News: Press Clippings

Forbes: You Knew This Was Coming: Ads Are Headed To Pokemon Go

Reposted from forbes

Publication date 7/13/2016

So there’s this new game you may have heard of that allows you to wander around the neighborhood and view images that seem to be overlaid on real buildings and other landmarks.

If that sounds like Pokemon Go, Nintendo’s mobile game phenomen, you’re right, of course. You’d also be right if that description sounds like a perfect advertising medium.

And so it is, at least as long as Pokemon Go remains a craze, which could be a few weeks or many years. But either way, advertisers are interested, and now the chief executive of the company that helped create the game, Google GOOGL +0.84%-funded Niantic, says it’s interested in helping them.

Niantic CEO John Hanke, who also headed the company that Google bought and turned into Google Earth, told the Financial Times that Niantic intends to allow retailers and other companies to sponsor locations on Pokemon Go’s virtual maps. It’s probably the least surprising thing about the surprise hit game that sent Nintendo’s stock up 50% recently.

 Although Pokemon Go already has a solid business model in the usual in-app purchases of virtual goods and services, Hanke said “sponsored locations” could provide an additional revenue model. Advertisers could pay per visit, like they pay per click on Google’s search ads, he said.

Pokemon Go will hardly be the first augmented reality experience to delve into advertising. Indeed, Niantic’s last game while it was part of Google, Ingress, also had virtual places on maps, and brands from Duane Reade to Jamba Juice have created “sponsored portals” for the game. And the startup Blippar has been selling technology that allows smartphones to recognize branded objects for years now.

But the difference with Pokemon Go, which already has close to 10 million daily players, would be huge scale. That’s what’s needed for a mass of advertisers to get interested, especially big brands with hundreds or thousands of outlets.

Already, there are some signs this could be a bonanza for local businesses. A New York pizzeria reported booming business from players. A survey by the digital ad firm Fluent showed that 57% have visited a new store or restaurant thanks to the game and 81% of those made a purchase.

There’s a risk here. Advertisers aren’t known for their discretion, and if they are allowed to plaster too many ads on the game, that could easily turn people off, and Pokemon Go could become the next Farmville. You can be sure Niantic and Nintendo are aware of this, but that doesn’t mean people won’t get annoyed.

It’s also possible that advertisers won’t get a lasting impact from ads inside the game. “The game drives quick, one-hit traffic fixes, but doesn’t allow brands the opportunity to re-engage after players have left, a real way to understand the effect of quick promotions, or the ability to recognize the long-term commerce of player engagement,” Alan Knitowski, CEO of Phunware, which helps brand build mobile apps and services, said in emailed comments. “Instead of these short-term, one-off boosts, marketers should be focused on an ongoing mobile strategy that allows them to re-engage virtually and physically over time.”

McDonalds partnership (There’s another risk, too. As one person tweeted, “McDonalds partnership would counteract the anti-obesity tendencies of Pokemon go. SAD!”)

Although Google would benefit indirectly from its investment in Niantic, which its parent company Alphabet spun off last October, Alphabet executives might be wondering if they parted company too soon.

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