Sorry Tiger, it’s the Year of the Location-based Services

2010 will be the year that location-based social networking services become mainstream. Bold statement? Hardly. With the rise in popularity of Foursquare, Gowalla, and other similar sites, we’re going to start seeing a shift in users from early adopters, to more mainstream adopters. I’ve been using Foursquare obsessively for a couple of months now, and it’s become increasingly hard to hold down mayorships. I didn’t think it would be a service that I could get addicted to – but every time I’m ousted as mayor, a piece of me dies a little. I don’t think it’s how many points I can rack up in a week, so much as it’s a combination of unlocking badges, and being mayor of various locations that keep me engaged with the app. It could also be that more of my friends use Foursquare than Gowalla, MyTown, Loopt, or BrightKite, thus giving me little incentive to use the other services. Despite Yelp having the edge in number of users, I really don’t think they’ll “oust” Foursquare as “mayor” of location-based services. I use Yelp to find new places to eat, thus, I have no reservations about adding random people I don’t know as I may find their reviews useful. With that said, I’m also unlikely to use Yelp’s check-in because, aside from the fact that there are no exciting game-mechanics to it, I really don’t want people on Yelp to know where I’m checking in. The type of people I’m connected to on Yelp, are very different from that on Foursquare.

With location-based services, monetization will be huge. I previously blogged about hyper-local targeted advertising, otherwise known as location-based advertising. Imagine the possibilities with location-based advertising within location-based services. If someone checks in to a location tagged as nightclub at 11pm on a Friday night, they can receive an advertisement right when they check in, on late-night pizza. This way, when they’re stumbling out of the nightclub with their friends at 2am trying to figure out where to satisfy their munchies, the idea of late night pizza is already in their head (or maybe they receive a push notification around 1:30am letting them know of a pizza place open late).

2010 will be the year location-based services become huge. More mobile phone users are getting smartphones, and the smartphone market penetration keeps increasing – though location-based apps are doable on normal phones, the user-experience is a lot better on a smartphone. On another note, it would be interesting to study how many of those with smartphones don’t have data plans, and why they don’t have them (or why they bothered to get a smartphone if they weren’t getting a data plan). So, while it is the Chinese Year of the Tiger, it’s definitely the tech year of the location-based services, whether or not that’s Foursquare, or Gowalla, or some other service, has yet to be seen.

The Gloriousness of Geo-Location

Too bad the Whos didn't have geo-location or Twitter. Horton could have easily found them through displayed longitude and latitude on tweets while looking for their dust speck in the field of clovers. Just sayin'.

Yes, I know “gloriousness” isn’t a real word, but that doesn’t detract away from the wonders of geo-location (and not just because it makes for the ultimate stalker-tool). Sure, you can, through Loopt, BrightKite, and similar applications, find your friends and people near you with similar interests. And with Twitter’s integration of geo-location into their API’s, developers can utilize it for a number of possibilities. But there’s one particular possibility which makes geo-location so great: hyper-local targeted advertising. Think about it.

If users are all of a sudden enabling geo-location on their tweets, posts, etc., it would make it that much easier to do targeted advertising. Small businesses contribute greatly to the economy, and often cater to niche markets that larger businesses and corporations are often unable to do. Currently, if a small business or local business were to advertise on the web on, say, unique ice cream flavors, and they just happened to be located in San Francisco, but someone in Los Angeles tweets/blogs/searches for unique ice cream flavors, that advertisement could very well show up. The problem with this is that it really doesn’t benefit the advertiser (or even the person receiving the advertisement). With geo-location, small businesses can ensure that they target users who are most likely to frequent their establishment (i.e., users that are in close proximity to them). Allowing for hyper-local advertising allows for businesses to maximize their success at reaching their target audience.

Hyper-local advertising also increases the interaction advertisers can have with users. Let’s say a user loves telecommuting and often finds themselves working out of coffee shops. With geo-location, a coffee shop could advertise free coffee with the purchase of a scone for an hour to everyone that’s currently in that coffee shop, and people in the surrounding area. The user that loves telecommuting would likely pay more attention to more deals (or in this case, a steal – if it’s a pecan scone!) that are advertised, and possibly frequent that particular coffee shop more often.

As geo-location becomes increasingly popular in the social networking realm, not only could advertisers utilize it to more effectively advertise to their target audience, but it would allow for a more personalized user experience through location. Geo-location could be used for location-based social networking, geo-tagging pictures and videos, and location-based searches, among other infinite possibilities. The effect of all of this is the increased information about particular locations for locals, by locals. Advertisers would be able to more effectively reach these people, and these users would be able to more effectively sift through information that’s more relevant to them.