Here’s a great example of how it works. I went to a Durham Bulls baseball game last night. I checked in on Foursquare and was notified when I did so that there was a special nearby via a yellow callout on the checkin screen. I tapped it and was presented with the following special offer:

There are several upside to this offer. First, it’s very inexpensive (free) for the merchant – in this case Tyler’s Taproom. The only investment required is the time to claim ownership of the venue and set up the offers. Second, it’s non-intrusive for the end-user. To access this offer I wasn’t sent a text message or other form of interruption-style marketing message. I voluntarily retrieved the offer when I was notified that it was available. Because of these two factors, I expect location-based apps will be the “next big thing” much like Twitter a couple of years ago.