Foursquare dives deeper into data with new ad platform

SAN FRANCISCO — When Foursquare decided to split its apps a year ago, followers of the location-based service scratched their collective heads.

But with those apps — Foursquare and Swarm — parsing data in new ways with new technology, the idea bulb is now lit over those same heads.

"There were a lot of questions (last year) on whether it was the right thing to do," Foursquare CEO Dennis Crowley said in an interview here.

A year later, with revenue growing at triple-digit growth, the privately held company knows it made the "absolutely right decision," Crowley says.

"The same question is asked of us, as previously with Facebook and Twitter, How the hell does this company make any money?" Crowley says, laughing. "Well, we have products for that."

The split was necessitated by Pilgrim, technology introduced in August 2013 that makes it possible to "check-in" to a location without taking a smartphone out of one's pocket. The functionality was made possible when 6-year-old Foursquare passed 6 billion check-ins, allowing Foursquare software to determine the exact shapes of more than 60 million venues. But the technology raised privacy concerns.

Foursquare chose to go with two apps — Swarm, an app to keep up with friends, and a new version of Foursquare to collect relevant, honest recommendations. Both apps have clear privacy rules.

Pinpoint, a social-advertising platform unfurled in April 2015, took things even more forward. The platform combines Foursquare's location-intelligence technology tracking 7 billion check-ins and 55 million customers with GPS information from apps and publishers to sketch an accurate digital portrait of consumer behavior — from how often they frequent a store to affinity for certain brands. Samsung, Coors, AT&T, Jaquar Land Rover and FedEx are among Foursquare's business partners.

Pinpoint is available through both of Foursquare's apps, as well as 100 million other mobile users in the U.S. with non-Foursquare apps.

"Foursquare was ahead of its time (with location-based services), but Yelp and others came along and stole its thunder," says Hyoun Park, chief research officer at Blue Hill Research. "It has found a new niche with the combination of location and data analytics."

Foursquare used such an approach to accurately predict initial sales of iPhone 6S and 6S Plus, as well as revenue from Black Friday and all-day breakfast sales at a select McDonald's.

The data is available in raw form or specific reports for advertisers and small-business lenders, who can use it to determine if book stores and pizza joints in certain neighborhoods draw enough business to earn loans, Crowley says.

Brand names like McDonald's and Taco Bell, in turn, could use consumer data to target ad messages while customers are in their stores.

"Everyone talks about big data, but no one does anything about it," Crowley says.

When Foursquare started in 2009, it relied on the voluntary check-ins of its customers to establish where they want and what they consumed. The equation is now changing for the 190-person company, based in New York.

"Foursquare is in tune with the market now," analyst Park says. "There's hope."

Follow Paste BN San Francisco Bureau Chief Jon Swartz @jswartz