Advertising: Foursquare to Test Paid Ads - Advertising

The pilot program, which has been the subject of recent speculation, began on Wednesday. Foursquare — the mobile app that lets users share their locations with friends — is calling the ads Promoted Updates, echoing the Promoted Tweets terminology used by Twitter.

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About 20 advertisers are taking part, among them Mario Batali restaurants; Best Buy; BR Guest restaurants; the Gap and Old Navy brands sold by Gap Inc.; Hertz; Hilton Hotels; and J. C. Penney.

Among the agencies working with Foursquare to test the Promoted Updates is OMD, part of the Omnicom Group.

Promoted Updates are the second business-related step in a week by Foursquare, which says it has more than 20 million users and almost a million merchants. Last week, Foursquare announced Local Updates, enabling retailers to deliver offers and messages to customers by location.

Promoted Updates are a “natural progression” for Foursquare, said Steven Rosenblatt, who recently joined the company as chief revenue officer.

They will always carry the Promoted label, he added, and there will be “a lot of controls in place” to ensure that “frequency will be limited.”

As for those who are uncomfortable with or unhappy about the creeping commercialization of social media, Mr. Rosenblatt said he would understand criticism of Promoted Updates “if we were going out with a whole bunch of display ads.”

Rather, they will be “organic,” he added, “and relevant to a user.”

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For instance, a Promoted Update from the Dos Caminos restaurant, part of BR Guest, could feature “an offer for a secret omelet that only Foursquare users can get,” Mr. Rosenblatt said.

Mr. Rosenblatt declined to discuss what Foursquare is charging for the ads other than to call the test a “paid pilot.”

“We’ve made a real, conscious effort to work with the agencies,” he added.

The Promoted Updates are to appear in a section of Foursquare known as the Explore7 tab. They will use “the same algorithm” that Explore uses to display nonpaid updates, Mr. Rosenblatt said.

Criteria will include a user’s location and whether users or their friends have previously expressed interest in the business.