Understanding Foursquare, Facebook Places and location based social networking.

The, up and coming, social network of 2010, Foursquare, announced on their blog in January that they had grown an astonishing 3400%. This is a big number, and certainly worth noting, but what does the average business need to know about location based social networks?

What is a location based social networking?

Location based social networking allow users to check into businesses with a physical location using a mobile, Internet-connected, device. Essentially, it allows users to let their contacts know where there are, and in a few instances, it allows them to receive coupons and discounts at the locations they are checking into.

Foursquare is the current leader in this space. There is also the less notable Gowalla, and the latest addition to the mix, Facebook Places. All of these services have their strong points, but right now Foursquare is the current leader. Personally, I see the most potential for Facebook Places. I will explain why, a bit later.

What is the current adoption rate for this type of networking?

Location based social networking is still in the very early stages – think of it as what the Internet was in 1996. We just don’t know how it will grow up yet. The important thing to note is that location based networking requires the use of a mobile device of some kind, the most common of which is a smartphone. In the U.S. smartphones are now used by approximately 55% of mobile users. This percentage is currently growing at a rate of 10% a year, or so, and I personally don’t see that trend changing.

So, we know that the technical challenges are being met, but the real question that hasn’t been answered is, do people actually want to check into businesses? Overall, I think that Foursquare’s growth tells us yes, but it is still a bit too early to tell.

What does the future look like for location based networking?

In my opinion, the future for this space is actually quite bright. I don’t think that services like Foursquare or Gowalla will be the big winners, though. I personally hold a lot more hope for Facebook Places. With Foursquare and Gowalla, the barrier to entry is just too high. Not only do you need a user account, but you also need a special application on your phone.

On the flip side, most smartphone users already have the Facebook application on their phone and use it daily. So, Facebook users are only adding to their current activity, rather than adopting an entirely new service. This lowers the barrier to entry and makes mass adoption much more likely to happen. In the future, I see the most potential in Facebook places for this reason.

What does this mean for my business?

The growth of Foursquare in the last year is significant, because it does show that there are users demanding this type of sharing, but we are a long way from mass adoption. As more people become constantly connected to the web with phones and other devices, we will see services like this taking up more and more of our attention.

The most interesting thing in all of this for the modern business, is that it provides an additional touch-point between you and your customers. It also provides them with one more method for sharing your business with their friends. Last week, I wrote and article for our Master Facebook Marketing for Business course that gives a more in-depth look at Facebook places and how you can use these services to offer people who check into your business special deals.

For most businesses, there is still a lot that they need to figure out with online marketing before they get too worried about location based networking, although we could have said the same thing about your company website in 1996. Social media and location based networking are still in their infancy, but just like the early days of company websites; those who get there early and figure it out will be the ones that reap the biggest rewards.

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