What Facebook Places Needs to Compete

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Facebook jumped into the location-based check-in arena this week with the launch of Facebook Places. Facebook Places has the potential to dominate, but in its early form it is missing key elements it will need to compete with established rivals.

Facebook Places has potential, but its missing key features to make it more valuable.
It took a few days, but my Facebook account finally got the Facebook Places functionality. I have been using the new Facebook app for the iPhone to check-in to Facebook Places and let my social network know where I am and what I'm up to. So far, though, Facebook Places has left me with one burning question: how do I know if I'm winning?

I am kidding--but sort of not. The achievements and competitive nature of competing services like Foursquare are key elements that Facebook needs to incorporate into Places to make it more compelling (or addictive). Sharing a location may be enough for casual updates among friends, but the point system, badges, and Mayor designation on Foursquare are the kinds of features that drive participation and make location-based check-in a more powerful tool for businesses.

While Foursquare appears to be the most direct competitor, it is not the only social network threatened by Facebook Places. Yelp, the social reviews site that almost became part of the Google empire, should also feel the heat because once Facebook Places is fleshed out and reaches its potential it will essentially be Foursquare and Yelp combined with the power of a social network with half a billion members.

Facebook Places has to ramp up still. Right now the Facebook Places database lacks the sheer volume of checked-in locations that its established competitors have. Sitting in my home office, the only sites that show up in Facebook Places are my home and the liquor store around the corner (guess we know where the Facebook members hang out). Foursquare lists more than 25 locations (including my home and the liquor store), and Yelp lists 40 or more.

That will change as Facebook Places catches on and more people start checking-in. The Facebook Places database of locations will also expand as businesses embrace the concept and make sure their "place" is on the list.

Once the list of Facebook Places expands, Facebook needs to also incorporate other elements of Foursquare and Yelp into it. Yelp lets you view nearby places by type (restaurants, banks, gas stations, etc.), and it has a five-star rating system that lets you see what the rest of the social network thinks of each business at a glance. Yelp also lets you sort the results by best match, distance, or highest rated, and it allows you to filter the results based on distance, cost, or whether the business is currently open.

Foursquare has relationships with businesses and has established its service as a marketing platform. The Chili's near my home has an orange rectangle labeled "Special" that makes it stand out on the list of nearby places. Clicking on the location shows that Chili's has a special offer granting free chips and salsa at every check-in just by showing the server that you have checked-in on Foursquare during the visit.

Facebook has over 500 million members. Those 500 million users might like to take advantage of what services like Foursquare and Yelp have to offer, but they don't want to invest the time and effort in building and managing a separate social network. Businesses have similarly worked to establish a Facebook presence to engage that massive audience, and don't want to dedicate resources to promoting disparate networks.

Facebook Places will continue to gain momentum as more members jump on the bandwagon and start checking in. If Facebook adds these features from Foursquare and Yelp to make Facebook Places more compelling for users and valuable for businesses, though, Facebook Places will be an unstoppable juggernaut. For now, Facebook Places is just getting started and it has some maturing to do.

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