When Facebook Places launched last summer, one of the first questions (other than “how will this impact my privacy?”) was “How will this impact other location-based startups?” While Foursquare was gaining tractions and users, some questioned if Facebook’s entry into “location” would serve to squash it.
Foursquare has hardly been squashed. The startup ended 2010 with over 380 million check-ins and now boasts over 6 million users. But a new survey from MerchantCircle suggests that while users may be flocking to Foursquare, businesses’ marketing dollars are going elsewhere.
According to the 8000 local business owners that participated in MerchantCircle’s quarterly Merchant Confidence Index, Facebook and Google are still the leaders when it comes to online marketing efforts.
Respondents to the latest survey indicate that 32% are using Facebook Places to promote their businesses, with 12% planning to do so in the coming months. That compares to 8.7% who use Foursquare, with 7.6% planning to add it to their marketing repertoire soon.
Behind Foursquare in the survey is Groupon, with 6.6% of local merchants saying they’d offered a “daily deal.” But 13% of those surveyed say they plan to do so, an indication that there is a demand for group-buying opportunities.
Interestingly, 14.3% of respondents said they’d never heard of Groupon, while 27.6% said they’d never heard of Foursquare. 26.9% said they’d never heard of Groupon’s competitor Living Social. 11% said they’d never heard of Facebook Places. Before you draw any conclusions about Super Bowl ads, the survey ran from January 22 through February 3, narrowly missing the Groupon advertising gaffe.
According to the survey, about 72% of local businesses say they’ll spend less than $5000 a year on these marketing efforts, with 34% spending less than $1000.
COMMENTARY: I just looked at MerchantCircle's survey and the percentage of consumers saying "YES" to the question, "Are you promoting your business with the following websites/services?", is quite revealing. While Facebook Places has an estimated 30-40 million users and Foursquare ended 2010 with 6 million users, only 8.7% of the merchants had heard of Foursquare, but 32.2% of the merchants had heard of Facebook Places. This is very surprising since Foursquare is at least a year older than Facebook Places. This could also help explain why Foursquare has very little revenues and supports my conclusions in a blog post dated January 29, 2011 titled, "Foursquare Has Few Revenues, But Andreesen Horowitz Says Its Worth $250 million, Oh Really?"
Even more surprising was that of the merchants surveyed only 6.6% had heard of Groupon and only 5% had heard of LivingSocial. To be honest, I don't know what to make of this disparity, since both sites are growing rapidly and dominate the group buying space by a wide margin. On the otherhand, if you look at the pie chart below you will find that "Coupons or direct mail" scored with 17.6% with the merchants, and "Other online methods" scored with 34.4% of the merchants. This means that they like discount coupons, but they just don't like group buying deals.
MerchantCircle also asked merchants to select the "top THREE most effective marketing or advertising methods their business uses or has used", and the results were for the most part what I expected. Search engine marketing was #1 among 40.2% of the merchants, creating a profile page on a social network was #2 among 36.7% of those surveyd, and the Yellow Pages was #3 among 34.4% of the merchants.
Courtesy of an article dated February 15, 2011 appearing in ReadWriteWeb
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