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LocalResponse Raises $5 Million For ‘Check-In’ Ads

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LocalResponse, the “check-in” ad network formerly known as Buzzd, has raised $5 million to build up its sales team as it tries to attract agencies and marketers to its offerings.

The New York-based company changed gears around April, when CEO Nihal Mehta sensed that Buzzd’s profile as an aggregator of Facebook, Foursquare, Gowalla check-ins as a city guide wasn’t going to cut it. By morphing into LocalResponse, Mehta felt he could take those same check-ins and instead of guiding consumers to restaurants or events, it could be used to help guide advertising.

LocalResponse collects “explicit check-ins” and creates what it calls “implicit check-ins” based on what users are saying about their activities and the geo-tags used in updates and photos on social networks like Twitter and Facebook. The idea is for marketers to respond to those “implied check-ins” with relevant ad or an offer. Secondly, LocalResponse also derives analytics based on users check-ins and that can also give marketers a clearer picture about the customers they want to reach.

Of course, this approach is not without challenges. While users certainly don’t mind relevant ads, individuals still have qualms about location-based ads or marketing that mines their social media conversations. For one thing, users who do check-in to restaurants or shops do appreciate deals and discounts, so that’s one way to warm them up. That’s essentially the message LocalResponse is bringing to the 40 marketers it has signed up so far.

“Tweet that you’re excited to watch X-Factor, and don’t be surprised to see an X-Factor ad on a digital billboard near you,” Mehta said in a statement. “Take a picture at a Yankees game and get an offer for a free beer from a nearby vendor. Check-in to a local retailer, and get an offer from them unlocking their latest promotion. It’s all on the table now.”

The company has previously raised $3.5 million, giving it $8.5 million in total funding to date. New investors Cava Capital, Vodafone (NYSE: VOD) Ventures, Advancit Capital, and Progress Ventures joined existing backers Metamorphic Ventures, Extreme Venture Partners, FF Ventures, Acadia Woods Partners and Jim Pallotta, among others, for the latest round.