Location based services are all the rage. Just this morning Shopkick announced another partnership – this time with Crate and Barrel. Foursquare recently exceeded 5M users. Gowalla launched its newest update providing an overhauled user experience. Articles on the topic have appeared everywhere, including Fierce Wireless (Warning shameless self promotion at the last link). But despite the hype location based applications are still just at the larval stage.

Today, stalwarts remain the key players. Recently, we revamped our Apps Database – which used to contain the top ten apps for iPhone and Blackberry in the US. Our new iPhone database contains a more global view - capturing the top 100 (free, paid and grossing) apps - in 62 countries. The data shows that Facebook remains the dominant player – regardless of region. Out of 124 free apps lists (2 weeks of 62 countries) Facebook and Skype appeared on 98% of the lists. Windows Messenger appeared on 75% of the lists.

Interest in social networking is not restricted to mature markets either. In fact, the Middle East and Africa are most likely to download social networking services - with nearly 11% of all free iPhone downloads coming in that category – almost 2x that of Western Europe.

Clearly there is intense interest in social networking even if there is not yet sustained interest in location based social networks. Foursquare and Gowalla combined for 12 total appearances (11 for foursquare and 1 for Gowalla) managing to garner placement on less than 10% of all free apps lists. However, many of the companies, such as McDonalds, that were bold enough to partner with these up and coming companies have found great success as these services continue to slowly grow, expand, and increase their influence.

In fact, these services will be so important in 2011 that we dedicated an entire prediction about them in our recent report 11 for '11: Predictions on the Future of Mobile Media (although to know what we predicted you’ll need to read the report). Additionally, we will be hosting a webinar on Thursday December 17, 2010 at 10:00 EST to discuss the future of social networking and how location will come to play an increasingly important role in 2011 and beyond.

Please find more information and register at the link below.

Mobile Social Networking: A Platform For Success?

Dennis Crowley – Founder of Foursquare - may be right. Facebook Places is indeed boring. However, anyone – Crowley included -that thinks Facebook Places in its current iteration is the final step for Facebook into the location based social networking space is kidding themselves. Facebook Places will have long term ramifications on the location based social networking space in due time but for now there are more questions than answers:

· Will users be able to check in their friends on third party sites even if they are not members of that service?

· Fragmentation of various services still exist making checking in to Brightkite, Foursquare, Gowalla, and others time consuming. FB may allow for dual service check-in (ie. Foursquare and FB or Gowalla and FB but not all three).

· Will FB users find enough usefulness in third party networks to utilize them or will their growth be stunted?

The question about competition comes down to Facebook’s ambitions which is a desire to drive revenue through the creation of a comprehensive ad network. Places will allow FB to acquire more information on users, increase the frequency of user interaction with Facebook, and better understand the nature of relationships between individual users. This type of data is important and integral to advertising not only via mobile but also on the web. If Facebook knows who a user spends time with it creates compelling new advertising opportunities. Let alone knowing where people go. How frequently they are there. The intelligence and effectiveness of Facebook’s advertising platform could come to rival and quickly exceed that of Google.

Partnering with others gives FB a way to appease the market in the short term by not appearing anti-competitive but Places will thwart competitor’s long term growth. Even if it helps them in the short term by bringing awareness to the services. But think about this – if just 1% of Facebook users regularly uses Places – Facebook will have more than 5M users – double that of Foursquare. And 1% of users would be a failure by Facebook’s standards.

For now, competition can continue to abound as competitors will have the opportunity to differentiate. Foursquare can continue to offer mayorships and enticements. Gowalla can offer trips, pins, and other prizes. But in the long term - competitive services - will have to move well beyond the check-in in order to grow beyond their current user base. Booyah’s MyTown is an excellent example of how to accomplish this – by turning location – into a game.

The immediate effect will be on weaker competitors who don’t have the resources or the buzz to convince new users to sign up. Some of these services will likely wither away before the end of 2010 as others see growth stunted and plan exit strategies for 2011. A select few may continue to press on, but Facebook will be the biggest game in town by then. And with scale comes sponsors, advertisers, new business models, etc.

Competitors aren’t the only long term losers either as carriers – hoping smaller third party services – would emerge as a viable new revenue stream from local advertising may miss the boat as subscribers instead opt for Facebook’s service which is unlikely to share revenue with carrier partners.

It finally happened. After watching the press go agog over the millions of users and millions more check-ins through popular start-ups Foursquare, Gowalla, Gypsii, Brightkite, and others, a heavy hitter is getting into the game with their own local service.

