Fast Company recently published an article on the effectiveness of location-based social services like Foursquare and Facebook places. In terms of attracting new business, these location services and others are appearing to be minimally effective. However, it’s important to look beneath the surface and uncover why these tools are still a useful component to a brand’s social media strategy.



Applied Predictive Technologies is a consulting firm that specializes in data analytics. When they were asked to determine whether Foursquare, Groupon, and Facebook Places promotions were driving up sales, they crunched all the numbers and determined that, on average, these services were only increasing revenue by a paltry 2%. However, an effective social media strategy should be measured for more than just short-term revenue increases. The public’s perception of a brand has a lot to do with trust and cool-factor, neither of which might translate immediately into sales.

If a brand like Nike runs a social promotion where runners “check-in” to places along their run, it might not lead to an immediate increase of shoe sales; after all, how often does someone buy a new pair of sneakers? But what a promotion like this does is emotionally link the positive feelings of exercise, self-improvement, and personal accomplishment with the Nike brand. This leads to a favorable impression of Nike and contributes to a consumer’s loyalty to the brand.

Or if Heineken offered a promotion where “checking in” to a bar gives customers a discount on Heineken beverages. Perhaps a single guy uses the foursquare app interaction as an ice-breaker to strike up a conversation with a romantic interest. Not only is Heineken in the backdrop, but the brand gets elevated from old friend to trusted “wing-man.” An interaction like this would be priceless to a brand.

Seeding low-level emotional and psychological connections to a brand may not show immediate sales results but it does help a brand build business over the long term. The fact that immediate, proven 2% increases are being measured is a great thing, as these increases are likely to be coupled with longer term growth as well.

Commenting on location-based services, a senior VP at Applied Predictive Technologies said, “It’s still a pretty nascent space. I don’t think anybody has gotten the model right.” Rather than the model being wrong, I think the model is simply new. Consumers’ lives are increasingly on-the-go, and location-based services are one of the few ways for brands to stay connected to customers no matter where they go. As users get more comfortable integrating location-based services into their lifestyles, brands will continue to learn how to seize the opportunity.