As other companies, including Google and Facebook, got in on the check-in action, interest in Foursquare began to wane. And so the company has tried to find new ways to not only stay relevant, but to monetize. Of course that strategy involved advertising.
Earlier this year, Foursquare announced the creation of a self-service ad platform, which it opened up to a select group of small businesses, then expanding it to around one thousand businesses in July.
And now the platform is being opened to small businesses "all around the world," the company revealed on Monday.
Obviously the hope is that this will give Foursquare a real revenue stream, but there is another aspect to all of this: the company is also hoping to prove its relevancy in a world that is becoming saturated with check-in apps and services.
Basically, if Foursquare sends an ad for a local businesses to one of its users, and then they go visit that business, the company will be able to say that it was the motivating factor in that decision. And that proves the effectiveness of those advertisements.
"We’re moving past the days when business owners have to figure out if a “like” or a “click” has any meaning in the real world; now they can tell if someone who saw their ad actually walks into their store," Foursquare said.
"We built this to be simple and flexible, learning from our four years of data and relationships with over 1.5 million claimed businesses."
To create an ad, a business owner needs to do is go to foursquare.com/ad. They can then build their ad with their photos, and information. The business owners also get to set their own monthly budget.
Through the platform, the owner can see how many people saw the ads, how many times it was tapped on and, by extention, how many of those people came to the store.
"Merchants know what they’re paying for – real actions and real customers," said Foursquare.
If this ad platform proves to be successful, it will rescue a company that has been seeing some very hard times recently.
Foursquare was huge in 2009 and 2010, before falling on hard times. In 2011, Foursquare even partnered with Groupon to deliver location-based deals and discounts, but we all know how the daily deal industry ended up. Foursquare reportedly brought in just $2 million in revenue last year.
In April of this year, Foursquare raised $41 million in a convertible debt round led by Silver Lake Partners’ Waterman growth debt fund, which let the company buy time: by raising debt rather than equity, Foursquare was able to deflect estimates of its real value.
The round brought Foursquare’s total raised to $112.4 million.
(Image source: http://business.foursquare.com/ads)