May 4 2010|07.02 AM UTC

Stan Reybern

12 Companies Who Are Competing For Local Businesses’ Attention

Category: Personal FinanceTags: , , , , ,

It was only a matter of time before mobile phones became full-fledged marketing platforms. In principle, there is little separating them from televisions, radios or computers, all of which have been used for promotional purposes since their inception (or soon after.) What was lacking, according to TechCrunch, were network improvements and smart phone technology that enabled a majority of wireless phone users to download apps. Once these emerged, service providers and startups began an ongoing mad dash to create “location-based services”, which allow users to broadcast their exact locations. Today, a crowded field of companies (some new, some well-established) are vying for the attention of local businesses, promising them the marketing opportunity of a lifetime: the ability to advertise to consumers who are already nearby. By 2014, Juniper Research predicts that revenues from mobile location-based services could surpass $12 billion. Billshrink profiles 12 of the most prominent location-based service companies below.


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Arguably the leader among location-based service startups, FourSquare is a virtual game where users of the free service accumulate “badges” and points for checking in at specific places including bars, restaurants and airports. The goal is to check in more often than other FourSquare users, at which point you become “mayor” of that place, according to CNN. But while FourSquare might appear to be merely an addictive online game, it has quickly become far more than that. Businesses are rushing to join FourSquare in order to make special deals and discounts available to users who happen to be nearby. If FourSquare has its way, simply walking down a busy city street will soon fill your iPhone or Blackberry screen with offers from participating local businesses.


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With services like FourSquare gobbling up users at such a rapid pace, it was virtually inevitable that Facebook would get in on the action. After several false starts, the social networking giant is indeed preparing to lift the curtain on its own LBS features. On April 22, the New York Times reported that Facebook was nearing completion of its own unique LBS features, as well as preparing for better integration with third party LBS apps. While Facebook founder Mark Zuckerberg “refused to offer any insight into the product’s timing” after previously promising an April reveal, a launch appears imminent, if only because the speed with which other companies are rolling out apps could cause it to “miss the boat entirely.”


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Another fast-rising competitor in the location-based services space is Gowalla. Using various free apps for smart phones including the iPhone, Blackberry, Android and Palm Pre, Gowalla users compete for the most check-ins within their local vicinity. The service is said to have nearly 200,000 users, and has already raised some $8.4 million in venture funding from the likes of Greylock Partners and Jason Calcanis, among others. As Gowalla’s userbase has grown, so has its use as a promotional platform. Bag and gadget case maker Incase, for instance, has partnered with Gowalla to reward users of the service with free merchandise in exchange for earning certain pins and badges. With so much money riding on Gowalla, it seems inevitable that more businesses will jump on the bandwagon in the months to come.

Google Latitude

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Google Latitude is a smart phone app which allows individuals of a user’s choosing to track their location on an ongoing basis. Users can be as precise or as vague as they wish in choosing how much location data Google broadcasts. At your option, you can reveal your exact geographic coordinates, such that another person could literally drive to where you were standing using a GPS navigator. Or, if you’d rather not be so revealing, you can restrict Google Latitude to merely broadcasting your city. While Google has yet to open the service to businesses in any marketing-intensive way, there are few doubts that this is the direction in which the service is headed. Furthermore, the app became an instant hit, attracting more than a million users in the first week its release according to SearchEngineLand. Google Street View, it should be noted, recently added local business listings in April.


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The location based services craze is by no means limited to the United States. Rummble, for instance, has taken the UK by storm as a service that lets users make recommendations about everything from night clubs to restaurants to beauty salons. As VentureBeat explains, “Rummble’s unique value is in its hyper-targeted personal recommendations.” Rather than simply bombarding you with where your friends are hanging out and assuming you’ll like the same places, Rummble learns from the types of places you like and dislike and, in turn, makes recommendations to you based on what users with similar preferences enjoy. In this way, Rummble is using algorithms and social data to intelligently help users decide where they should be spending their time.


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One of the earliest players in the location-based services space, Loopt began life in 2005 with seed funding from Paul Graham’s Y Combinator VC fund. The service is accessible via a growing library of mobile apps for just about every smart phone imaginable. A broad range of features are included, such as the ability to see visualized maps of where all of your friends are, get the lowdown on which pizza place is the best on the block and even integrate your Loopt profile with social networks like Facebook and Twitter. More recently, the company produced Loopt Pulse, an app designed exclusively for the newly released Apple iPad.


