Foursquare Joins the Coupon Craze
Foursquare doesn't want to be another popular—but unprofitable—social network. Its new plan to make money? Personalized coupons. — The company, which lets users alert their friends to their location by “checking in” via smartphone from coffee shops …
Context & Ripple Effects
Foursquare has spent two years circling commerce without landing on a revenue engine: an online store floated back in 2010 never became the business, a brand partnership push with PepsiCo signaled ambitions beyond check-in points and badges, and talks of a distribution deal with Groupon in 2011 hinted at deals but stayed at the partnership stage. Meanwhile the platform kept compounding its core asset — over 20 million users checking in and more than 750,000 businesses signed up by early 2012.
First-order effects
- Foursquare starts selling directly against its own data: personalized coupons turn each merchant's check-in history into a targeting product, giving the 750,000-plus signed-up businesses a paid reason to stay on the platform.
- The move answers the profitability question hanging over the company as a popular-but-unrevenue social network — the same framing applied to peers like Facebook ahead of their own IPO-season scrutiny.
Second-order effects
- Daily-deal players like Groupon now face a rival whose coupons are triggered by where a user actually is rather than by email blasts, pressuring the deal-of-the-day pricing model toward per-user targeting.
- A reported mid-June ad platform built around Promoted Specials would stack paid media on top of the coupon product, making merchant budgets — not consumer subscriptions — the revenue base Foursquare pitches to brands.
Third-order effects
- If check-in data keeps proving out as purchase-intent signal, local marketing consolidates around platforms that own location history, and merchants shift spend from blanket discounting toward offers priced off who is nearby and what they have bought before.
The trend: Location-based services are converting gamified engagement data into targeted local advertising, moving from check-in novelty to intent-driven merchant monetization.