Are Geosocial Apps Foursquare, Gowalla, Loopt & Brightkite Ready for Prime Time?

Is the Tail Wagging the Dog? Evaluating the Potential of Location-based Social Applications

If you read any mainstream media or social media sites, you might have started to get the impression that a Foursquare, Gowalla or Loopt application is your only hope to make this quarter’s numbers because check-ins are on everyone’s lips, er, finger tips these days. However, for CMOs of large brands, what’s the real business potential of these apps in 2010? What can they do for your business, and what and where are their limitations? Here, I’ll share some due diligence I’ve conducted for one of my clients and give you some general guidance for using these apps this year. I’ve also included links to the best information sources. First, let’s start with an introduction of geosocial and how it fits into the ecosystem you already know.

A Brief Introduction to Geosocial Applications

“Geosocial” (or “geolocation” or “location-based services” or …) applications represent an emerging space within the Web 2.0 ecosystem, so I’ll spend a minute here positioning them ,^) because their development is moving at warp speed. “Geo” refers to exchanging information related to one’s current temporal and physical location via a mobile device. “Social” applies the now-established bundle of practices called “social networking” to one’s physical location (interacting with friends, friends of friends). Many geosocial applications utilize GPS technology to automatically report the physical locations of their users, subject to their privacy settings. [update] For some quick visuals, see Geosocial Applications and the Enterprise [update].

You might think of it as “situational social networking based on where you are” (and what you’re doing)

Small niches of people have been active in geosocial, using text messaging, for many years. Progenitor Dodgeball was founded in 2000 and enabled users to SMS each other to report their location, notify them about other people nearby to enable “meeting in real life.” Geosocial applications try to increase opportunities for socializing with existing friends or people users don’t know but have certain things in common, based on each user’s privacy and sharing preferences.

It’s worth noting that geosocial is related to but distinct from geotargeting, which usually denotes serving precise marketing messages to people based on their locations. Citysearch, has been doing this since Web 1.0, and current players like Yelp and Facebook are converging into the geosocial space. Google tried to morph its Dodgeball acquisition into Google Latitude, but it hasn’t really worked, and I’ll speculate that they are channeling much of their geosocial energy into Google Buzz.

Some Key Players

• Loopt launched in 2006 and claims 3 million users
• Brightkite launched in 2007 and claims 2 million users
• Gowalla was born in 2007 and claims 150,000 users
• Foursquare launched in 2009 and claims close to 1 million users (with this growth, is it any wonder it’s got the lion’s share of the buzz?)
• Twitter shares considerable geosocial functionality, but it’s more generalized and less specific; it launched in 2006 and has 75 million users

Foursquare and Gowalla began catalyzing the current incarnation of geosocial applications in 2009 when they introduced a gaming element that is very relevant to retail and entertainment. Foursquare and Gowalla users “check in” to pubs, the symphony, SFO, the Cubs game, Bob’s barbeque (in his backyard) … Checking in broadcasts users’ time/geo location and activity to their friends (analogous to Twitter followers). Moreover, the apps award points and badges to users who meet various check-in criteria. For example, the person who has checked in to a location the most often per time period is designated “the mayor” of that location. Retailers can award free services or drinks to people based on check-in activity.

Most serious businesspeople won’t admit it, but like other people, they secretly like hoarding buttons and badges that elevate them above their peers in some way. It’s like a scavenger hunt game you play with your iPhone, Blackberry, etc. The world’s a playground.

The Potential: Emerging Opportunity

If your business involves physical locations, geosocial applications represent a tantalizing possibility: people can talk about their presence and share their experience at one of your locations with, potentially, friends of their friends that have the same interest (or thirst). It adds long tail digital grease to conditions on the ground at a retail location. Put another way, it can extend the buying radius of your retail locations significantly because one of my friends is looking at iPads right now, and I’m only 5 blocks away. My friend can share her iPad exploration process with me, fusing social and shopping experiences. I hadn’t thought about looking at iPads right now, but because my friend is there… That also means immediacy, peer pressure and more sales.