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Not every location based service app is developed with commercial intentions. Aka-Aki is a case in point, having “emerged from a diploma thesis project of its founders at the Berlin University of Arts” in April 2008, according to the company website. Today, Aka-Aki claims that “hundreds of thousands people” all across the world have become faithful users via a collection of mobile phone apps, and the service received two Webby awards in 2009 for its expansions and added features. But make no mistake: while Aka-Aki might have gotten its start in academia, its business applications are lost on no one. As recently as April 23, the company appeared at Berlin’s AR Business Conference to discuss the marketing potential of both Aka-Aki and the growing galaxy of similar applications like those discussed above.


Arguably no “household-name” company has made a bigger investment in location-based services (and their business potential) than Nokia. ReadWriteWeb explains that the company’s first and largest foray into LBS was back in 2007, when it forked over $8.1 billion for digital map provider Navteq. Since then, Nokia has made a slew of similar, albeit less expensive, acquisitions, including geosearch and geotagging services company, MegaCarta. In February, Nokia officially launched Ovi Maps Racing, its first mobile location-based game and, in the eyes of some analysts, the company’s early answer to rival services FourSquare, MyTown and Gowalla. RedLynx, the mobile gaming house that collaborated on the app, told that the game was a step toward “allowing users to view real locations though their phone’s camera and have information appear on the screen, specific to the location.”


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One of the most unabashedly commercial LBS apps is Yowza. The burgeoning service claims to provide access to coupons and offers from over 15,000 participating brick-and-mortar businesses (web-based retailers are not eligible.) Although Yowza itself only makes apps for the iPhone and iPod touch, the company website reassures Blackberry, Android and Palm Pre users that they can access Yowza coupons through an application called WHERE. Yowza’s own app and WHERE are both free of charge to users. Yowza also prides itself on the fact that it is not a coupon aggregator, but rather, that they actively work with retailers to offer coupons and deals that only Yowza users will have access to. The service is only available within the United States at time of writing, though Yowza promises to roll out in other countries in the foreseeable future.

Tonchidot Sekai Camera

It’s hard to think of a location-based service app that made a bigger splash than Tonchidot’s Sekai Camera did upon arrival at 2008′s TechCrunch 50. The Japanese service, which allows you to “leave text messages, photos, and audio recordings that will appear as floating bubbles wherever you created them”, functions by using the iPhone’s camera viewfinder to lay this information over real objects (such as restaurants), rather than virtual maps of those objects. The practical result, as TechCrunch explains, is that users can literally pan their camera around a specific area – such as a busy city street – and see various recommendations, notes and tags hovering over all of the stores in front of them. It took a while to materialize, but the Sekai Camera app became available for worldwide downloading in December 2009.


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CitySense is a mobile app dedicated solely to helping users find the hottest nightlife in their area. Users interact with CitySense by downloading an app to their mobile phone and creating a profile that is automatically populated with the types of bars and restaurants they tend to frequent. Over time, this profile comes to learn your nightlife preferences and begin making recommendations to you based on where its algorithms believe you would enjoy hanging out. InformationWeek quoted CitySense at the time of its launch as saying:
“You created your data: you own it. But showing up in Chicago for the first time and seeing the top places you’re likely to find people with similar tastes as yourself at midnight — that’s pretty useful.”


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Like FourSquare and Gowalla, MyTown functions as a sort of game in which users connected via mobile software compete against each other for status in virtual worlds. As MyTown’s website explains, users can (by checking in more frequently than others) “buy and own” your favorite real life locations, collect rent when other MyTown users check in at those shops, and even upgrade those shops to boost their value. The New York Times contends that MyTown “turns the real world into monopoly.” As with all of the apps discussed, MyTown’s skyrocketing user base (it reached 1,000,000 users before FourSquare or Gowalla, according to MobileCrunch) represents a gigantic promotional opportunity for all sorts of local brick-and-mortar businesses – a fact reflected Kleiner-Perkins’ investment in the fledgling startup.

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{ 2 comments… read them below or add one }

Brent May 4, 2010 at 11:16 am

They all smell like evil to me.


Andy Miller May 4, 2010 at 4:06 pm

LBS companies, such as the ones listed above, are thriving, however, the real challenge is connecting to the right consumer so that merchants and brands care enough to start writing checks. Having been in the game for a year and change now, we at CardStar have noticed that merchants won’t pay up unless you have a connection to their customer base. My guess is that the companies capable of extending their user base beyond early adopter techies will be best positioned to win the local market…soccer moms still rule with merchants and brands.


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