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American Express is expanding a partnership with Foursquare to connect the mobile-focused social network to its credit-card customers’ high street purchases, in the latest attempt to prove smartphone apps can generate real-world revenues for marketers, retailers and developers.
The digital voucher scheme, which has been operating in the US for just over a year, is launching this week in the UK, with other countries to follow. It allows Amex’s customers to receive cashback when they spend money at retailers including Tesco, Primark and Pizza Express, by “checking in” to the store’s location on Foursquare, a smartphone app with 20m users globally.
“We’ve been making offers from merchants to card members for 30 years but we’ve been doing it in traditional and clunky ways” such as direct mail, said Ed Gilligan, Amex’s vice-chairman.
The partnership is the latest experiment to tap the vast yet largely unproven market at the crossroads between mobile devices, location-based services and social networks. It comes a time when Facebook and Google are under growing pressure to generate more revenues from their users’ mobile activity.
AmEx also works with Twitter and Facebook to dole out coupons but Mr Gilligan says Foursquare’s mobile app has an immediate ability to drive people into stores.
Chief executive and co-founder Dennis Crowley said: “When people open and use a Foursquare app, they have a specific intent to find a place. A lot of mobile apps are time fillers.”
This potentially provides a more obvious appeal to marketers, although Foursquare is yet to turn partnerships with companies such as Amex, Starbucks and CBS into substantial revenues. Foursquare’s chief operating officer, Evan Cohen, said that the “hundreds of thousands” of Americans who have synced their cards with the app spend on average 15 per cent more than other Amex customers.
The partnership is a key one for Foursquare as it faces competition from much larger internet players looking to connect mobile, local and social. Facebook late last year acquired Foursquare’s closest rival Gowalla and has made a string of subsequent acquisitions of mobile services, including Instagram, the $1bn photo-sharing app. Facebook has also experimented with Foursquare-style check-ins and coupons, with limited success.
Google and Facebook provide their local services on both desktops and mobile devices, but like Instagram, Foursquare believes it has an advantage in being a mobile app first and a PC service second. With more than 1bn 3G subscribers globally, the smartphone market – in user numbers – tops even Facebook’s 900m members. Growth in 3G subscribers is particularly strong in China, Brazil and India, providing a strong new source of growth.
Nonetheless, industry experts say that every internet company faces the same fundamental challenge: there is simply not as much money spent on mobile apps and services as on traditional PCs.
“There is a transition going on,” said Mary Meeker, partner at Kleiner Perkins, a leading venture capital firm, at the AllThingsD conference on Wednesday. “It may take a little bit of time for mobile to get monetised as highly as desktop.
By some estimates, mobile now makes up around 10 per cent of total internet traffic, but US mobile adspend, at $1.6bn, is a smaller portion of total US online adspend of $30m, with ad pricing also much lower on smartphones than PCs.
“The screen is small and the ad units haven’t really been rolled out effectively yet… I think we’re still early in figuring out local and social.”