Foursquare is reportedly building a new advertising product that will leverage data to help businesses create targeted ads on other platforms.

According to Ad Age, the company has started pitching digital agencies on a new ad product that would use its location and behavioral data. Still in development, it will eventually let advertisers use Foursquare data to target ads purchased through ad exchanges or networks.

“We are always looking at ways that could make our data more useful for advertisers and partners, while respecting the privacy of our user’s information,” Foursquare told Ad Age. The company has otherwise remained tight-lipped about the potential ad product, stating only that it will provide more details “when the time comes.”

Advertising through Foursquare is somewhat limited right now with promoted listings and specials advertised only within the app. Launched last summer, they only returned $2 million in revenue in 2012. Figures like that make it seem like businesses are uninterested. It’s possible that Foursquare’s data can’t compete with the likes of Facebook, for example.

That said, several agencies not pitched by Foursquare told Ad Age that they would be interested in the company’s location and psychographic data. Ken Allard, managing director of global business strategy at digital agency Huge, said Foursquare’s “unique and proprietary data is incredibly valuable,” adding that the data could enable predictions on whether temperature will affect a consumer’s decision to buy a hot or cold drink.

Foursquare currently possesses data from 3.5 billion check-ins and more than 40,000 developers that have integrated the company’s location database in their apps — this includes Instagram, Uber, and Evernote. It’s too early to say whether the ad product will be a good fit for advertisers, but it’s certainly worth keeping an eye on, especially if your business already benefits from Foursquare’s existing features.

[Via: Ad Age, Image credit: Michael Galpert]