From the start, Foursquare’s mission has been to drive customers into local businesses. Brendan Lewis, the company’s Director of Corporate Communications, says that Foursquare’s efforts to monetize have been closely linked to giving business owners unique tools to draw in new and repeat customers. A recent move that opened its ad platform up to businesses of all sizes proves that the strategy is working. For the first time, small businesses now have access to the same advertising tools the big guys have had for over a year.

Any business owner who wants to advertise on Foursquare today simply has to go to the dedicated site where they can set up targeted ads for as little as $50 a month. Advertisers get a customized dashboard that allows them to design, track and change campaigns. Unlike traditional ad placements, these help businesses rank higher in search results for relevant queries and can be further targeted on parameters such as geography and visit history. With so many options, Foursquare is giving small business owners a flexible and affordable advertising option where you pay only for actions, not views.

We chatted with Lewis about the reasons small businesses should consider advertising with Foursquare. In addition to the some of the strategic benefits, Lewis also explained why this type of campaigning is ideally suited to cash-strapped small businesses in particular.

It’s Right On Target

As is true for all successful advertising campaigns, knowing your audience is the first step in achieving your marketing objectives. This may be even relevant for Foursquare advertising, which offers targeting options that are significantly more granular than those offered by other platforms. Thanks to the treasure trove of data amassed by tracking check-ins by Foursquare’s 40 million users and their friend activity, advertisers can target based on historical activity.

Relying on that data eliminates some of the guesswork from targeting. Knowing that you and your friends have previously checked in to a number of Mexican restaurants could make someone like you the perfect target for a new taco joint. But what about companies that want to attract customers to try something new? A coffee shop could set its ads to run in the morning, targeting people within a certain radius who are searching for a latte.

“Foursquare offers every local business a way to connect with people and to drive people into their establishments,” Lewis says. This means not only showing up in search results, but putting the business’ name in front of the right potential customer at the moment that is most likely to drive that customer into the store.

You Can Show Off a Little

When asked what types of ad content drives the most conversions, Lewis says it is still too early to draw definitive conclusions. Instead of recommending a specific type of ad for all businesses, Lewis encourages business owners to look at the content that visitors generate for them. Often, users leave tips praising the establishment’s selection of goods or preparation of specific popular ingredients. They are also likely to share photos, especially of food they liked.

“The notion of one-size-fits-all advertising is sort of a failure,” Lewis says. Rather than blindly crafting ads using standard text or a photo because that’s what others in the same category are doing, Lewis suggests focusing on those elements that play up your business’ strengths. A beautiful photo taken by a customer may be very eye-catching and could be worth highlighting. Useful tips that integrate key search terms — such as “latte” or “Swedish massage” — can be powerful marketing messages since relevant phrases are bolded in search results.

While content drafted by a business’ marketing teams may be polished, the implicit endorsement that comes from other customers’ comments and images can carry more weight with potential visitors. As such, it is important to keep track of fresh comments, tips and images. When you’re ready to try new ad messaging, the content could already be ready for you mine from existing customers.

You Pay for What You Get

A couple of years ago, daily deals companies seemed to be the answer small businesses were seeking in terms of driving customers into stores. Over time, however, it has become clear that while potentially valuable, those daily deal sites aren’t the only silver bullet. Lewis, who previously worked for a big daily deals platform, says Foursquare’s approach is more beneficial than many.

“The beauty of our approach is that a local business can bid on how much a customer is worth,” Lewis says. As similar businesses vie for the same customers, they can bid to have their ads show higher or more frequently in targeted search results. The payment for these ads comes from a set monthly budget, which can’t be overspent, just voluntarily raised. And advertisers only shell out when users interact with the ad, or check in to your business after seeing it.

The fact that Foursquare only gets paid when a notable action takes place is one of the reasons some small business owners prefer this advertising method. Take Caitlin Bergmann, who advertised her New York City-based Century 21 clothing stores so well, she made it to Foursquare’s Success Stories page. For her business, tracking how many people went into the store after seeing the ad meant knowing the real-world effect of her advertising dollars. Through her campaign, she realized each check-in cost her just $1.23.

Lewis may be biased, but his argument is  solid. For knowing exactly what type of person will see your ad — and whether or not they acted as a result of it — Foursquare is a pretty good bet in the competitive digital advertising space.

[Image credits: Nina Matthews, Edsel Little, Nic McPhee]