Forrester to Advertisers: Hold Off on Foursquare

Forrester is out with a new study that concludes most advertisers should hold off on starting location-based ad campaigns with Foursquare. While we agree that Foursquare gets more attention than its usage (2 million users) deserves, this could be missing the point.

First, there are a couple of different ways to advertise with Foursquare and other mobile location-based services. As we discussed last week, most of the ad support for Foursquare has come in the form of brand marketing. This includes brands like Bravo, VH1 and New York Magazine, which secure badges that users can unlock by checking in to local joints.

This plays along with the game mechanics that have driven Foursquare’s usage thus far, and is mostly a branding play. In addition to badges there are “location layers” and tips that carry brand messaging (see screenshot). This type of advertising could be questionable in light of Forrester’s 4 percent figure for U.S. adults that use Foursquare or something similar.

In reach-driven and impression-based marketing, these figures don’t bode well. But it can also be argued that Foursquare users, though small in number, are “fashion forward,” demographically attractive, and influential. This is particularly true among males aged 19 to 35, according to the study.

But branding play aside, Foursquare’s longer term advertising opportunity could be more “direct response” oriented, in its ability to offer location-based promotions to users who check in nearby. In this light, Forrester’s figures don’t relate quite as much.

Currently on Foursquare, any business can start to get its feet wet with location-based marketing — a medium that, though currently small, could reach mainstream levels relatively soon. This is free in early stages where Foursquare’s biggest objective is to lower barriers or points of friction for merchants to adopt.

Not only is it a free experiment, but it is also a steal if it drives foot traffic and makes the cash register ring in the interim. At that point it only becomes a matter of the cost attached to the time it takes to establish and manage a Foursquare campaign.

This is a real cost for most businesses, especially SMBs. But let that be a deciding factor for experimenting with Foursquare — not a lack of scale, a la Forrester’s advice.