The Real Value of Facebook Geo-Location: Contextualizing Ads around Social, Mobile Gaming

With expectations of Facebook’s geo-location launch to go down this week, the question around hyper-localized consumer tools moves even further down the path of monetization, usefulness and appeal. Geo-location is something we’ve anticipated from Facebook for months, and given the ripeness of mobile marketing as a current trend, it was only a matter of time before Facebook found a way to incorporate it into its own feature sets and kits for developers. An event invite posted by Kara Swisher at All Things D indicates that Facebook’s next “big thing” is imminent, presenting us an opportunity to dig a little deeper into the phenomenon overall.

As far as Facebook is concerned, the mobile and gaming crossroad of geo-location appears to be a large benefit to the social network, particularly as it expands its brand offerings and extends pieces of its interactivity outside of its garden. Like buttons have presented new ways for brand loyalty and sharing to be expressed by Facebook users, and geo-localized consumer data will bring about even more marketing opportunities for Facebook’s own advertising network. From a holistic perspective on Facebook’s full-circle services, geo-location has been a long time coming. Twitter’s already added such capabilities to its microblogging service, while the recent funding of Foursquare validates the monetizable potential behind these particular social gaming applications. Groupon has already demonstrated the viability on the mobile end of geo-located advertising, and Google has already started to incorporate social features into its geo-location mobile apps, like Maps.

Mark picked up on some of of these trends at SXSW, wondering at the appeal they could have for mainstream consumers. At the time, Foursquare and Gowalla were the major contenders. They presented themselves as nerdy features around location-based social media activity, but not necessarily something that mainstream consumers could fall in love with. Any large-scale implementation from Facebook, on the other hand, could bring about more reasonable expectations for the mainstream consumer appeal. As John Furrier notes, the social, mobile gaming components are key for Facebook, especially as the massive social network has found itself moving towards a mobile distribution platform for various applications.

Facebook’s interest in mobile is very important to them and it’s a Foursquare killer. It’s not so much about [a] checking-in feature as it is about mobility and the future of advertising. A source close to Facebook told me that the amount of mobile uptake is growing leaps and bounds, and that the user behavior shown in social games points to the future of their ad model – interactive value. Checking in at locations allows Facebook to provide real time value at "point of geo" context. Simply put: Facebook could deliver real value to users where they are, and in context to their preferred user expectations – shopping, searching, discovering, etc..

I expect that location (a la Foursquare) will be less about cool new feature and much more about value to the user and of course leveraging the "social graph" data from users friends and preferences. This translates into a powerful opportunity not only for the main Facebook product but for all of their applications that run on top of the Facebook platform.

In terms of [adoption], a minor uptake on Facebook will crush the overall numbers of Foursquare. My guess is that Foursquare must cut a deal with Facebook or risk being left out in the cold, as Facebook would go it alone with an in-house solution that is more comprehensive and more in line with the app and social game market (hello virtual currency).

All in all Facebook needs a location (or edge) solution to add to the user experience their users demand – mobile and real time.