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21 . 7 . 16

Is Augmented Reality Gaming Set To Revolutionise Mobile Advertising?


Is your Facebook newsfeed flooded with people talking about Pokémon Go?  The latest viral location based freemium game developed by Niantic launched in the US a few weeks ago. The game gained instant popularity with over 15 million downloads in the first week in the US. The game now has more active daily users than Twitter, eclipsing that achieved by popular game Candy Crush. Demand for the game was so popular that this was quickly rolled out to Europe and Niantic looked to increase server capacity to keep up with demand.

The augmented reality game allows players to capture, battle, and train virtual creatures whilst walking around in the real world. Although the game is free-to-play, it supports in-app purchases which are reportedly netting Nintendo over $1.5 million a day. This led to an increase in gaming giant Nintendo ‘share price by over 50% last week even though they only own a 33% share in the Pokémon franchise. According to the Financial Times Niantic founder John Hanke the company plans to further expand revenue streams by introducing a new feature called “sponsored locations”.  The new feature will allow advertisers to appear on the virtual map paying for engagement with gamers on a cost per visit model.

The new sponsored location feature isn’t available yet although some local businesses have used in-app features called Lure Modules which attract Pokémon to their location to attract gamers to their businesses.  The potential to businesses is huge; a pizza restaurant in the US claims to have seen a 75% increase in revenue last weekend as gamers visit their location in search of the virtual creatures.

It’s too early to say how much longevity the game has, although the technology could be used for other augmented reality games. The explosion of freemium gaming has been significant in recent years and the opportunity to advertisers to use in-app bonuses to drive users to sponsored locations is clear.

Mobile advertising is growing year on year with just under £3.4 billion spent on mobile ads in the UK in 2015. This is expected to grow to £4.5 billion in 2016 and surpass desktop ad spend. (Emarketer) Location data has been used in mobile advertising for some time.  The use of GPS signal data and Bluetooth beacons are already being used by advertisers to target users visiting retail stores. Other major publishers are looking to utilise the opportunity of mobile advertising. Google has been working for some time to represent the value that mobile ads can have on driving offline conversions. Facebook also recently announced new tools available to advertisers to record offline conversions.

For information about mobile advertising opportunities contact twentysix digital.

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