Facebook enters the Geo-Networking Arena

Rumours have been flying around this month speculating about the imminent launch of Facebook’s location based status feature. Providing similar advertising opportunities to the likes of Foursquare, Gowalla, MyTown and various other location-based mobile applications but on a much larger scale, Facebook is set to once again expand their hold on consumers lives.

To summarise the concept; for those of you not initiated into the Foursquare ‘crew’, this social application is essentially a game that allows businesses to reward users for visiting and ‘checking in’ to registered locations as well as leaving reviews, tips and comments for other users to read. Foursquare, although only currently boasting around 1 million users, has already seen the likes of Pepsi, Dunkin’ Donuts, Starbucks and Warner Bros running campaigns built around the platform. Many of these initial platforms have also integrated with Facebook and Twitter to raise their appeal; for example, Foursquare contains a ‘like’ button on its business pages that connects to your facebook profile to display an image and produce a status update. Facebooks concept is in a similar vein to this, allowing users to add a ‘geo-tag’ to their status updates, informing friends of their exact location. Although initially it will be launched for consumers only, there are plans to roll out branded applications on top of the service that allow businesses to interact with users, for example adding rewards or promotions for ‘checking in’ or simply advertising themselves to users that are in the area. McDonalds has already signed a deal with Facebook to be the first business to use the platform, predicted to launch at the end of May.

But it’s not just big companies that can benefit from geo-targeting ads. On the contrary, small, local businesses may well gain the most benefit from Facebooks venture into location based social networking. The adoption of a platform that displays your business to local consumers, along with reviews and comments from current and recent customers (hopefully positive ones!) means that small bricks and mortar businesses can harness the power of online social networking without the need for a flashy website. With the leverage of 500million current Facebook users and supported by a simple online marketing campaign, focused on local customers, smaller businesses could thrive in the new social-mobile environment.

Facebook vs. Foursquare

Facebook has been instrumental in the demise of Bebo and the dramatic reduction in usage of MySpace, casting them by the wayside on its swift clamber to social network dominance. However, despite the previous immortality of Facebook in the social network sphere many marketers believe this does not spell the end for Foursquare and its companions.

So what advantages does Foursquare have that Myspace didn’t?

Firstly, it has the support of some big brands including Pepsi and General Motors. These companies are already customers of Foursquare and are maintaining that these new developments from Facebook make them no more likely to consider it for a location program. This says a lot for the existing relationships that Foursquare has built with its clients, and the respect they have for the knowledge and value that the company is giving them.

Secondly, Foursquare has dynamic game play that makes users want to interact and ‘check-in’ with the application. They can compete with their friends and within the community to unlock badges, become the mayor and generally gain social status around their locality.
In terms of value to businesses Foursquare offers companies knowledge and experience in this new social space; which they’ve gained from both their first mover advantage and their focus on such a niche. Furthermore, Foursquare’s game environment encourages users to become loyal to certain establishments and by bringing friends or sharing reviews it is likely that business sales and revenue will also prosper as a result.

In contrast, Facebook are introducing geo-tagging as a primarily status based feature, which doesn’t give users as compelling a reason to ‘check in’. With Facebook surrounded by controversy over privacy issues at the moment this also doesn’t bode well for encouraging users to put yet more information in the public domain. Also, it may be difficult for Facebook to differentiate its offering against the others in the market. So far each location based social network has carved its own niche in the market, focusing on either discovery, gaming or shopping. Due to these specialities each application can offer businesses differentiated value; Facebook however, is known more commonly for its mass appeal, something that businesses trying to target a more specific, influential audience may not want or need. One aspect in Facebooks favour however is the important part it already plays in many consumers lives. If there does become a case of ‘check-in fatigue’ and users start to prefer to only use one application, due to the regularity of interaction with Facebook already it is likely that consumers will continue to log in to Facebook on a regular basis and may chose to only update their location on there.

So who’s going to come out on top?

All in all, I believe that for smaller, local businesses one of the current location based applications will continue to be very effective in increasing sales and building brand awareness. And although Facebook currently has an audience base that the current apps can only dream about that does not give it a clear advantage in the strategy proposals of big businesses either. Experience, knowledge and business value are the most important aspects in a localised social media strategy and the current players appear to have this in bucket loads.

This may be a corner that Facebook should let the small guys win.