While I wasn't one of the first to sign up for Foursquare, I can at least say I got in among the first 500,000. That used to be something I could speak proudly about with those (like me) who follow this social media stuff a bit too closely. I could mention all my mayorships and brag about my Super Mayor and Crunked badges (whatever that is), but it doesn't mean all that much to me or anyone else these days.
There are a number of factors threatening to make Foursquare obsolete, and they're coming quickly. It turns out that these factors aren't dramatic shifts, demographics, or big changes in technology. They are things that exist right now that are slowly but surely doing everything Foursquare does, but better (or bigger, faster, or smarter).
I'll put them in order from the lowest to the biggest impact.
1. Digital clutter and the annoyance factor
A few years ago (and even a bit today in certain circles), whenever you asked nearly anyone if they used Twitter, the clichéd response you got was, "Why the hell do I care what people I don't know had for breakfast?" In most regards, Twitter has gone beyond that and moved into a more mainstream position. Not everyone may know the benefits of Twitter, but they know it will tell you more than the gastronomic habits of strangers. The thing is, these people were right. Twitter used to be useless updates (and spam) about nothing. In other words, it was amazingly annoying. Today, it has evolved to become a useful source of information and communication.
Enter Foursquare. Just as my Twitter stream was opening up and ridding itself of worthless status updates, along comes Foursquare update after Foursquare update directly into my feed on Twitter... and on Facebook. "I'm at Starbucks." "I'm at Twin Pines Mall." "I'm at the New England Whaling Museum."
It made me realize that I couldn't care less what people were doing on Foursquare, and that constant updates from my "friends" on their whereabouts was nothing more than an annoyance. As our lives get more cluttered with digital noise, our threshold for annoying has gone way down. While this might not even be Foursquare's fault, it's the one that is going to be punished by turning off potential future users.
"Why am I bothering to check in?" many people ask. Well, in what's now social media lore, Gary Vaynerchuk explained this at a past SXSW (and I'm paraphrasing): "If someone gives you a free beer when you check in, you're going to check in." Of course, the problem is that they don't give you a free beer. At least, they don't at most places, and where they do, it's only for the mayor. If I'm not the mayor, I may earn a free beer after five or 10 check-ins. Is that enough to remember and compel me to check in? Maybe. But here's one more problem: Let's assume that the mayor of every bar gets a free beer. What do you think that creates? That's right -- a bunch of liars. It creates a bunch of people who check in even when they aren't really there. Maybe as they drive or walk by, or maybe when they're at the bar across the street. You don't really have to be at the place to check in, and when free beer is on the line, ethics go out the window.
Unfortunately, GPS isn't accurate enough to consistently tell if you're really inside the store (never mind if you actually bought something). So for business owners, as you offer better and more specials, you have another problem: proving that people aren't cheating. If you don't, those who are playing fair will get annoyed, and who will they blame? You. Business owners have enough to worry about without policing Foursquare. I know that I'm sometimes forced to cut out UPC codes from boxes as a proof of purchase, but who's going to create a "proof of location"?
The net result of all of this? It's one more thing for people to worry about and deal with every day. People need fewer things to do that make less work for them. Adding checking in to that list is just one too many things for most people.
2. Niche competition
Another major factor that will hurt Foursquare are niche competitors. What I'm not talking about here are other location-based applications like Gowalla, Loopt, or even SCVNGR. I'm talking about applications that already do a much better job at the things Foursquare hopes to deliver in the future. For example, Foursquare's latest push is Tips and To-Do Lists. The idea is simple. When you're looking for a new place to try out or find in a new city, open up Foursquare and see what people recommend. Of course, for anyone who has read a tip in Foursquare, you know they aren't terribly helpful. The local bar near our office has five tips. The most insightful is: "Get the new bourbon stout." While that sounds great, I'm not sure that's going to get me into a new bar I've never tried (especially this particular dive). Compare that with what I find on Yelp. I get star ratings, photos, in-depth reviews (and a lot of them), contact information, and more (including Yelp's own version of the check-in). It's infinitely more useful than what I get from Foursquare. So, the question is this: Why would I use Foursquare to find a new bar or restaurant when there's Yelp? Can Foursquare reasonably assume that it will ever have better content than something like Yelp?
