December 15, 2011

Why FourSquare is Toast! Foursquare, the leading independent location-based social network, cannot survive because it lacks scale, context, committed constituents and a compelling customer experience. The purchase of Gowalla by Facebook, signals the beginning of the end for one-trick ponies like Foursquare. Foursquare is a case study in rapid growth but unrealized potential. In spite of growing from 2 to 15 million total users since July 2010, recent research from Forrester indicates that only 30 percent of Internet users are aware of the category called location-based services. A mere 6 percent actually have used them. And just two percent are active weekly users. Three-quarters of Foursquare members are 23-45 year old early adopters, 73 percent men and 37 percent women, who are twice as likely to share product information, promotion codes, coupons, discounts, offers and their results from online games. And while sharing might be caring, the numbers are very low and the ability to track and measure this marketing potential are very fuzzy. As a proud member of the active 2 percent, who connects his Foursquare account with Facebook, Twitter and LinkedIn, I can tell you that the customer experience is bewildering. You check in. Each time you check in, you get a different number of points benchmarked against different set of friends. Points are awarded with each check-in but they never seem to accumulate. Nobody knows what the points mean or what to do with them. Similarly I’ve earned a bunch of badges, whose names are forgettable and purpose indiscernible. Reaction to my frequent check-ins, from my social networks, range from validation or criticism of my restaurant selections, to occasional tips about out of town destinations to mild irritation about why my friends might care where I am and what I’m doing. From a marketing standpoint Foursquare could be empowering local merchants, pushing out timely geo-based offers, rewarding frequent store visits, enhancing the in-store experience and connecting or cueing friends in nearby vicinities. But they haven’t really got traction on these prospects from either merchants or customers.There has been some big brand experimentation but no significant campaigns on a regional or national scale. Location-based marketing will not go away. Pure play LBS providers like Foursquare will disappear as the geo-social functionality gets wrapped into larger contexts and subsumed in e-commerce, m-commerce and f-commerce functionalities.
Why iAds Bombed The initial failure of iAds is a tale of Apple’s attitude and arrogance. The introduction of this new ad medium was heavy-handed. Three fashionably dressed hotties showed up at our offices, whipped open their MacBooks and laid out the take-it or leave-it value proposition --- pay us a minimum of a million bucks, create what we tell you to create within a very constrained technology environment and then shut up and be grateful. Does it surprise anyone that brands and their agencies didn’t rally to this? Apple’s reps asserted that iPad users were smarter, richer, more likely to share and buy than the average Joe. That brands could micro-target using rich data from the iTunes app store. They suggested that those who didn’t get in early on this amazing deal like Target, Unilever and Geico did, or you’d be left in the dust. Of course, there was no data to support or document these claims other than the hockey stick sales curve for iPads. There was also a clear suggestion that since Apple invented the platform and since Apple ran the famous “1984” ad, they knew much better than brands or agencies who to talk to, what to say and how to express it on the new tablet landscape. A year later, many brands have tried it. Revenues are way off projections. And brands are under-impressed with both the creative canvass, the targeting options and customer response. Marketers have also figured out that iAd creative is one-system only requiring additional, costly creative and technical resources where the cost/return ratio is out of whack. Couple that with emerging customer usage patterns that suggest iPads are primarily entertainment vehicles supporting TV and movie watching, games and social media. These are behaviors and attitudinal inflection points only open to a finite number of brands and campaigns and virtually force advertisers to intrude on customers and prospects.. The promised creative bonanza has not materialized and while rep visits to agencies has increased, interest in iAds hasn’t. Apple isn’t the first Internet giant to break into the market with a bull-in-a-china-shop profile. But it could be the first to eat some humble pie, re-tool, re-think and re-stage their approach to the advertising and marketing community.

Danny Flamberg

I am a veteran marketing consultant working with leading and emerging brands

The Typepad Team

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