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.