3. Mayors vs. influencers
The brass ring for anyone using Foursquare is to grab the mayorship of a popular location. It's an interesting competitive element, which frankly is one of the big reasons Foursquare is still around. As marketers get involved in Foursquare, things start to change. First, the idea was that businesses could offer a special incentive to the mayor like a free dessert. Nice touch, right? The idea is simple. Offer something of value so that you keep the competitive element going, which means more check-ins at your business and presumably more customers and sales. At the same time, by rewarding the mayor, you're keeping one of your best customers happy. However, is the mayor really your best customer? I think not. The Foursquare mayor is more like a Chief Loiterer. Contrast this to an actual mayor who is someone that might drop by occasionally, and it's a big deal when he or she does. So if you're rewarding the Foursquare mayor, are you wasting your giveaways?
What you really need to decide is where your perks will have the biggest impact on your business. Does giving a free dessert to your Foursquare mayor have the biggest impact on future sales? The answer is almost certainly no. Giving your perks to your most influential customers is what will have the biggest impact on your business. These are the people who will not only tell a bunch of their friends and followers, but also whose opinion will carry a lot of weight with them.
I'd argue that it's far more important to know the type of data about customers that Klout can provide versus Foursquare. Klout uses its algorithms to give an influence score for everyone based on the impact they have on friends and followers in the social space. It also gives you an idea about what someone talks about most, and which topics they have the most influence over.
I can't take credit for coming up with this factor. That goes to Peter Shankman who summed this up on his blog:
"Think about it: What does 'being a mayor' tell the store owner? That this person likes to come in a lot. But if I can see your Klout score and know that not only do you visit here, but you're a wine aficionado, who tweets about wine and recommends wines and places to get them to your friends... Well, that changes the game for me! I don't give a crap about a Foursquare mayor anymore -- I'll look to Klout for my marketing information."
4. Marketers' performance reviews
A recent survey from Pew Research Center found that just 4 percent of Americans online use location-based services. Specifically, the survey asked people if they use a service such as Foursquare or Gowalla. Interestingly, while Facebook Places (more on this in a moment) debuted when the survey was fielded, it was not mentioned in the questions. Some argue that this suggests the number might be higher than the 4 percent. Mashable has argued that this figure doesn't make sense in light of the fact that Foursquare alone recently reached 4 million users. To show the size of Foursquare, they also pointed out that 4,511 people checked into the San Francisco Giants' World Series parade.
That sounds like a lot, I guess, and apparently that was good enough for all those people to secure the new "Epic Swarm" badge. Here's the thing: The San Francisco police estimated that at least 500,000 people came into the city from other parts of the Bay Area just to see the parade. Quick math -- that means that at most 0.9 percent of people at the parade checked in (and it's probably a lower percentage because the 500,000 doesn't include all of the people who were already in the city and watched). Plus, I'd argue that people are more likely to check in during an event like this than a routine trip to Starbucks. So even with everything in its favor, including the tech-savvy-skewed population in San Francisco (home of Twitter, Digg, Craigslist, Yelp, and TypePad, to name just a few), fewer than 1 percent of people at the parade checked in. I wonder how many posted something on Facebook about being at the parade?
The point here is not to debate what the exact number is. I think we can concede that the number is still a small minority of Americans and likely in the single digits. Despite this, no shortage of big-name marketers have jumped into Foursquare with both feet, spending a fair amount of money and an even greater amount of time and attention that might have been better spent elsewhere. Just a few of the players include Starbucks, McDonalds, Bravo (owned by NBC Universal), Pepsi, MTV, the NHL, and Gap (again, to name just a few). I know I've seen an increase in the amount of time spent talking with clients about how to do some marketing via Foursquare, but it's certainly disproportionately high compared to the potential size of Foursquare's audience.