However, let’s abstract above retail to see a far more widespread potential. Consider these geosocial use cases:

• Law firm seminars on import/export standards usually attract thirty, but when attendees tell their friends, it increases by 50%
• Restaurant clients check in for drinks, and their friends can join them “spontaneously” for dinner
• Outdoor equipment retailer gives away climbing gloves to people with a certain number of check-ins; remember, when someone checks in, all their friends know, and friends tend to have similar interests
• University economics forum attracts 33% more attendees when attendees check in to the forum
• Ice cream shop gives free Rocky Road sundaes to kids who check-in wearing sunhats between 3:00 and 5:00 this afternoon, dramatically increasing excitement and selling radius
• By the way, Foursquare et al have Twitter and Facebook plugins, so check-ins are often broadcast to their user’s larger networks (much to the chagrin of their friends, who often tire of barhopping ordeals ,^)

The Reality: This is a VERY Small Market

Even writing the above paragraphs was exciting because it infuses companionship, immediacy and sales in an exciting cocktail that fuses new digital capabilities with the pleasure of retail’s immediate gratification. There is definitely a place on the Social Network Roadmap for geosocial, and I will undoubtedly be advising clients on geosocial social networking this year; however, I predict that engagements will be very specific and have goals that don’t involve huge numbers. Here’s why:

• Remember Twitter. The degree of excitement and overwhelming media attention vastly outstripped the actual business returns of launching a Twitter account or two. Today, Twitter has 75 million members, but 90% of tweets are written by fewer than 10% of them, and I’ll wager that geosocial services will follow a similar pattern, although they are easier to understand than Twitter.
• One of the best Mashable articles in ages drives this home graphically in “Local’s Long Tail Challenge.” For example, here are stats for the top three U.S. cities:
  • New York City has 2.71% of the U.S. population, and 13,539 Foursquare users—among more than 8 million population.
  • Los Angeles has 1.24% of the U.S. population and 6,206 Foursquare users among almost 4 million
  • Chicago has 0.92% of the U.S. population and 4,618 Foursquare users among almost 3 million
• In other words, geosocial users are a drop in an ocean.
• There is considerable distortion around geosocial because social media and techie users are very excited and vocal, and mainstream media is desperately magnifying anything that people will read while trying to adopt enough 2.0 to stay alive. Yes, the tail is wagging the dog right now. But he’s right to be happy.

Pragmatic Geosocial Opportunities in 2010

• Geosocial in Q2 2010 is an excellent example of a highly vocal early market discovering an explosive trend that will develop over the next five years and end up transforming retail. Although the term is outdated now, Web 3.0 used to denote applying “the Web” to physical location (among other things), and geosocial is a key driver.
• Success in 2010 will hinge on engagement sponsors and their advisers forming aggressive but realistic goals that recognize and play off the reality of geosocial users now; you can’t make money this year off of 2011’s user numbers. Or 2012’s. Or…
• On the positive side, you can make focused, modest investments that depend on your knowledge of your target audience’s true motivations (not what you want their motivations to be). Having people who can create excitement, promotions and events that draw geosocial users can certainly increase awareness of your physical locations, products and services.
• For large businesses, awareness will be a more realistic goal than huge sales increases because geosocial users probably represent a very small portion of their total customers. However, if your business is focused on early adopters (i.e. bars, entertainers, events), it can be very relevant now.
• Furthermore, are you following the firestorm over Facebook’s conflict with some vocal users over privacy? Privacy will serve as a huge impediment to geosocial adoption by the mainstream market. If your business is grounded in Main Street, be careful not to make geosocial 2011’s tarnished silver bullet.
• The Web 2.0 Adoption Curve is instructive here because it predicts a significant backlash against social networks in 2010: the perceived value of social networks in 2009-2010 is much higher than the market’s competency with using social networks to create relationships that increase revenue. When expectations are higher than the ability to realize them, disenchantment is the inevitable stepchild.

Net-net, you can make money in any market. Successful 2010 initiatives will give current users valid value propositions and motivate them to talk to their followers, most of whom will lurk for the next several years. If you don’t depend on exaggerated adoption, you can succeed and get in front of a trend that is certain to grow.

Sources

Here are some of the most valuable sources I used to diligence this post:

• [Update] Awesome backstory on Foursquare from Wired & Thx @stefanw
• 5 Things You Need to Know About Location-Based Social Media
• Making a Business Case for Mobile Marketing
• King of the Location Based Mountain- Foursquare vs. Gowalla, Loopt, yelp, RallyUp, Plyce…
• Facebook Friends GPS
• Geolocation 101: How It Works, the Apps, and Your Privacy
• Even more…

Your Turn

What’s your experience? Please share your reactions, your personal experience with geosocial apps 0r your business experience.