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In this four-part series, we'll look at how small businesses can leverage the power of location-based services such as Foursquare and Places

The saying 'location is everything' is starting to take on a whole new meaning in the digital realm.

A few years ago, the average user's physical location was largely irrelevant to their Web experience. Sure, a user's IP address could give away roughly what region they were coming from, but knowing that your potential Web customer was visiting from Qatar or Oklahoma didn't really help small business owners customize their Web offerings. Indeed, those on the cutting edge of location-based Web sites were usually the ones that let you select your country from a drop-down list, and took you to the corresponding page.

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Today, location on the Web has evolved to near pinpoint accuracy. Thanks to GPS, today's gadgets are able to figure out exactly where they are, down to the individual street corner.

This kind of information is quickly becoming invaluable to small and medium-sized businesses. The ability to figure out which users are nearby - and to let nearby users know where you are - represents one of the most effective new forms of digital marketing.

But before looking at how to leverage location data, let's take a look at some of the most important location-based services available to small and medium-sized businesses today.

Perhaps the most famous location-based service right now is Foursquare. The Web site, launched two years ago, allows users to "check in" from various locations, ranging from ballparks to coffee shops to hotels. The service relies almost entirely on smart phones and other mobile devices.

For business owners, Foursquare offers a compelling branding opportunity. The site already has more than five million users, and has become famous for giving out "badges," or little electronic awards certificates, to users who achieve certain tasks, such as checking in from a pre-set number of locations. The system tends to encourage users to check in multiple times from the same location over a period of time - the user who checks in most often to a certain location becomes "Mayor."

Businesses can claim their virtual locations on Foursquare, and offer deals that encourage customers to visit the physical storefronts more often. For example, a business can offer a special discount to the virtual mayor, causing users to visit multiple times in the hopes of receiving that designation and subsequent discount. Businesses can also offer special deals based on frequency of visits, or a one-time deal when a customer visits for the first time.

Increasingly, more big-name competitors are entering the location-based branding market. Google offers a service called Places, which lets business owners build mini-sites describing the business and its location. A Places page also usually contains user reviews of the business. But perhaps the most useful aspect of Places for businesses is the way Google integrates the service with its Maps tool. Because many of the world's smart phone users take advantage of Google Maps to perform geographic services, having a location pop up as a nearby result can be a huge boost for businesses.

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The latest heavy hitter to join the location wars is Facebook. The world's most popular social network recently introduced its newest service, called Deals, which is sort of a hybrid between location tools such as Foursquare, and group-discount sites such as Groupon and TeamSave. With Deals - a smart phone-only application - users can check in to various locations, and see nearby discounts from participating businesses. Companies can base their discount on the number of check-ins a user makes, or can simply make a discount available to everyone, as long as they bring their smart phone and show that they've gone to the discount page.

While there are numerous group discount sites that offer similar deals, Facebook hopes to gain an advantage in the market by leveraging three aspects of its service. The first is the massive, 500-million user base. The second is the integration of mobile devices, which gives users access to discounts near them at any given moment. But perhaps most importantly for the businesses looking to take part in Deals, Facebook isn't taking a cut of revenues from the service, unlike group discount sites, which often take 50 per cent of the money customers spend.

Special to The Globe and Mail

The series continues with a new post every Thursday for the next month. Stories can be found on the Web Strategy section of the Your Business website.

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