great for Google, which reported  a 42 percent increase in paid clicks, year over year, for the second quarter of 2012. But the heightened competition has driven up the prices for keywords and made it harder for small companies like Mr. Telford’s.

While about 96 percent of pay-per-click advertisers spend less than $10,000 a month, according to  AdGooroo, a research firm that studies the pay-per-click market, big-budget advertisers spend hundreds of times more. In the first half of 2012, Amazon reportedly spent $54 million, and the University of Phoenix $37.9 million. “AdWords can bleed many a small business dry,” said Sharon Geltner, an analyst at the  Small Business Development Center at Palm Beach State College in Boca Raton, Fla.

It’s no secret that paid search is highly effective if you know what you’re doing with setup, keyword selection and eventual optimization.

What we do (and what we really enjoy doing) is helping small businesses realize that tactics such as targeting demographics or locations or keyword buying with a specific goal in mind can help level the playing field of the competitive pages of a Google result.