Location-Based Social Networks Slow To Take Off

Foursquare, Gowalla and Brightkite are highly hyped but have yet to reach their potential for Web marketers

Location-based social networks such as Foursquare, Gowalla and Brightkite are buoyed by a lot of hype that has yet to reach its potential for Web marketers, but some 84 percent of users surveyed are not familiar with these applications at all.

That’s the gist of a market research report from Forrester Research analyst Melissa Parrish, who polled almost 43,000 people in the U.S. and Canada and found that most location-based service users are tech-savvy males who access the aforementioned applications from smartphones.

Location-based social networks are typically apps that are downloaded on a smartphone that offers social profiles, status updates and other tools to help people connect and share information. Most of these apps keep user engagement high by offering competitive games.

Free Starbucks Coffee

Foursquare and Gowalla let users check into certain locations from their handheld to win virtual points and badges or even real-world discounts on products and services.

The latter is real the money is for these services; popular businesses such as Starbucks give free coffee to Foursquare users who check in enough.

That keeps users coming back and provides great exposure for Foursquare, which can advertise on its existing service. That also creates sales opportunities for other Web marketers, said Parrish.

Unfortunately, the market is super young. Foursquare, with more than 2 million users, is the only service of its kind with a foot planted firmly between the digital elite and the average mobile Web user.

Parrish said only 4 percent of US online adults surveyed have ever used location-based social networks on their mobile phones, with only 1 percent using them more than once a week.

“The biggest vendors in the space may boast fast growth numbers, but registered users are still a drop in the bucket compared with the number of consumers reached with tactics like SMS, mobile search, or display media on WAP sites,” Parrish noted.

So who is using Foursquare, Gowalla, Brightkite and other services of their kind? Nearly 80 percent of location-based social network users are males, and 70 percent are between the ages of 19 and 35.

Most have gone to college or graduate school or higher learning. These men tend to be heavy mobile researchers who check their cell phones before making big purchase decisions.

Yahoo Fire Eagle

Parrish also noted the potential impact Facebook and Twitter (with Twitter Places) can have on this market and advised not to count out the big technology guns such as Google and Yahoo.

Google offers its Google Latitude friend-finding service, while Google Buzz for mobile lets users post status updates from their mobile phones. Google just hasn’t found a way to cultivate any sort of social network around these services.

Yahoo launched its Fire Eagle service two years ago and recently acquired Indian check-in service Koprol.

Location-based services promise to be a big draw at the Web 2.0 Expo in New York in September.

Attending is Foursquare CEO Dennis Crowley, who left Google and the Dodgeball mobile social network the search giant bought from him behind years ago to form Foursquare.

Foursquare in June banked $20 million (£12.69m) in funding to grow its operations and user base.