When I was at South by Southwest in Austin a few weeks ago, checking in on Foursquare and Gowalla was useful as it helped people know where I was and friends reciprocated letting me know where they were at. It was also somewhat novel being able to get new badges and show up on the Foursquare leaderboard, but weeks later I never check in on the application. Simply put: there is no incentive for me to check in.
No Incentive, No Business
When I asked my friend the other night why he was checking in on Foursquare, the only thing he could come up with was “because other people are doing it”. So while using the application may make some people feel as though they are part of the “in crowd”, the average Joe doesn’t use it and won’t as Dave McClure rightly pointed out on his blog last night.
Yes, as soon as you introduce coupons and other incentives into the application there is a massive opportunity, but as Dave points out, the cost of this space is extremely high. Based on the people I’ve spoken to who run one of the top two players in the group coupon space, getting each new customer is extremely challenging and right Groupon is using exclusive contracts with their customers to try to lock each new customer.
However, if one of these applications (Foursquare, Gowalla, etc) can grow beyond 20 million users or so, businesses will start registering on their own for integrated promotions rather than sending out door-to-door sales people. Facebook won’t let any of these companies get to that size though as they are about to launch their own location service and will quickly become the best small business marketing tool on the internet.
It is possible for some of these companies to generate a genuine incentive for users without the use of coupons. MyTown, the application built by Kleiner Perkins-funded booyah, is probably the best location application I’ve used yet. It’s essentially monopoly based on the real-world. I’ve checked in more on this application in the past month than any other application. The reason is that I get a serious kick out of owning virtual properties that are based on real locations.
While the Foursquare mayorship provides me with a badge, MyTown actually generates virtual currency for me. While there are ways that the company could significantly improve the application (they could limit location ownership to one individual which would make this game a bigger hit), this application beat both Foursquare and Gowalla to 1 million users and continues to outstrip the two companies in growth.
While Dave McClure’s post is more of an attack on Foursquare individually, I think there’s clearly a way to get people checking in without giving them coupons or any other form of monetary exchange. I should add that everybody who I’ve told about this game wants to install it on their phone immediately. Foursquare and Gowalla though, they have no idea what the point is.
FarmVille Of Location Is Worth Billions
Just like venture capitalists are big on Zynga thanks to the company’s more than hundred million addicted users, they’re also addicted to the idea that Foursquare could potentially be as large and dominate location marketing. Once MyTown has 20 million users and Foursquare has less than 2 million, I think the investors will know which company they should have invested in.
While it’s easy to discount MyTown as “just a game”, integrating “fancy game mechanics” as Dave McClure likes to call them is driving a much more active user base. I’m of the opinion that games will become increasingly integrated into everything we interact with and if these non-incentivized location apps don’t integrate finely tuned gaming dynamics, they’re screwed.
Location Marketing Is King
The money that all these players are after is a piece of the massive location based marketing pie. It’s not surprising that Apple’s new iAds integrate location into them: they want a massive piece of this pie as well. Facebook will be doing it and so will every other location app, but right now if I had to bet my money, I’d bet on the company that’s going to be the Zynga of the location world. That’s because the platform owners (Facebook, Twitter, Google, etc) will integrate location (if they haven’t already) as a feature and make applications like Foursquare worthless.
I’m not saying Foursquare doesn’t have an opportunity, it’s just that they are by far still an underdog in the location space, which means taking Dave’s advice to “take the money & run, homey”, makes a lot of sense for Foursquare right about now. There’s a huge opportunity out there but there is no way that Foursquare is going to be king of the space just because a lot of early adopters are using it. I like to consider myself a second wave early adopter but as of now, I don’t really see the value beyond using a service like Foursquare at large group gatherings. If I’m not constantly checking in, there is no way in hell the average Joe will.
Is there incentive that I’m missing from Foursquare? Do you think the site could have as many users as the large platforms out there?
P.S. If Facebook’s going to buy anybody it will be Gowalla and it will take place in the next two months.