Foursquare Merges With Factual, Another Location-Data Provider

Foursquare, which first gained fame for an app that allowed people to share their location with friends, pivoted in recent years to providing location data and software to businesses including marketers and ad agencies, helping them see how well their ads steered people to their stores and restaurants.

While the Placed deal improved Foursquare’s ability to gauge the effectiveness of ads by measuring foot traffic, the merger with Factual will build on its ad-targeting capabilities, executives said.

Factual’s location software helps marketers home in on customer segments, for instance, people who have visited certain car dealerships in the last 30 days. Factual or Foursquare’s data is already integrated into the digital advertising platforms of companies that include

Oracle Corp.,

Roku Inc.

and

The Trade Desk Inc.

“Location data has tremendous power because of intent,” said Factual founder Gil Elbaz.

Foursquare already allows advertisers to target different audience groups, but Factual’s underlying data set is better, said Foursquare Chief Executive David Shim, who will continue in the role after the deal closes.

“When it comes to audience segments, Factual is No. 1; we’re not No. 1,” Mr. Shim said. “Foursquare is No. 1 when it comes to attribution and ad effectiveness, when it comes to app developer tools.”

Foursquare, which is based in New York, and Factual, based in Los Angeles, together generated more than $150 million in revenue last year, executives said. The combined company will operate as Foursquare Labs Inc.

Foursquare said it has made foot-traffic data available to local government response teams and public health officials to help them understand how people are behaving during the ongoing coronavirus crisis. Its tools allow the data to be filtered by different counties, states and days, Foursquare’s co-founder Dennis Crowley said in a blog post. A Foursquare spokeswoman emphasized that this user data will remain anonymous and won’t be used for “contact tracing” to identify the places people infected with the virus have visited.

As the outbreak of the novel coronavirus stalls entire industries, some marketers are pulling back on advertising spending. Foursquare and Factual declined to comment on the revenue impact of Covid-19, the disease caused by the virus. No roles will be eliminated as a result of the pandemic, the Foursquare spokeswoman said.

Foursquare had its first profitable quarter in the final period of last year on an earnings before interest, taxes, depreciation and amortization basis, the spokeswoman said. A Factual spokeswoman declined to say whether the company has turned a profit.

Foursquare’s tech and data has helped run features in apps from companies like Snap,

Twitter Inc.

and

Uber Technologies Inc.

Uber uses Foursquare to display the name and location of venues in its app; Snap uses it to enable location-centric filters. Foursquare’s marketing clients include Taco Bell Corp. and

Starbucks Corp.

The combined company is hoping to take its business beyond its services to advertisers, the executives said. For instance, the two companies are already working with a mutual client to figure out how to use location technology to help customers order from the client’s app when they are near a store.

As part of the deal, Mr. Elbaz will join the merged company’s executive team and board of directors, which will include Mr. Crowley as executive chairman. Mr. Elbaz said he would be making an additional investment in the merged company—writing “a large check”— but declined to be more specific.

Following the completion of the merger, Foursquare will have more than 400 employees. The company expects to eliminate some jobs where there is overlap, but isn’t planning significant layoffs, Mr. Shim said.

Foursquare announced its purchase of Placed last May. Without saying how much it was paying, it simultaneously said it had raised $150 million in an investment round led by The Raine Group that would cover the cost of the deal and the company’s continued expansion. The Raine Group remains an active investor in Foursquare, Mr. Shim said.

Foursquare did say at the time that it and Placed had combined revenue of more than $100 million in the 12 months preceding the announcement.

“The mandate of the modern CMO [chief marketing officer] has grown beyond just advertising,” Mr. Elbaz said. “They’re now responsible for using tech to build one-to-one relationships with customers. Location data is going to be a big part of that.”