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“Checking in” on the hyper-local opportunity

There is a new term that is quickly gaining popularity in the lexicon of social media: “checking in.”    You can think of it as letting the world know where you are.  Many apps have begun enabling this new functionality.  And it has now made its way on my facebook page.  On almost a daily basis now, I get another post that was issued by a mobile app that so-and-so has checked in somewhere.   Why, and who cares?

It’s another way for people to share information about themselves.  And that may be fun and interesting.  But what is ultimately behind it is an attempt to get users to contribute information about local businesses (“crowd-sourcing” in the business lingo).   The idea is simple.  If an app becomes a fun and useful way for people to find local information and share it with their friends it becomes a advertising medium for local businesses.

Foursquare in NY started this as a game.  Foursquare is a mobile app that allows users to share information about geo-location in a game-like environment that motivates users to share information in exchange of earning “badges”.   Yelp and Loopt are copying them fast.  And new entrants, like Postabon, are trying to carve out a niche with similar crowd-sourcing content around discounts.  It is all an attempt to attract traffic and become the main place where people find information about local stores.  No one owns that market yet.  Google’s efforts in local have not paid off and it has been rumoured that they tried to buy Yelp to compensate.  Not surprisingly, AT&T, with a lot to lose on the yellow pages side, is jumping in with a site that has not been launched commercially yet, buzz.com.

As I wrote in a previous post, local advertising dollars are poised to move online.  Just the yellow pages market in the US adds up to $14Bn spent annually.  How are local businesses going to attract customers when the world uses online search to find a business?  That fight is happening now.   Why now?  I think a large part has to do with finally having a smartphone in our hands that makes it easy to access location-based information.

So the fight is on.  I believe that there is still a lot of opportunity for innovation in this area.  I think we are going to see new way for users to get information about local merchants and the companies that are able to tap into that crowd with a sticky application can reap great rewards.  Yelp has a big head start and they are trying to expand into verticals other that restaurants where they started.  Whether they can build a core content-contributing audience beyond food on a mass scale will be interesting to watch.  And it will also be interesting to see whether Foursquare’s Check-In feature can start translating some of the fun of seeing where your friends are into local content.    One interesting area is also how these companies integrate with Facebook.  Tapping an existing social network using Facebook Connect can be a powerful growth engine.  Many of the early attempts were not as interesting: think “reccomend this to your friends”.  But sharing content more intelligently between a mobile app and Facebook can be a smart way to add value to the application as well as expand its audience.