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Hungry for money, Foursquare dishes out self-serve ad tool

The social network for places is getting serious about making money by letting any of its locations pay to promote their businesses.


In its most aggressive maneuver to make money yet, Foursquare is introducing self-serve advertising tools that merchants can use to dish out promoted updates to a selection of the place-based social network's 40 million members.

Monday, the 4-year-old company is launching in full an ad product that any of the 1.5 million claimed locations on Foursquare can use to reach people through the home screen of the application or in the "Explore" tab, where members typically go to search for places to visit.

Foursquare plans to hawk the self-service tools, which have already been live in beta status with 800 companies in 36 countries, as a means for small businesses to drive foot traffic to their stores. The ads are being offered on a pay-per-action basis, meaning a merchant only pays when a customer clicks on something in the ad or redeems an offer in the store.

The company is opting for an unconventional approach in its targeting tactics. Instead of letting merchants indicate who they want to reach, Foursquare figures that out for them. It's as if, after years of collecting data on where people go, Foursquare believes it knows better than businesses who their best customers are. What the approach lacks in customization, Foursquare believes will make up for in convenience.

Foursquare's self-service ad tool lets any of the service's 1.5 million locations pay to promote their businesses.

"I think we have a really good idea of who the best customers are for businesses because we're in the business of making recommendations," Noah Weiss, Foursquare's director of product, told CNET.

Foursquare, he said, has essentially flipped its Explore places recommendation engine on its head to go out and find would-be customers. It then delivers a promoted message when the identified people open the app.

If you buy the party line, the ads are also good for Foursquare members who, theoretically, could find something new to eat, see, or do at a discount. Reality, however, dictates that at least some people will have a distaste for the new units on home and search pages -- that is, if they even see them. Foursquare recently started giving out unsolicited tips on Android and iPhone, alerting people when the service finds something noteworthy about their current location. The passive location feature makes passé the need to open the app to get a Foursquare tip.

The ad push is an inevitable one as Foursquare looks to boost revenue from the humble $2 million it reportedly earned in 2012. This year, Foursquare is said to be on track to make between $15 million and $20 million, according to FastCompany, though the social network has never confirmed the estimate. Weiss would only reveal that Foursquare is exceeding its targets for the year.