If you’ve had doubts location-based social networking services were going to really catch on, you should know that Foursquare whizzed past the one-million member mark back in April and just passed 1.8 million; and raked in $20 million in venture funding just a couple of weeks ago.  That buzzing sound you hear is the Power of Place, about to go mainstream.

Other location-based services, including Gowalla, Loopt and Where, are also being actively embraced by mobile-device owners to shop, communicate, socialize and play games. Their total number of members runs in the millions.  “None of us have 30 million users, but we’re just at the beginning of breaking into the mainstream,” says Sam Altman, CEO of Loopt, which has 3 million users.  Meantime, Google is—of course—ramping up an aggressive push for it’s own mobile social network, Latitude; and Facebook is expected to announce new location-based features later this year.  Foursquare, however, is the brand leader in this fledgling arena. Earlier this year, there were rumors of an acquisition brewing with the likes of Facebook and Yahoo, with Foursquare leaders deciding that it was just too soon to sell.

Expect location-based services to play a starring role in the rising wave in mobile advertising, poised to rocket to $3.1 billion in the U.S. in 2013 from $320 million in 2009, according to market researcher BIA/Kelsey.  Driving that growth is the rise in smartphone sales, expected to account for the majority of U.S. phones by the end of 2011, according to Nielsen.  About 5% of the more than 225,000 iPhone apps out there are location-sensitive.

Analysts say the appeal of location sharing goes far beyond game-playing and seeing where your friends are. “Location is such an important tool for local merchants and marketers to more deeply connect with customers,” says Michael Boland, an analyst at BIA/Kelsey.  Expect an increasing number of merchants to capitalize on this loyal customer base as they become more familiar with the apps and discover new ways to use them to interact and more profitably engage with customers.

Since it began last year, Foursquare has established partnerships with more than 15,000 businesses, including Starbucks and CNN; and is adding up to 15,000 users a day. Loopt has signed advertisers such as Burger King and Gap. Where has deals with 20,000 small businesses in North America.  “It’s not that these folks haven’t advertised before,” Where CEO Walt Doyle says. “They’re just changing who they advertise with—in this case, digital, instead of print.”

The services will only become more popular as consumers also share photos and content, says Josh Williams, CEO of Gowalla, which is up to 350,000 users.  These consumers are also going to share their experiences, making location-based services an invaluable opportunity for merchants to both get to know their customers better and to encourage them through incentives, contests, and other engagement programs, to act as brand ambassadors.

To find out more about location-based social networking and how to put it to work for your company, check in to The Power of Place, led by Jodi Gersh of the Gannett Company (whose networks include CareerBuilder.com, USA Today, Metromix.com, and more) part of your Social Media Optimization Summits agenda!  We’ll see you there!