After three years of building up its user base, Foursquare is finally starting to make money — a big step for the service with over 20 million users and over 2 billion “check-ins” to businesses.
On Wednesday morning the location-based network launched “Promoted Updates,” which allow companies to advertise to nearby potential customers. This sets the startup well on its way to turning the service into the next big social network that could eventually head towards an IPO.
Foursquare describes this new ad product as “search ads for the real world” in that they’re closely targeted based on where people are and what they’re are looking for — they only appear when users click the “Explore” tab, looking for recommendations.
The updates are targeted based on users location, their history of ‘check in’s and ‘likes’ and their friends history. And Foursquare will target these “updates”, which may take the form of deals or special offers, or updates to a menu, based on the time of day — so you’ll see an update about a nearby coffee shop around breakfast, a bar around cocktail hour.
And Foursquare has some big names on board for its pilot program with about 20 companies — including Gap , Hilton, JCPenney , Best Buy , Hertz and Walgreens .
It’s unclear how much they’ll pay to reach consumers, but pricing will be based on Foursquare user actions. After a few months of trial the company will roll out the program to all million merchants it works with.
Wednesday’s announcement followed last week’s launch of “local updates”, a free service to allow the million businesses on foursquare to better communicate with their customers and fans. Foursquare started to offer merchants tools to update their information, offer specials and updates to customers, and see analytics about user traffic.