Facebook Places throws down gauntlet to location-based social networks

By Chris Lee

Location-based networks – apps which enable users to interact with other people and places by their geographical location – are fast growing. Foursquare, one of the leading players in the market claims around three million users globally. Although research group Forrester claims that most people have not even heard of location-based apps, the world’s largest social network Facebook has entered the fray with the US launch of its Places network. What does this mean for the future of location-based social networking?

Opportunity or threat?

With established location-based networks such as Gowalla and Foursquare already in the market, will Facebook simply steamroll the market? Not according to Kieran Clinton-Tarestad, ecommerce strategist at digital agency Pod1. He sees it as an opportunity to start an innovation race in the location-based networks sector.

“Foursquare and Gowalla have been described as large rooms with not many people in, and those who are there you wouldn’t want to talk to anyway,” he told NMK. “By entering this space Facebook brings increased user awareness of what location based social networking is and will help the concept reach critical mass, which it doesn’t have yet. A rumoured location based functionality within Twitter will only add to that.”

Clinton-Tarestad added that the emphasis will then be on developing logic that moves away from passive software to one that recommends nearby places for users based on them and their friends’ previous “check-ins” as well as reviews.

Competitive edge

While Facebook Places may bring numbers and awareness of location-based social networking, it needs to offer more compelling reasons for users to get involved if it is to be successfully adopted, according to Iain Millar, head of innovation at marketing consultancy Rufus Leonard.

“Facebook’s initial offering is notably slim and it currently only shows your friends who have checked into a specific location, whereas Foursquare provides a far more detailed level of information (most recent customers, gender breakdown, the tips that have been left),” Millar said. “The chief idea for now is that not only can you check yourself in; you can also ‘check-in’ your friends to the same place, even tag them as you can currently do with photos – but only if they allow it.”

Millar argues that potential mainstream adoption of location-based services, led by Facebook Places, would unlock “a hitherto unimagined realm of possibilities for location-based advertising”, as even a minority take-up among Facebook’s 500 million-strong user base would be significant, but only if privacy thresholds can be raised.

New neighbours

Michael Ferguson, the CEO of location-based social network Geomium, believes that Facebook’s entry into the location-based network scene will help open up the market, which is still in its infancy.

“The future is very bright for new entrants into the market that can deliver a strong and useful location-based services (LBS) proposition that will help make the everyday lives of people better,” he said. “It will be much easier to create a new community based around the full potential of LBS rather than try to convert an existing community, who signed up to a service for a different product.”

So who’s going to win out in the UK? According to Joe Sinclair, digital strategist and director at PR consultancy Burson-Marsteller, Facebook is in a strong position and could usurp Foursquare “in a second and no one would even notice, except maybe a handful of early adopters and digital directors at PR firms.”

Sinclair concluded: “What no one has worked out yet is how individual users can get paid for checking in places, or ways of rewarding super-users. The first person who does this will probably win the game – and no doubt quickly get bought by Facebook.”

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