Social media advertising is the newest and fastest changing field for marketing. As featured in the New York Times, Forbes, and TechCrunch, New York City based start-up LocalResponse aggregates both explicit and implicit location-sensitive inputs, and allows businesses to take advantage of this information. Rather than waiting for a customer to check in on various limited networks, the company connects with the merchants directly to help them find their loyal customers and “respond” to them with deals via Tweets and e-mails. I had a chance to speak with Mr. Nihal Mehta, CEO and (Co)Founder* of LocalResponse to find out more about this innovative marketing platform.

Fueled: Give us a little background about the product you offer at Local Response.

Nihal Mehta: LocalResponse helps marketers respond to consumers in a time and space context. We aggregate  real-time “check-ins” from sites like Foursquare and Gowalla, but also pictures from Instagram, Flickr, and Foodspotting and natural language from Twitter and Facebook, to help businesses interact better with their customers.

Could you explain how you use “explicit” and “implicit” check-ins?

Sure. The explicit check-ins [like Foursquare and Gowalla] only make up about 15% of our data. Implicit check-ins are the geotags from a Flickr or Instagram photo, or a Tweet that says, “I’m heading to Shake Shack” or “eating at Shake Shack.” We read about 200 million Tweets a day, and we can run natural language processing on that. [Flickr and other platforms] use API’s, and we can pretty much connect to any of these servers.

Where did the idea for LocalReponse come from?

I started buzzd about 2 years before Foursquare. [The name] is a double entendre: it was associated with going to bars (getting buzzed) and [when you arrived at a bar] you could buzz the venue and friends around you would get a notification/buzz. We had around 2 million active users, but it was hard to monetize. The user base just wasn’t that huge and the demand was really limited. There was too much competition in the field with Foursquare, Gowalla, and Whirl. So we thought, why not leverage their inventory and let them help us?

What makes you different from other location-based sites like Foursquare or even Groupon that offer deals?

Unlike Foursquare, the consumers don’t know LocalResponse, and that’s because they don’t have to go through LocalResponse. We help the business or brand directly to respond to consumers no matter where they might be. With Groupon and LivingSocial, you’re disintermediating the customer/business relationship because the merchant doesn’t get to see who their customer is...Consumers generate content, and we’re just making sense of all that content for marketers to actually respond to. [Other platforms] use this data for analytics, but they don’t have an activation network [to allow] marketers to respond to the data. They may have a dashboard for the data - but not an ad tech platform. We don’t know anybody yet that’s doing what we’re doing.

Who is the target audience for your product? Local businesses or big brands and agencies?

Both. We have about 5,000 local businesses using the platform, like RdV (the nightclub), Butter Lane, and Blue Dog. But we also have around 25 major advertisers, half with the brand, and half with agencies. We can’t publicize who, [but it’s] like some of the top auto manufacturers, top carbonated beverage manufacturers [etc.]

When will LocalResponse move out of beta version? And what is the cost?

We’re still testing the user interface, but [we plan for] a full release at the end of the year. We currently offer it at no cost for 25-50 messages a month. After that there’s a subscription fee, but only after we’ve shown value.

Have you ever considered moving out or expanding to another location? Where would your first choice be?

San Francisco. I used to live in San Francisco. That’s where I started my first company, ipsh!, in 2001, which we sold to Omnicom. [LocalResponse] needs to be in New York to connect with the businesses, but the platform itself is global. [We have customers] as far as Amsterdam.

Since Fueled is a mobile app development agency, what role do mobile apps play at LocalResponse?

We do have a mobile app for buzzd that works on iPhone/Blackberry/Android/MobileWeb, but we’re not building one for LocalResponse anytime soon. We don’t want [the consumer] to have to sign up for anything. [But we have some] nice landing pages for our deals. For example, we can help Coca-Cola send you a Powerade offer after your work-out. You get a bit.ly link on an html5 optimized landing page on your mobile where you can opt in or opt out of the offer. You’d think it was Coca-Cola’s page but it’s actually ours!

Last thoughts?

LocalResponse hasn’t had an amazing exit yet, but we think we’re on to something. To entrepreneurs, just keep on going. It’s all about persistence. You’ll have twists and turns and evolutions along the way. You only fail when you quit, but if you keep on going, you’ll find a way.

Fun Question: If you could pick one bar to go to in NYC, what would it be and why?

My rooftop (pause)...because it’s the only bar in New York City where clothes are optional (laughs).

*LocalResponse grew out of Nihal’s first company, buzzd. He was joined by two other co-founders at the start of LocalResponse.