Foursquare and Factual merge, CEO Shim to lead combined company
The combined company is the clear market leader for location intelligence.
In something of a surprise announcement Monday, Foursquare and Factual said they were merging. No terms were disclosed but the companies reported their combined revenue would be $150 million, which is smaller than we might have expected; the majority of which is likely Foursquare’s.
The new Foursquare will have more than 400 employees. There will apparently be a small reduction in force to eliminate redundancy.
Foursquare CEO Shim will lead. The merged entity will be called Foursquare Labs and be led by current CEO David Shim. Shim was previously the founder and CEO of Placed, which was acquired a year ago by Foursquare from Snap. Originally, Snap bought Placed in 2017.
The two companies offer similar capabilities and services. However, Factual’s underlying audience data is better than Foursquare’s, according to CEO Shim – a rare admission in a segment where everyone claims equivalent reach and data accuracy.
Factual audience data apparently better. According to an interview in the Wall Street Journal, Shim said, “When it comes to audience segments, Factual is No. 1; we’re not No. 1 . . . Foursquare is No. 1 when it comes to attribution and ad effectiveness, when it comes to app developer tools.”
Prior to the outbreak of COVID-19, audience segmentation and offline attribution were the primary use cases of location data. Now location is being used to help determine whether social distancing is working and to track the spread of the virus.
Location data will be ubiquitous. The traditional marketing use cases of location will return, however, after the outbreak subsides. Indeed, location data is a leading candidate to replace cookies after they disappear. Offline visitation patterns are also intent signals not unlike search. Notwithstanding privacy advocates’ concerns, location data will ultimately be woven into almost every non-search campaign in one form or another — for targeting, attribution or both.
Factual CEO Gil Elbaz, who will become a board member and member of the Foursquare executive team, told the WSJ that he would also be personally investing in the combined entity. Elbaz was a co-founder of Applied Semantics, which Google bought in 2003 for more than $100 million and which became the basis of AdSense.
Why we care. The combination of Factual and Foursquare will undeniably create the market leader in the location intelligence segment — if it wasn’t Foursquare before. My suspicion is that a variety of factors contributed to the decision to merge, one of which was undoubtedly the economy. Regardless, this development puts significant pressure on the multiple companies in the space to merge or find buyers. The market ultimately wants fewer, more capable competitors.