I had lunch with a buddy last week and he asked me what I thought Facebook would do about mobile location. I told him that I had no idea, but that I know what I’d do in their place. So on my flight home, I wrote this, intending to email it around – but, since the talented MG wrote about Facebook’s location plans on TechCrunch today – I thought this might be interesting to more people. It sounds like Facebook isn’t taking the route I lay-out below; I’m excited to see what they do instead!  If you want to read about Facebook’s actual strategy, check out MG’s article linked above and Ian Schafer’s article in AdAge today: How Facebook’s Geo-Networking Plans Will Change Everything.

Facebook has ~500 Million users and an interest in getting data they can target advertisements against. This gives them a very good reason to get into the location game. However, competing directly with the likes of GoWalla or FourSquare seems an inefficient way to complete this goal. Their goals are two-fold: creating an experience users love and collecting good data that advertisers can use to more effectively target their ads.

There are four things Facebook could do together in order to accomplish this:

  1. Incentivize mobile location companies to tie location data to a user’s Facebook profile and to share that data back to the network.
  2. Create a compelling experience for users around location data that’s complementary to other mobile location players.
  3. Turn user check-in locations into targeting data available for advertisers.
  4. Sell ads targeted to passive users (Brand Advertising) while letting mobile location companies sell ads that target users involved in a direct experience (Direct Response).

I think each one of these steps requires a decent amount of space to properly detail (which I hope to sit down and do at some point), so for now I’ll paint in broad strokes.  Companies like GoWalla and Foursquare are quickly acquiring new users, but their biggest need is generating more users. Location is a network effects business, effectively making this a heads-up, winner take-all battle.

Incentivize Data Sharing

Companies are already using Broadcast networks like Twitter and Facebook – MyTown (another player in the space) rapidly grew to 1.5M users using viral channels on Facebook. Solid utilization of Facebook could give a location player an advantage in the war for users. If Facebook built a complementary business around location that helped those companies increase adoption, it’s likely many of them would take it (and give Facebook access to its location data).

Create a Compelling Experience

Facebook isn’t going to mess-up the user experience in order to unlock an additive amount of advertiser value – but getting location sharing right represents a serious improvement to user’s lives. Here’s how they could do that:

  1. Create a data point about a user that represented their most-recent location (call this: “Location Status”).
  2. Allow users to update using standards status update with special syntax: (i.e. “I’m at” @[Location] [contextual information])
    • Also allow users to connect with a service to update this (i.e. let GoWalla update my fb location)
  3. Surface Location Status in proper ways on the site (box on profile, stream updates, mobile subscriptions)

    Facebook should protect the UX and Privacy settings in order to stop malicious platform applications use this data, and each user should get full control over how they share location (on profile, in newsfeed, and/or allowing friends to subscribe to — or request subscription to — mobile updates) as well as who to share it with (allowed applications and friend lists).

    The location status update should include prominent reference to the update source, which would create a viral distribution channel to act as an incentive for location services to encourage users to allow them to write to the location status. Facebook could clearly communicate their strategy re: competition and hopefully win the trust of location players — Location Services are invested in several things:

    1. Building great user experiences around checking-in
    2. Creating databases to turn machine co-ordinates into user recognizable locations.
    3. Addictive mechanics to keep users coming back

    These companies could easily compete against the “Location Status Update” user experience provided by Facebook, and own the check-in. As long as Facebook clearly indicated that they’d prefer third parties owning the check-in (and having a direct relationship with the user), Location Service companies can decide for themselves whether the additional viral channels is worth sharing data with Facebook (a competitor in ad dollars)

    My guess is most will do so because user adoption benefits them in such a competitive market, but some won’t because they don’t like sharing valuable/proprietary data with Facebook.  Facebook gets data for enabling the growth of partners, and users have an easier way to share location and connect with friends.

    Turn check-ins into targeting data

    This would let Facebook know a place’s name and location on a map from the check-in – but they have to invest in creating advertiser context. If they know I check into “Epicenter Cafe” on foursquare, Facebook has to figure out what that says about me that advertisers might want to target against. Here are some examples of valuable targeting criteria you could extract from check-ins:

    • City/Neighboorhood
    • Category of establishment
    • Social Graph Representation (does that location have a facebook page, for example).
    • Etc.

    Two different advertisements

    Facebook’s ads are setup well to be persistent and targeted rather then presented in direct context – so they’ll enable those demand-gen type of advertising programs.  Location services can focus on highly engaging and contextual monetization programs (like sponsored badges, loyalty programs with establishments, geo-targeted offers, etc.).

    Taking this into account, it’s likely that Facebook could exist peacefully with several different location services. It’s likely that those players would be either focused on loyalty programs (huge market) or be smaller companies. It’s also worth noting that

    Worth Noting:

    • The Zynga/Facebook fight going on right now is the biggest danger to announcing a program like this.
    • Foursquare, in particular, would likely be very unhappy about this, With their fundraising and valuation they would have a hard time justifying giving data away to a potential competitor for location based ad programs, yet they can’t afford to fall behind in user adoption  for their product.
    • Presence was the coolest thing at F8 – the folks that put that together have already shown you some of the amazing things that could be the early version of the location status update formats. If Facebook wanted to go this alone, they could be VERY competitive, but I think they don’t need to use the resources for this.
    • Facebook looks like it wants to go head-to-head with check-in services. Facebook wants to encourage every user on their service to be a mobile user (mobile users are more active and less likely to leave), this alone may be enough of a driver to launch their own check-in service. As well, they may want to extract more advertiser value and try to launch a contextual advertising offering at the point of check-in.