Location-based Services: Are They There Yet?

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Location-based Services: Are They There Yet?
Mobile users are more connected to the Internet than ever. As of December 2011, ComScore estimated that there are 97.9 million smartphone users in the U.S.--nearly a third of the total population.

Almost every one of those devices can provide its location to services in which users choose to participate, allowing them to tell their friends where they are, what businesses they frequent and how those businesses perform. For example, a retail store might offer discounts to entice customers to let their friends know where they're shopping and how good the store is.

But not all location-based services--or their mobile apps--are created equal.

What follows is a look at the background and differing approaches of four major social media platforms that provide LBS, with a special eye to what it all means for businesses that are looking to connect to customers. Two of the four networks, Foursquare and Google Latitude, are completely location-based; the other two, Facebook and Yelp, are social networks that have incorporated location-based services into their existing infrastructures.


The LBS story of Facebook is--and there's an irony alert here--far from being liked. While Facebook has done a pretty good job of monetizing advertising, social mechanics and user-contributed content, it has pretty much fumbled the LBS ball to date.

Many industry analysts and pundits thought that when Facebook launched its Facebook Places service in August 2010, it would spell doom for the Foursquare LBS. With check-ins and the capability to see which friends were nearby, Places was meant to give mobile Facebook users power to track and be tracked by the popular social media site's members. It would also give local advertisers (and by extension, Facebook) access to a lot of hyper-local customers--literally, people who were just down the street.

Facebook Places

But Facebook Places completely failed to take off, to the extent that just a year after its launch, Places was essentially deactivated. Facebook still retains some LBS functionality: mobile users can opt to attach their location to their status updates and check in at business locations. But business participation in Facebook's check-in program is minimal; a quick survey of Chicago check-in deals yielded just five hits.

Altimeter Group mobile analyst Chris Silva sees the pullback not as a failure of the Places tool, but rather a retreat on the part of Facebook from a faltering mobile strategy. In February, Facebook's own pre-IPO S-1 filing all but admitted the flaw, which Silva pointed out on his blog.

"Sounds like a problem--the biggest-news IPO in Silicon Valley is essentially admitting it's concerned with its prospects for monetizing mobile users," Silva wrote.

Today, Silva is convinced that Facebook must and will turn itself back to the mobile environment. "Their next step is inherently mobile," Silva emphasizes.

Next page: LBS takes a back seat to ads at Facebook

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