Facebook - once a rumored paramour of Foursquare - the popular social network will in fact launch its own service. How it will work is still shrouded in mystery but its decision will have wide ranging ramifications for all start-ups in this space while ushering in the notion of mobile social networks to millions of more users.

Why is Facebook a threat?
400 million active users
500 billion minutes per month spent on Facebook
100 million active mobile users - nearly 100x more than Foursquare

Some companies may be safe while others are immediately put at risk:

Independent Mobile Social Networks. Companies like Foursquare, Gowalla, Brightkite, and others without any white label solution are in the most immediate risk. Current users are not likely to abandon their services of choice but winning over new users will become a challenge. Will Facebook users really want to create an entirely new social network? Probably not. The result will be slower growth and less hype. The result is a loss of mindshare and the innovative partnerships that come with it.

 

White label solutions. White label solutions are probably still safe since Facebook is unlikely to share revenues with carriers who want to collect a percentage of local mobile advertising dollars generated from mobile social networks. Therefore, companies such as Gypsii, who have partnered with China Unicom and Telefonica in Latin America are safe - for now. However, if users opt to not use these services instead choosing Facebook even this more sound business model will be at risk. And with Facebook working with 200 carrier partners globally this could be a very real scenario.

 

Games. Booyah's MyTown has grown to more than 2M users since December with a majority of users logging more than an hour of gameplay per day. The Monopoly-esque location based game is unlikely to be impacted by Facebook's decision and may be the forbearer of the next generation of location based social networks to crop up after the check-in phenomenon.

 

It would be irresponsible to say that Facebook's location play will quickly kill the location based market. However, Facebook cannot be ignored. The big mobile social networks may now have to start thinking about a short term exit strategy. Despite fears, Facebook can trip along the way giving hope to today’s players:

1. Implementation. Google Latitude has failed to catch fire and arguably Google has many more users than Facebook - so a failure to properly implement could de-rail the service.
2. Interaction with the rest of the service. Users are already frustrated with all the changes Facebook has made - will adding check-ins - to an already crowded news feed infuriate them further?
3. Partnerships. Facebook will need to create compelling partnerships with small business to large brands in order to build a buzz around the new product and get users excited about using it.
4. Privacy. Facebook will have to tread lightly around privacy concerns in regards to sharing location information. A failure to protect users will result in the mass market being turned off.

In the end however, Facebook's decision to launch a location product may be bad for competitors (despite what I’m sure are pending quips that a rising tide raises all ships) but it is good for mobile social networking, good for small business hoping to partner with a more powerful local advertiser, and good for carriers hoping to educate users on mobile social networking.

Mobile social networks: Loyalty, Publishing, and Revenue: Oh My! You may think that because we have ushered in the digital age there will be fundamental shifts in human behavior. You’d be wrong. Services such as Gowalla, Foursquare, Loopt, and even Yelp are finally at the tipping point of success because they tap into latent human desire. And then make acting on those desires simple. Much like the loyalty programs that offered a tenth sandwich after getting nine purchases punched on a card new social networks are offering benefits for loyalty firmly merging the physical and digital world. The aforementioned services are mobile social networks – allowing users to check-in to locations, earn badges for visiting pre-determined locales, and net loyalty rewards (such as free drinks) for particular achievements. The availability of smartphones and the opening up of mapping API’s will help these solutions succeed where other have failed. For greater insight see David MacQueen’s Insight Nokia Strides Forward in Online Location and Navigation. The most amazing part of these networks is the willingness of brick and mortar companies to participate. Becoming a Mayor (by visiting a place the most) on Foursquare and earning a free burger can only be achieved if the establishment opts in. And they are opting in. But free fare is just the beginning. In the last few weeks Foursquare has partnered with the American television network Bravo – allowing Blackberry users to earn special Bravo badges when they visit pre-determined locations, which one can assume will complement Bravo’s programming. Another Foursquare partnership with Canada’s Metro newspaper will provide location aware content from the newspaper’s nightlife section and eventually other sections as well. Finally, Foursquare most recently partnered with Zagat, allowing users to earn special Foodie badges at Zagat rated restaurants as well as offering restaurant tips. So, what does this all mean? Is it just a passing fad? In short, no. It seems like this is the new era in customer loyalty. While the social networking aspect of it remains new the ultimate goal is to drive user behavior. And open user’s wallets. While the players may change the fundamental merging of the physical and digital world is happening. Just this week OpenTable announced it had seated more than 2 million restaurateurs through its mobile applications. GyPSii is also building location based applications that offer location specific advertising such as coupons. While publishing companies will tout solutions such as the iPad as saving their businesses the truth is, services like location aware social networks could be the true path to salvation by driving consumer to spend identifiable real world dollars on real world goods.