The two hottest location-based social networks—Foursquare and Gowalla—are taking different approaches to the market, and seeing unique uptake patterns as a result.  While these companies have repeatedly said they don’t view each other as competitors, the activities on networks are similar.

What’s more, several other companies are making the case to be included in the discussion about the top location-based network, including Booyah’s MyTown, which has more users than Foursquare and Gowalla combined.

Let’s take a look at how the location wars are unfolding and which of these services might be ideal for your marketing strategy.

The Contenders

Foursquare

Foursquare, founded in 2009, has attracted more than 1 million users.  Users have the ability to “check in” at local businesses, bars, and restaurants, are able to find friends at different locations and have the ability to become “mayor” of a given location, which often entitles them to benefits and discounts.  Users also receive “badges” for completing certain tasks and doing activities a certain number of times.

Foursquare offers an excellent city guide in cities where it is well-established, and has a fun aura of competition arising from users attempting to check in at favorite spots more than others.  Until recently, the network was limited to large metropolitan areas, so it was not as robust in smaller areas as other services.  Because the site does not use GPS for its check-ins, like Gowalla does, it can be gamed as a result.

Gowalla

Gowalla is seen by many as the main location-based social competitor to Foursquare, but despite being founded in 2007, it has only attracted a quarter as many users (250,000) as Foursquare.

Gowalla also allows users to check in at local establishments, but is more framed around an idea of “social gaming.” The network allows users to discover, capture, and share places and events with friends through a slick user interface that is one of its key differentiators.

Gowalla has also been available throughout the U.S. for some time now, and has established communities in some areas where Foursquare has failed to gain traction. However, Gowalla’s small install base does make it harder to find the connections that make social network entertaining and useful for businesses.  It also had limited handset availability at first, and only recently rolled out an Android version (Blackberry version in beta), which has further slowed its adoption.

MyTown

MyTown was founded by Booyah in 2007, and has rapidly become one of the most popular iPhone applications ever.  It has about 2 million users, making it more highly trafficked than either Foursquare or Gowalla.

MyTown allows users to “buy” and “own” their favorite stores and hangouts using virtual currency. This ownership model allows users to collect “rent” from others when they check in at shops they “own,” increasing the fun competitive nature of the application.

The large user base holds exciting opportunities for marketers in general.  The problem is that large install base is restricted to the iPhone, which limits further adoption potential.  The lack of handset choice plus the gaming aspect of the service makes it less attractive as a social network, though the gaming offers more potential services and features than other platforms.

The Battles

Commercial Potential

Foursquare is in the lead when it comes to catering to small- and medium-sized businesses.  The company has built its feature set to be useful and valuable to small business owners, because its platform incentivizes users to visit local establishments more frequently with its “mayor” system. The company also has created a “Foursquare for Business” dashboard that will provide additional info on user activity. The company has also landed many commercial partnerships, including with Starbucks and Bravo, which indicates an evolving business strategy that eventually should include much smaller businesses.

Gowalla is geared more toward interaction among users, and it has yet to deliver a clear commercial strategy.

MyTown uses contests to generate revenue, but the platform is again designed more as a multiplayer game than a transactional platform.

Functionality

Foursquare has pulled in front in the feature department, and it has received the most media attention because its core functionality is the most robust and easy to use.  Gowalla’s initial launch had many bugs and a choppy user experience, but its second try was much improved.  MyTown is the simplest and its features tend more toward gameplay than user interaction.

Fun

Though it may not be as useful yet for businesses or have as many features, MyTown is currently more fun for its users. What makes MyTown weak on the other counts makes it win this battle.  The comparisons here are a little skewed, because Foursquare and Gowalla are more social networks than social games like MyTown, but MyTown’s superior signup numbers show just how entertaining users are finding the service.

Look and Feel

Gowalla is winning currently in the design battle, however. The company’s CEO is a former designer, and the slick, attractive user interface displays a close focus on look and feel.  Foursquare and MyTown are both more functional than eye-catching, and their value is more in the interactions that take place than the visual aspects or display features.

