Yesterday, Foursquare announced that they will launch a new feature called Explore, which will recommend places, such as restaurants, bars and cafes, based on a user's check-in history and and the history of people like them.
This is exciting news as it demonstrates Foursquare's intent to influence the behaviour of their users. If they are successful in doing so, the service will clearly be a fantastically valuable marketing features to merchants that want to attract traffic to their locations.
In this sense, it has the potential to become the real-world equivalent to Google, which influences online traffic. And, in similar ways to how Google developed Adwords to buy advertising space connected to people's search terms, Explore could enable Foursquare to sell sponsored recommendations, alongside their natural recommendations.
Moreover, Explore could enable Foursquare to go one step further than Google has done. By leveraging their partnership with Amex, or launching their own mobile payments solution, Foursquare will be able to track purchases that follow sponsored recommendations.
Research has indicated that merchants on average are willing to pay 7-8% for marketing messages that specifically lead to purchases, 2-3 times more than the current merchant fee that credit card companies charge. This type of solution may therefore be the next generation interchange fee and Foursquare Explore may be an important step on the way.
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