Is location-based social networking your next step in online marketing?

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I found Waldo, and he just checked in to your shop on Facebook Places. Or on Gowalla. Or FourSquare. Or Loopt. Or Yelp. Or any number of “location-based social networking” clones that are popping up all over the interwebs.

What are these sites/services? How do they work? Who uses them? Why should you care?

Now that many people are used to social networking and own smartphones that have fast(ish) connections to the Internet and have some method of determining where they are (GPS, cell-tower triangulation, etc.), it’s natural that someone has come along and made the big connection: Combine the social networking experience with location-aware features while providing an opportunity for the business locations to participate. Except for the creepy stalker/exhibitionist aspect of the whole thing, it’s pretty brilliant.

Here’s how most of these services work. You sign up for an account with a site like FourSquare (www.foursquare.com). When you go someplace (a restaurant, a concert, a club) you use the application on your iPhone or other supported device to “check in.” You’re basically broadcasting to your social network (at least the part of it that’s using the same service) a message that says, “Hey, I’m here!” From there, depending on the service/site, a lot of other things can happen. If you have “friends” on the same location-aware social network and they’ve also checked in, you can hook up, you can earn loyalty points from the business, etc.

So far, the big dog in this space has been FourSquare. It was the first to gather a large user base, get a lot of press, and capture the hearts of the venture capitalists. But now that the concept is proving itself, the really big dogs like Facebook (with Facebook Places) are starting to roll “check-in” functionality into their service offerings. Most people already use Facebook, so sites like FourSquare will have a lot less room to move around. That’s assuming Facebook doesn’t eventually blow itself up due to privacy concerns. Most of these location-based social sites have methods to provide incentives to people that check in to a location a lot. It works like this: Business A has an account with the location-based social service and “claims” it business.

Business A provides incentives (special services, discounts, free stuff) to people who meet certain levels of participation. For example, with FourSquare users can earn points the more they check in to the same location. Earning more points leads to various “badges” that tell the world, “I’m a regular.” With FourSquare, folks aspire to be a location’s “mayor.” Typically a business owner will provide more perks the higher up the ladder a user goes.

By themselves, these location-based social services are like a game. But how they should be interesting to you is as a way to advertise your store, participate in the various ecosystems that will develop around these networks, reward loyal customers, and so on.

Sites like FourSquare and Gowalla (www.gowalla.com) are hot right now as companies look for better ways to use social networking tools and sites to market their businesses and make money. At the Search Engine Strategies conference I attended in San Francisco, it was clear that businesses are becoming more and more disenchanted with paid search advertising (if you buy Google AdWords, you know that our industry has managed to jack up relevant keyword prices to levels that are just goofy). Display ads and other content network ads are proving very costly and difficult to measure except for companies that can afford complicated advertising attribution tools and services. Advertising on social sites like Facebook is reportedly not very effective for a lot of companies. Companies see the advertising and marketing opportunities that these new social networking sites offer because they hinge around having customers physically in their store. These sites may be what people have been waiting for: the holy grail union between local, Web, and social. Or they may be just another flash-in-the-pan Web sensation that caters to narcissistic exhibitionists. Who knows? Some folks thought TV was a fad.

You should be able to envision ways to leverage these sites for your dealership, especially if your shop gives people a reason to hang out. You could also partner with establishments in your area that are hot hangouts for riders. Here’s something to get the ball rolling around in your head: If you live close to a track, partner with the operators by offering free oil changes or something like that to the track-day “mayor” of that facility. It’s a safe bet that a lot of tracks, especially ones that often sit empty, don’t have owners or operators that are even bothering to “claim” their business in sites like FourSquare and Yelp. Offer to step in and do it for them. I’m sure once you start using these things, more brilliant ideas will come.

Keep a close eye on this area of the social Web. It’s attracting attention, and companies playing in this space are raising a lot of money. It’s already starting to develop some technical extensions and meta-level technologies that hope to provide additional value to the participants. An example of this is TopGuest (www.topguest.com) that links check-ins with users’ loyalty programs (their frequent flyer program, for example), allowing them to earn points.

This story originally appeared in the Dealernews October 2010 issue.