Foursquare Tries To Find Its Way, By Selling Your Data to Advertisers.

For the last four years, I’ve been a pretty devout Foursquare user. I’ve “checked-in” to 6,500+ places, secured “mayorships” at 40 some-odd locations and posted 500+ photos and a few dozen tips and comments. I’m by no means a power-user, but I am a loyal user of the app.

The challenge I’ve has a user is understanding the value of the app—is it simply a way to alert my friends of where I am to keep me “in touch” with my social graph? Is it a game app where I compete against friends for points? Or is it a way to discover promotional deals from advertisers linked to Foursquare?

Over the years Foursquare has struggled with these different value propositions as well, as the tried to find a balance of attracting and keeping users like me, and attracting advertising dollars to monetize the company (at some point every “free” app has to find a way to make a profit).

This week, Foursquare released a new version of its app that aims to make “local discovery” –and not check-ins, its primary function suggesting it wants to be in the business of linking local businesses, with users of the app. Foursquare CEO Dennis Crowley said the company is becoming "the location layer for the Internet."

Foursquare currently makes money from businesses who buy promoted listings and specials advertised within the app. Last year they generated a reported $2 million—hardly enough to sustain itself as a profit-making venture.

Lately, Foursquare has been pitching potential advertisers on a new ad product that would use Foursquare's location and behavioral data to contextualize ads on other platforms. The product, according to AdAge will allow advertisers to use Foursquare data to target ads purchased through ad exchanges or networks.

"We are always looking at ways that could make our data more useful for advertisers and partners, while respecting the privacy of our user's information," Foursquare said in a statement. "We're really excited about our 2013 monetization roadmap, and will provide more details.”

It is a way for Foursquare to generate money by selling their user data, rather than just pushing ads directly at consumers. It could very well be a lucrative proposition for Foursquare, given all of the behavioral data generated by its millions of users—after all, they know where you eat, shop, sleep, socialize and get entertained. Our collective 3.5 billion check-ins tell a lot, and provide invaluable data for advertisers.

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