Foursquare, Gowalla and Loopt raised funds of nearly $50 million from investors and have garnered 13 million users and would now make users pay off.
The ‘geosocial’ applications have South by Southwest (SXSW) for its testing ground as there events hourly in the place full of bars and restaurants. Patrons habitually check-in apps to find out what’s latest with their friends. In 2010, Foursquare and Gowalla battled for attention at SXSW and this year, they will be using the show to test business models. For motivation, they look up to Groupon whose yearly sales go over $1 billion.
Foursquare has historically tried out sponsored promotions and exclusive deals and has teamed up with American Express. Founder Dennis Crowley said it’s loads of deals built for Amex card in sync with Foursquare account for additional specials such as a $5 purchase at participating merchant earns an automatic $5 to Amex account. While Foursquare does profit, the deal is a model for future business deals.
Loopt is also looking into discounts and rewards to monetize members of which founder Sam Altman said the big trend with location is about value. It also launched a feature where businesses can send offers that are specific to a location via consumers’ phones and be able to provide better experience of the real world said Altman.
Gowalla joined the SXSW discounts game and has pilot tested Gowalla Rewards, a daily deals drive for local merchants.
Further polishing for geolocation services is essential to obtain mass audience and a Pew Research Center study said that currently, only 4% of online adults use sites like Foursquare.
Companies hope to raise the score with improved applications because while virtual prizes like badges upon checking in to 100 places earned early adopters, there is a need for more measures for more to be encouraged.
Foursquare offers a new recommendations engine from the information it has gathered. In 2010, out of 7 million members, there were 382 million check-ins recorded. On the new feature, Crowley said that for each check-in, every piece of information put into the system is recycled to help figure out things in the city.