Facebook plans to unveil a user-tracking app next month.
Bloomberg News reported this week that "two people with knowledge of the matter" confirmed the plans.
The app would enable users to find friends who are nearby—and probably enable advertisers to offer location-specific advertising either immediately or eventually.
According to Bloomberg's report, the app would track location even when the app isn't running. (Facebook's current app can identify location when a user posts or launches the app.)
We can assume, based on Facebook's existing policies, that the app would not convey personally identifiable information to advertisers, and also that it would have a plain-language opt-in dialog so that users would know what they're getting into.
It's reasonable to assume that the new Facebook feature will work much like Foursquare's "Radar," which runs in the background and notifies you when you're near friends or a location where you have to do something (like pick up your dry cleaning).
It's unknown whether location data gathered by the app will be available to Facebook's new Graph Search feature. If so, you might be able to search for "Friends who like beer and are near me."
The benefits of an app that tracks your phone are many. One of them is to bring social networking into the real world. Say you're at a restaurant and someone in what Facebook calls your social graph is in the same restaurant. An app like this can tell you so you can go say hi. You can imagine how great this would be at conferences, when you travel to other cities, or just as you're running around town.
Another benefit is a location-aware to-do list. You can tell such an app to remind you to pick up your dry cleaning, buy a loaf of bread or get your car washed when you're near the places where these things happen.
The benefit to companies and their advertising customers is also clear. They can notify users when they're near something of interest. For example, if Facebook decides through your actions on Facebook that you like organic cigars, it can beep your phone and alert you to the fact that you're just around the corner from a cigar store that sells them.
Another big advertiser benefit is that the real world becomes just like the Web. Just as advertisers profile you based on where you go online, they can also do the same thing based on where you go in the real world. If you're constantly going to stadiums and sports bars, they may like to advertise sports-related stuff to you. If you always pick up your child at school, they can advertise children's products.
But the real marketing magic happens when the user benefits are combined with the advertiser benefits.
For example, if you set up a reminder to get your car washed associated with a specific establishment, an app could take the initiative to offer you a different car wash that you happen to be near and which is a Facebook advertiser.
If the app notifies you that your friend is two blocks away from you, it can mine both social graphs to find a place to meet that both people will like, and which happens to be an advertiser in the system.