When it comes to performance review time for many marketers, they're going to need to somehow justify the dollars, time, and attention spent to get one of these campaigns going. In classic marketing talk, was the opportunity cost worth it? I'm not saying that every one of these campaigns needs to show a perfectly measured ROI figure (though is that too much to ask?). I am saying that they need to have shown something. For example, this might be a lesson they can take forward and share with the rest of the company. Judging by the fact that you haven't heard about a second campaign from any of these big marketers should tell you something. If marketers aren't seeing value and can't justify spending time and resources marketing on Foursquare, then Foursquare doesn't have much of a business model left.
5. The 500 million-pound gorilla
For those paying attention, you've probably noticed that I haven't said much about one key player. I did say I'd put the list in order of importance, so without question, the biggest threat to Foursquare is Facebook Places. While Foursquare has 4 million users, Business Insider recently reported that a Facebook source has said that more than 30 million people have tried Facebook Places. For perspective, that's fewer than 10 percent of all users of Facebook (500 million).
You can look at that number a few different ways. First, you could argue that Places isn't important because only a small percentage of users have jumped on board since its introduction this summer. Of course, this might also confirm the data from Pew's study about the usage of these location-based tools in general. Some even use these low percentages to show that Facebook Places isn't going to be successful, which would be good news for Foursquare. Well, here's the real news: The worst possible thing for Foursquare would be for Places not to catch on. If you can't sell the concept of "checking in" to the general population on Facebook, then what makes you think you're going to sell them on Foursquare?
You could also look at this 30 million number and see nothing but potential: 470 million people who have not tried Facebook Places. That might be a bit high since not all of these people even have mobile devices capable of using Places. However, considering that 200 million active Facebook users access Facebook through their mobile device, there's a really big pool of people with all the tools necessary to use Facebook Places. Like many new additions to Facebook, the way Places will catch on with everyone is by more people using it. It will spread via the same viral-type awareness as any application on Facebook, by showing up in everyone's News Feed. If you see your friends using Places, you'll start trying it too. If it worked for FarmVille, it'll work for this.
Facebook makes more sense as a platform to check in and tell people where you are than Foursquare. You would probably feel comfortable sharing your location with most of your Facebook friends. If not actual friends, you know a fair amount about them. I trust the people I know on Facebook and their Places updates do motivate me. For example, I saw one friend checking into various Disney theme parks this weekend. Then I saw pictures and even a video from her trip. What did that make me want to do? That's right... visit the mouse. It works the same for a new restaurant or bar.
Facebook Places just makes sense for most people. Think about it: You already share where you are and what you're doing on Facebook. Take a look through your News Feed, and you'll see a lot of people talking about where they are and what they're doing. They may not be using Places to enable this, but they are certainly fine with the idea of sharing this information. Once they become familiar with Places, they'll use it to enhance their updates about their location. And instead of seeing the annoying Foursquare check-ins, you'll start seeing rich updates on Facebook that include comments and maybe a picture and video as well.
But what about marketers? How can they use Places? Facebook just announced the addition of Facebook Deals, which allows marketers to create specials in the same way that Foursquare specials work. I would expect these deals to spread farther and faster than deals on Foursquare for a number of reasons. Chief among them is that when someone checks in or claims a deal, a story is published in their Feed for all their friends to see. When you see your friend get a big discount somewhere, you just might be motivated to get the same deal. Foursquare doesn't have anything nearly as simple and with as large a reach as Facebook (no one does). Combine all these factors together, and Facebook Places could be the service that finally kills Foursquare.
While it's not over yet, and Foursquare might have some more tricks up its sleeves, it's certainly not looking great, as a bunch of different forces start to line up against it. Perhaps Foursquare should have taken the $100 million it was offered by Yahoo when it had the chance. I can't imagine anyone else stepping up with that kind of cash in the foreseeable future. Maybe it can give us each a share in the company when we check in.
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