What Happens If Facebook Commoditizes the Check-In?

I’ve been playing with Facebook Places for a few days. It’s a really simple to use application. I am not sure if it’s going to “kill” Foursquare, but I am pretty confident that it will succeed. Facebook was supposed to “kill” Twitter by focusing more attention on status updates and the like. It didn’t happen. I’d suggest that’s because the use case and usage model for Twitter status updates is and was different than how people were updating status on Facebook. If people are using Foursquare in such a way that having their location info shared among their social network on Foursquare is different and unique than how it plays out on Facebook Places, then there’s a good chance that they won’t get killed either. I don’t yet have a strong enough viewpoint on how Places usage will evolve and potentially diverge from the way in which people use Foursquare today – that to me seems to be the key in figuring out how the market eventually settles.

I have an old blog post about FB as a commoditizer that I’ve been thinking about a lot lately. In a nutshell, the advantage FB has is the ability to subsume popular stand-alone social services and roll them out to the FB community. They have the scale and reach that they can take niche products that are not yet at scale and put them in front of their major scale. They’re already a major force in online photos, video, news distribution and information sharing, and events. I suspect that they’ll also end up being a major player in the check-in space. I think there’s a good chance that Facebook could end up commoditizing the check-in, making it much harder for other players in the space to build really interesting businesses and communities in the future. There are a few things working in Facebook’s favor:

None of the existing players have an insurmountable lead in terms of absolute audience. While a number of the location / check-in services have audiences in the millions, that is a fairly modest portion of the total addressable mobile audience on smartphones.
FB Places does not require another application – if you have the iPhone app (and eventually the Android app), you will be able to use Places. That’s one less hurdle to overcome for user adoption and mobile continues to be a major growth drive for Facebook.
Facebook has identified and built the basic primitives for what I believe you need to build a successful check-in app.
*Social – It should integrate with your existing social network or allow you to bootstrap a new one
*Simple – Checking in needs to be a fairly simple process. Foursquare has nailed this and Places also does a good job.
*Useful or Fun – There needs to be a “reason” to check in. I am not saying that the reason needs to be some serious utility-maximizing event. Two reasons to check in are that it’s easy to do so and relevant to your friends or that it’s just fun and gamelike.

As much as people seem to want to paint this as Foursquare vs Facebook, I really think that allowing Facebook to commoditize and own the check-in has much larger implications for Google and Yelp than it does for Facebook. Why do I say that? Well, I think that whoever controls / owns the check-in experience for the masses is going to have the opportunity to have a really interesting set of conversations with local businesses.

Imagine a world in which Facebook, which already (probably) has lots of demographic information on 500 million or so people using their service can combine that information with knowledge of where you are and where you go. Aside from creepy stalker use cases, there are some really interesting

Option 1: Give “Places” owners more demo info on people who come to their places of business and allow them to message / contact them. Facebook could become a way for local businesses to get a better sense of who (in terms of demographic info) is coming into / checking into their businesses. This would be interesting and valuable information, especially if it could be paired with something like Facebook Pages to allow users to grow their fan bases / email lists for future communications.

Option 2: Online to Offline “check-in” as a conversion. One other really interesting business model would be to allow advertisers to offer online deals, discounts, and promotions that can only be redeemed in person, using the “check-in” as a way to redeem the offer. This is not necessarily different from some of the things that Foursquare is doing, but it could be another way to engage advertisers and get them to better understand the relationship between online spend and offline store traffic.

Option 3: Reviews product. Facebook has a huge opportunity to build a great Yelp competitor. With check-ins, Facebook will now have a reasonably good piece of proof that you’ve actually been to a place. It would only be natural to start asking people who go to places to provide feedback, ratings, or other information about their experiences at that place. Given that Facebook is largely about real identity, they could build a really interesting social reviews and recommendation service on top of Facebook that I bet could grow fairly quickly and would have the benefit of knowing that the reviews come from Facebook-verified people.

Google and Yelp have both spent a ton of time, money, and energy building relationships with local businesses, albeit using different approaches. Yelp has been focused on using reviews and ratings as a way to engage local businesses around opportunities for advertising. Google has been really focused on using a combination of Google Maps and Places pages as a way to engage local businesses. These two companies have been really focused on figuring out how to give local businesses a reason to invest in and engage with their online presences. If Facebook can succeed with a combination of check-ins and Places, they could in one big swoop, take a lot of wind out of the sails of Google and Yelp. Sure, Google Maps will still be useful and important as a navigation tool. And Yelp reviews will still have merit. But Facebook will have a pretty formidable and sticky product offering for small and local businesses.

As always, comments are welcome.

  • Alex B

    I like the idea about using the real identity Facebook provides as way to get more reliable reviews on hotels and the like, rather than wade through reviews that may be posted by either a competitor or an employee of the business. It would not be full-proof but at least an improvement to the current unreliability of online reviews.nnAlex

  • Jason

    Facebook is going to have a hard time taking the wind out of Google’s sails… Yelp they could do, but Google Places has a huge advantage that Facebook CANNOT have: The listings on Google when you search for “city” + “business” (i.e. “Los Angeles Toyota”).nnOn top of that, Google has these advantages:nPlaces already incorporates reviewsnPlaces app comes on Android phones, and allows you to find nearby businesses that you might WANT to check-in atnGoogle Maps is used by huge numbers of mobile usersnGoogle Maps has “check-in” functionality in its API, even if Google itself isn’t using it yetnGoogle could use Android to make check-ins even easier (one click from home screen, if they want)nPlaces COULD (doesn’t currently) incorporate Facebook check-ins (like they do reviews from other sites)

  • http://www.charleshudson.net chudson

    Hi Jason,nnYou do have some good points. A few other things to consider though. If the concern with your first point is about Google getting access to directory listings, those can be purchased / licensed from a 3rd party. So they don’t need to bootstrap their own list of restaurants, bars, auto dealerships, etc – that can be acquired for a fee. I also assume that the Android version of the FB app will eventually support places checkins as well. nnAlso, while Google has reviews, I find the reviews on Yelp and other services to be more useful – that’s not to say that it will be that way forever.

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  • http://www.socialtimes.com Nick O’Neill

    Look like you called Facebook Deals ahead of time ;)

  • charles

    Ha, hardly – it just seems to me that it doesn’t make sense to do Places without a more comprehensive strategy around how to engage businesses in the process.

  • http://www.moldremoval.org/ Mold Testing Moreno Valley

    thanks for the review! I like the idea about using the real identity Face book provides as way to get more reliable reviews on hotels and the like, rather than wade through reviews that may be posted by either a competitor or an employee of the business.