16 February 2011 | Author: N. Hamilton Media copywriter

Face off: Survey shows Foursquare is losing out to Facebook Places

Facebook Places seems to be going places fast and has powered past start-up location-based discounters Foursquare and Gowalla to achieve a commanding market share in the five short months since its stateside launch.

The Financial Times' tech blog has reported that 32 per cent of social networking site MerchantCircle's 1.6 million local business owning users currently promote their business through Facebook Places, while just 9 per cent use location-based start-up Foursquare - even though Facebook Places is said to be largely styled on the start-up.

Only 6.6 per cent of MerchantCircle users promoted their business through popular e-discounter Groupon, with 50 per cent of Groupon-using merchants admitting that they would not use the service again - which may bode badly for the success of Google's planned rival coupon clipping offering.

Responses to MerchantCircle's quarterly survey of 8,000 local business users also seemed to indicate that while more businesses were utilising location-based services, the majority of local businesses prioritised their marketing spend on better-established online marketing channels such as Google's AdWords, online display advertising and social networking.

And with 72 per cent of local businesses spending less than $5,000 per year on marketing, FT journo Chris Nuttall has suggested that Foursquare and other location based start-ups may have to re-think their offering in a bid to fend-off Facebook and draw more revenue from local businesses that are unlikely to easy-part with their strict spends.

Foursquare yet may be able to engineer a face-off between itself and Zuckerberg & Co, as the start-up's co-founder Naveen Selvaduri has hinted that the hyper local service plans to develop tools to help boost display advertising revenues.

"Right now we're just building very, very basic tools ... We're improving the process and getting the right stats.

"I think you're going to see a lot more tweaks to the game itself, the game mechanics, and the game dynamics. We haven't done that in a while and I think there's a lot more room for interesting things that we've wanted to do for a while, and that's going to happen over the next couple of months. But I can't tell you anything more beyond that," Selvadurai said at MIDEM 2011 in Cannes.

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