Conclusion

Though all of these platforms offer great potential opportunity for businesses, only Foursquare is large enough and commercial enough currently for businesses to consider using it as part of their digital strategy.  Though they are emerging and growing rapidly, Gowalla’s scale and MyTown’s lack of a clear business focus keep them from being must-use applications like Facebook and Twitter.

Location is one of the hottest spaces around right now, however, so don’t be surprised if all of these players eventually command a large enough audience to have a significant business impact.  The early location battles are over and Foursquare is the leader; however, the larger war for location dominance is far from finished.

Have you “checked in” to these platforms? Which one are you a fan of?  If you’ve leveraged location-based platforms for your business, how are they working? Let us know your thoughts and ideas in the box below.

These networks have not reached mass adoption yet, so it’s not necessary to get active on all of them immediately.  But remember, Facebook only took 6 years to reach 400 million registered users.  You should keep an eye on these five upstarts to see if their innovative services attract large audiences in the near future.

Why You Should Pay Attention

Learning the ropes on new services before they gain mass traction can help you get value from them faster once they catch on.  Monitoring the innovations in the social media space also gives you an indication of how the market is changing and will evolve over the next few years. Marketers should stay abreast of broader market trends to assure their messages stay relevant.

The 5 Social Media Sites You Should Explore

#1: Foursquare – This location-based social network/gaming application is rapidly gaining users and mindshare.  Users “check in” at local businesses and earn rewards for frequently visiting participating establishments.

The site receives more than 1 million check-ins per week.  Business owners can get value out of Foursquare by offering incentives for users to check in, such as special offers for repeat visitors.

The site lists more than 800 establishments currently offering deals.  Those deals could include a free drink or appetizer for the Foursquare user who checks in the most (called the Mayor).

Currently available in 45 US cities and many major international cities, Foursquare has plans to expand further and grow its user base over the next year.  It has also signed major partnerships with TV network Bravo and restaurant guide Zagat that will expand its functionality and usage.

#2: Google Buzz – Google’s latest entry into social networking has the potential to attract rapid adoption, due to its connection with the widely used Gmail and Google Maps applications.

Buzz allows users to post status updates and upload pictures and videos to a Google profile, not unlike Facebook and Twitter.  A user’s network is formed by contacts they interact with frequently on Gmail.

If a user makes an update public, the information also gets added to the “Buzz” layer now available on Google mobile maps.  Now, Google Maps users on iPhones and Android devices can view the things other Buzz users have said about businesses in the area.

#3: Loopt – Another location-based social service, Loopt aims to connect its users with their friends by visually displaying their location and availability on a localized map.

Users can connect with friends in the area, see reviews and recommendations of restaurants, and find events in the area that might be of interest.  Businesses have tapped into Loopt’s location data to offer targeted promotions.  The B.R. Guest restaurant chain in New York sent messages containing special discounts to Loopt users near their restaurants.

Loopt is accessible on more than 100 mobile phones, giving it the widest distribution of any of the location-based services.  It is currently used by about 3 million people, which should increase as Loopt expands to more cities.  Marketers should explore the possibilities of interacting and promoting their businesses through Loopt, as well as monitoring posts to judge the sentiment of user reviews.

#4: Blippy – Blippy aims to connect people around the purchases they make.  Easily the most controversial of the applications profiled here, Blippy publishes the amount and location of customer purchases (with user permission, of course), which the rest of the community can then react to.

While the concept may not seem attractive on its face, the site has already signed partnerships with a dozen major vendors and is funded by many marquee investors.   If the service begins to attract a large user base, this community could be very valuable to retailers looking at general purchasing trends.

#5: Groupon – This site offers “collective buying power” by providing deals to groups of people who buy products and services in bulk from participating retailers.  The site uses social networking to get users to share offers with their communities, in order to reach the target number of customers the “Groupon” requires to activate.

Businesses could gain exposure and new customers by making offers on the site—if Groupon develops a large following. For instance, a colleague recently bought a golf lesson package from a local pro shop for 60% off, because he joined a group of 29 others in the “groupon.”  While the revenue from the purchase is helpful, exposing a large group of customers to your product is even more valuable.

This is by no means an inclusive list, only 5 exceptional companies striving to change the social media landscape with fresh ideas.

Which up-and-coming social application are you most excited about? Who did we leave off the list that should have been included? Please leave a comment below…