Foursquare may be looking to take their promoted ads product to smaller businesses in an attempt to further monetize the 4-year-old company.

AdAge reports that the company is currently testing a promotion program for small businesses in the New York City area. This program allows small businesses to promote their location inside Foursquare’s explore feature – just like the big guys.

Foursquare first launched promoted updates back in July of last year. They amounted to the first-ever ads on the network. But up until now, these promotions were only available for bigger chains – Old Navy, KFC, Radio Shack, etc. Small businesses have been able to offer specials for users when they check-in, but have not been able to promote themselves in this way.

According to the report, the select few small businesses are working with Foursquare to target users based on locations, check-in history, what the have “liked,” on the network, and more. Maybe a fine dining restaurant would only want to target certain users that have checked-in at other fine dining places recently, for instance.

This sort of targeting falls in line with what CEO Dennis Crowley has hinted at before. Last year, he said that Foursquare would be moving in the direction of marketing specific discounts for specific customers.

“You can build a big business making a lot of money off each user, not just amassing more users and showing dumb banner ads,” he said.

Indeed, with Foursquare, it’s all about smart targeting.

Foursquare is in the process of monetizing the platform – and they’re early in the process. According to reports, Foursquare only made about $2 million in revenue last year despite billions upon billions of check-ins and over 25 million registered users. Opening up promotions to all types of businesses is one way to kick up this strategy. Although this initial test is only for a select handful of NYC small businesses, you can imagine it going national quickly if Foursquare sees it as a success.

For users, it would be a big plus too. No offense to KFC, but when I’m in an unfamiliar area, I’m looking for a nice, local restaurant to visit. If a place fitting that bill could promote themselves – maybe with a nice picture of their soup of the day or a mouthwatering review of their pork belly sliders – that would make Foursquare’s explore feature that much more useful.

[Image via Sean Salmon, Flickr]