Foursquare Just Launched A Multi-Million-Dollar Ad Campaign To Promote Its App In New York And Chicago

Foursquare launched its first-ever advertising campaign Monday. The outdoor ad placements are in airport kiosks, city bike share hubs, on subway cars and in subway entrances in New York and Chicago for the next six weeks.

The app partnered with Omnicom and boutique creative shop Judd Branding to come up with the flight times and placements. It's a multiple-million-dollar campaign for Foursquare, which says it will be carefully watching brand lift and return on investment over the course of the fall.

Foursquare says its decision to start advertising was sparked by a major rebranding initiative it launched over the summer. In May, Foursquare announced it'd be splitting its flagship app into two: "Swarm" houses venue check-ins and find-friends features. "Foursquare" is a Yelp-like search and discovery app for local businesses. The app uses location data and user-imputed "tastes" to learn what people like and makes recommendations for them accordingly. Foursquare says it has 6 billion check-ins and over 60 million reviews to work off of.

Swarm is also running an advertising campaign this fall, but its placements will be online-only.

"We're educating a broader audience about the new Foursquare," COO Jeff Glueck tells Business Insider. "We're seeing from tests that [the new] Foursquare has been getting rave reviews from people who try it - especially those without preconceived notions of the old Foursquare and its points, badges and mayorship features."

Foursquare's new tagline: Foursquare learns what you like and leads you to places you'll love. The placements celebrate cultural differences and demonstrate how Foursquare can make smart venue recommendations for all types of people.

But is it smart for Foursquare to spend millions of dollars on an outdoor ad campaign?

When it launched, Foursquare exploded to nearly 30 million users and raised $100 million from investors at a $600 million valuation. Since 2012 however, growth has stalled, leading the company to completely reimagine its business and relaunch two new apps in 2014.

Glueck says the advertising campaign has been planned since before the August relaunch of Foursquare. Since then, Foursquare has been growing in terms of users and revenue. Glueck says Foursquare's active monthly users on mobile have increased 54% from August 2013 to August 2014. Revenue has grown more than 100% since last summer also. Additionally, Foursquare's tips per active users are up 116%.

Another worry is that a multi-million-dollar advertising campaign is just burning cash at a time when investors are warning startups to be cautious.

Glueck says Foursquare, which has raised $162 million since it was founded in 2009, has "well over" $50 million in the bank.

Foursquare, which has raised $162 million since it was founded in 2009, has "well over" $50 million in the bank.

That, paired with the revenue it's generating, is allowing Foursquare to spend a few million testing brand lift through advertising.

He also says Foursquare's board, which includes Union Square Ventures and Andreessen Horowitz, is fully supportive of the advertising campaign. Union Square Ventures partner Fred Wilson and Andreessen Horowitz partner Marc Andreessen have both written about startup burn rate concerns recently.

"I think we have some very experienced marketers in the company who are used to measuring acquisition costs over the lifetime value of a customer," Glueck says. Glueck was formerly at Travelocity, which he says spent ~ $1 billion per year on marketing and measured every penny.

"We're very mindful of managing venture capital funds," Glueck says. "I think it will take a while to come to a conclusion on how well the campaign is working," Glueck says. "We'll be doing brand surveys in both cities."

When asked about Foursquare's advertising campaign, Union Square Ventures' Fred Wilson and Albert Wenger were supportive.

"We are very much encouraging our portfolio companies to look hard at their burn rates," they wrote in an email to Business Insider. "But they also have to continue to make the right and rational investments in their businesses.

"Foursquare's revenues have been ahead of plan this year and the app is doing great with new users. So it makes sense to spend some money on getting the word out. They are going to measure this and all marketing expenses against the returns they get on them."