Location-based social networking site Foursquare has partnered with American Express to distribute coupons on behalf of five major group-buying companies, including LivingSocial’s Australian operation, Jump On It.
Foursquare, founded in 2009 by Dennis Crowley and Naveen Selvadurai, is a location-based social networking site based on software for mobile devices.
The service allows users with GPS-enabled devices to announce their location to friends by “checking in” at venues.
Crowley told the Wall Street Journal the company has partnered with LivingSocial, Gilt Groupe’s Gilt City, zozi, BuyWithMe and AT&T Interactive to distribute discount coupons to users in return for checking in at certain venues.
“We are trying to see if our targeting works and how users will react. The deals haven’t been heavily targeted with some of these providers,” Crowley said.
Foursquare will take a commission for every coupon redeemed.
Deals will be available via Foursquare’s BlackBerry, Android and iOS apps in the US, the UK, Canada, Ireland, Australia and New Zealand.
The partnership is expected to benefit Australian merchants who advertise deals through local shopping site Jump On It given LivingSocial’s investment in the company.
Last year LivingSocial announced it had invested nearly $5 million for a controlling majority stake in Jump On It.
Colin Fabig, founder of Jump On It and chief executive of LivingSocial for Australia and New Zealand, says the deal between LivingSocial and Foursquare will directly benefit local merchants.
“Working with Foursquare is another innovative way LivingSocial is bringing our merchants’ handpicked experiences to high-value consumers,” Fabig says.
“Merchants will enjoy even greater exposure of the deals they offer to LivingSocial members and the deals offered through Foursquare will encourage repeat visitation to our merchants.”
Foursquare has indicated that other deals and countries will soon be added to the mix and it is believed that the New York-based start-up is negotiating a deal with Groupon.
The coupons will be served to Foursquare’s 10 million registered monthly users based on their previous check-ins via Foursquare’s updated Explore tab.
“We now run all specials through our personalised Explore tab. As a result you only see specials that are right for you,” the company said.
“If you’re walking around and see a special you like, a couple of taps in your app and you’ll be able to buy it, all without leaving Foursquare. And if you find a good special while browsing on Foursquare.com you can buy it there too.”
Jake Maas, senior vice president of business development at LivingSocial, said the Foursquare deal adds another distribution channel to his company, which already markets deals via websites and bloggers.
By partnering with deal providers Foursquare, which employs 75 people, avoids much of the expense of building the sales force needed to cut deals with local merchants.
Foursquare’s deals program hasn’t been very lucrative so far. It has signed up 500,000 merchants but doesn’t receive a cut of the deals it sells.
The company faces growing competition from heavyweights Google and Facebook in addition to a wave of innovative start-ups. Its investors are betting it will eventually be able to capitalise on its head start in location services.
Late in June Foursquare raised $50 million, valuing it at $600 million – six times its valuation the previous year.
This article first appeared on StartupSmart, Australia’s top site for start-up entrepreneurs
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
