Foursquare, the social network which lets users check-in at restaurants, retailers, and other venues, is finally incorporating paid ads into its service, much like Facebook and Twitter have done.

The New York-based startup officially kicked off a pilot period last week for Promoted Updates, an advertising product that builds on the release of Local Updates, to give merchants a way to reach people who may be in the mood to pop by their stores.

“This is the first time ever that we’re allowing businesses to pay to promote their business in Foursquare,” product manager Noah Weiss said last week. “It’s obviously a very exciting milestone for us.”

Promoted Updates

Promoted Updates enable businesses to send promoted text, photos, or specials to users that will appear at the top in a prominent position in the “Explore” tab within the Foursquare app. Businesses who buy promoted updates will pay on a cost-per-action basis, which could be anything from a user visiting a venue page or unlocking a special to checking in.

Relevance

According to Foursquare’s chief revenue officer Steven Rosenblatt, Foursquare’s major focus with these updates is that users actually find them to be worthwhile — which is why they use the same technology to make sure they’re targeted to users specifically based on their locations and interests. “What we’re really excited about is that you have to be near a business to get an update,” Rosenblatt said in an interview last week. “No matter how much someone pitches us, it has to be relevant, based on proximity and based on intent. Those are critical.”

Promoted Updates vs Local Updates

Promoted Updates build upon Local Updates, which Foursquare launched just last week. Local Updates are updates that businesses can send for free and appear in the main friend activity stream on Foursquare. These updates only appear for users who have checked-in at a business a certain number of times or if their friends have checked-in there.

Both the Promoted Updates and Local Updates are rolling out on top of Foursquare’s recent app redesign that added more social features and the ability for users to more easily find businesses.

“We’ve been developing these two in parallel for awhile,” Weiss said. “Local Updates are really about engaging with your existing customers when they’re in the feed, when they’re nearby. [Promoted Updates] … are about showing your business more prominently, hopefully with a compelling piece of content, in the Explore tab, which is where our users go when they’re actually looking for ideas for what to do next in the real world.”

Promoted Updates are currently being trialled in the US by twenty handpicked small and large merchants including Walgreens, Best Buy and American Express. It is not known when Promoted Updates will be available to more business but Rosenblatt did hint that more will be able to opt in. “We want to make sure we really perfect it,” he told TechCrunch. “This will evolve, and as it evolves, when we feel ready we can open it up.”