How Foursquare plans to monetize: no dumb banners, all specific targeting
Specific discounts for specific customers — that's the key to Foursquare's future monetization success, according to Dennis Crowley. — Speaking to Sarah Lacy at PandoMonthly in New York tonight …
Context & Ripple Effects
Crowley's PandoMonthly answer lands at a pressured moment for Foursquare: the company teased a new advertising platform back in April for a June launch, then joined the coupon craze in May, while June reporting flagged that growth was not accelerating enough to secure its independence under a venture-backed model. The pitch he gave Sarah Lacy is the monetization thesis for all of that groundwork — merchant-funded offers keyed to specific customers, explicitly rejecting dumb banners.
The framing also closes a loop opened back in 2010, when Mashable glimpsed this future for Foursquare: two years on, the check-in database built for consumer play is being repositioned as the targeting asset that justifies the company's substantial venture raise.
First-order effects
- Local merchants become the paying customer: Foursquare's revenue case now rests on selling them specific, customer-matched discounts drawn from check-in behavior, not display inventory.
- The June-launched ad platform gets its strategic definition — targeted offers are the product, which sets expectations for what merchants were signed up to buy.
Second-order effects
- Foursquare moves from adjacent player to direct competitor with the daily-deal and coupon services it joined in May, competing on targeting precision rather than discount depth.
- Advertisers gain a benchmark problem: if check-in-based offers price against banner CPMs, every location-aware app's inventory gets valued by how specific its audience signal is.
Third-order effects
- If the pattern holds, the durable asset for consumer location apps shifts from user counts to commercial-intent density — who is about to buy what, where — making per-user revenue, not growth rate, the metric that decides which venture-backed apps stay independent.
- Merchant-funded offers tied to behavioral data point toward location history becoming standard ad-targeting infrastructure, with the attendant privacy scrutiny that any such shift invites.
The trend: Consumer location services are pivoting from scale-at-all-costs growth to monetizing behavioral intent, with targeted merchant offers replacing display ads as the business model.