This is the year when location-based services are going to take off. If that sentence seems a bit familiar, it's probably because pundits have been banging on about all things location-based for years. So why believe it now? It's down to the numbers. In the final quarter of 2010, more smartphones were shipped around the world by manufacturers than PCs.

Lots of people have traded in their plain old mobile telephones for smartphones, which are highly personal devices. Unlike PCs, they typically have a single user who keeps the device with them most of the time. They become an extension of that person. When you add in 3G, WiFi, GPS and a compass, you've got the internet in your pocket and it knows exactly who you are and where you are.

The opportunity for services that give you what you want, when and where you want it, is an exciting one. But the challenge is to build creative engagement on top of what can appear to be rather uninspiring interactions. Like ‘checking-in' on Foursquare. Checking-in is what you do at airports and it's rarely pleasant. It feels a bit like clocking in, having your timesheet marked and your movements monitored. The reward for checking-in to a place over and over again on Four­square is you get a ‘badge'. If you check-in a lot, you might become ‘mayor'. But that's not enough. "What's the point of being mayor if there's nothing in it for me or my friends?" asked blogger Karen Costa recently. "Why do people need to know that I'm shopping at the mall?"

Foursquare's response has been to ramp up the special deal features and push Foursquare as a platform which lets retailers and vendors give away freebies for checking-in. Version 3.0, trialled at SXSW in Austin this year adds a number of options. These include the Swarm Special, where a group of people are rewarded for checking-in together and the Newbie Special, which rewards people who check-in to a place for the first time. These new features are probably best understood as a form of commercial ‘gameification' - where the shopping mall or high street is transformed into a landscape you can explore in search of points and prizes. And going beyond the app, Fourtap is a service built on top of Foursquare which lets you check-in via Oyster card, hinting at a future when Near Field Communi­cation technology built into smartphones can automate the process via a tap or swipe over an NFC antenna.

But location-based experiences haven't always been so utilitarian. Back at the dawn of time - 2001 - Blast Theory and the Mixed Reality Lab were experimenting with the creative possibilities of a satellite and internet system that let people play a game connecting the real streets of Sheffield with a virtual online space.

In 2006, Area/Code's Crossroads turned Manhattan into a GPS playground where the objective was to avoid capture by an invisible Baron Samedi by using your mobile handset.

And last year we had the Museum of London's StreetMuseum app from Brothers and Sisters, which made Best in Book in this year's CR Annual. The premise is simple: what if we take an archive and put it back where it belongs, in the real world? It turns out that archive content in its natural habitat is a powerful combination and that viewing, say, an old photograph of Carnaby Street while you're in Carnaby Street today, can be a surprisingly moving experience. For the team who made Street Museum, Lisa Jelliffe and Kirsten Rutherford, it's all about finding the story in the archive and giving it new relevance. The archive is set free in the world.

There's a lot of content out there and much of it is trapped in dusty archives. I'd love an app which lets me experience the musical London of the 1960s and 70s in the right locations. Hendrix at the Marquee on Wardour Street, or the Clash at the Music Machine in Camden, for example. But most location-based services are, for the time being, going to be about checking-in for deals on Foursquare, Gowalla, Scvngr or Loopt - all of which do variations on the theme of gameifying space and offering branded rewards.

The 800lb gorilla in the room, however, is Facebook which recently introduced Facebook Deals. It's got the reach to snuff out the competition, too. Whereas Foursquare is growing at the rate of 20,000 new users a day and currently has a total of 6 million people signed up, Facebook has 600 million active users. And the fact that Facebook is a social network with a location service added on to it, rather than a location service trying to become a social network, means there are creative opportunities to overlay location onto everything Facebook does. Opportunities that simply aren't there for the competition. Benetton, for example, recently did a promotion with Facebook Deals whereby for every check-in at Benetton megastores across Europe, the company donated €2 to Architecture for Humanity to help build a media and technology centre for young people in Nairobi - a check-in deal which doesn't involve blatant self-interest.

But the single most successful creative execution of a location-based service to date is based not on greed or altruism. Grindr is a free app which helps you find "gay, bi or just curious men" who are close by and in the mood for love. It's been a massive hit. Once again, gay culture shows the way forward in the creative use of new technology. A straight version of Grindr is in development.

Andy Cameron is interactive creative director at Wieden + Kennedy London