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Do Social Media Offers Attract Customers? Pitt Study Says It’s A Toss Up

As social engagement increasingly becomes centered around mobile apps, many local businesses are turning to location-based apps such as Foursquare and Yelp to attract customers.

But a new study from the University of Pittsburgh School of Information Sciences and Stevens Institute of Technology suggests that special deals and discounts linked to social media apps aren’t all that effective at driving customers to businesses.

Lead researcher and assistant professor Konstantinos Pelechrinis said anecdotal success stories are contradicted by nationwide Foursquare data collected during a seven-month period from late 2012 to early 2013.

Foursquare is a mobile app that, at the time the data was collected, allowed users to “check-in” at a particular location.

Researchers found that a little more than half of the venues surveyed did see an increase in check-ins during and after the special deal period, but that nearly as many venues did not see such an increase.

Pelechrinis said that suggests the benefits of location-based social media discounts are contingent on other factors, such as the type of business, the duration of the deal, and the population density in the area surrounding the business.

“Our study shows that they are not very successful but … after some analysis on how they are being offered and what are the potential drawbacks, we believe that the way they are being advertised or being offered can change to make them more successful,” Pelechrinis said.

Pelechrinis said the data only showed the number of check-ins, and didn’t capture how much each customer who checked-in on Foursquare spent at the establishment, so it’s possible that revenues increased during periods of special promotions.

He added that, even absent strong data supporting the success of location-based social media promotion, such a marketing tactic might still be useful for small businesses.

“It’s a very low cost means of advertisement and it’s especially important for local businesses that … don’t have the resources to have, for example, a broadcast advertisement on TV or a billboard,” Pelechrinis.

Since the data was collected, Foursquare has actually done away with the “check-in” feature, transferring that functionality over to a new app called Swarm. The current version of Foursquare functions more like Yelp or a search engine, helping customers find businesses. The special deals function still remains a part of Foursquare, but it not based on whether a customer has “checked in” to the business.