Gotta Catch ’Em All: Big Brands Missing The Pokémon GO Craze

The location-based mobile game is generating plenty of retail foot traffic, but so far only savvy small-time retailers have learned how to take advantage of the latest fad.

Pokémon Go has been a runaway hit but also a huge missed opportunity for marketers. While local mom-and-pops have benefited from foot traffic generated from the game, it took a week or so for its publisher, Niantic, to consider adding “sponsored locations” for larger advertisers.

John Hanke, CEO of Niantic, told the Financial Times this week that under such a system, advertisers would “pay us to be locations within the virtual game board–the premise being that it is an inducement that drives foot traffic.” Such advertisers are charged on a “cost per visit” basis, similar to “cost per click” on the web, he added. At this writing, no brands had been named as partners.

Bridging the gap between mobile games and store visits is a potentially lucrative new line of business for publishers, such as Niantic, and a vehicle for brands looking for new ways to drive foot traffic. However, location-based games have been hyped for at least six years and haven’t fulfilled their promise. It’s also unclear whether adding brand integration might be perceived as too heavy-handed and would hurt the spirit of the game.

Nevertheless, location-based games enhanced by augmented reality (AR) seem poised to grow, which makes them an object of interest for marketers–especially those trying to woo younger consumers.

Location-Based Marketing Takes Off

Well before Pokémon Go, location-based marketing was growing rapidly. A recent report from BIA/Kelsey predicted that U.S. revenues from location-targeted mobile ads would grow from $6.8 billion in 2015 to $18.2 billion in 2019.

Growth has been fueled by four categories–search, display, messaging, and native social. Michael Boland, chief analyst and VP of content at BIA/Kelsey, said that he considers the upcoming sponsored locations within Pokémon Go to be a native social ad. “We baked into our estimates the fact that we expect this type of thing to grow,” he said. “What’s happening with Pokémon Go is very much aligned with numbers I projected.”

That said, gaming–or gamification of the retail experience–hasn’t been a big factor in location-based mobile advertising. Experiments have been sporadic. In 2011, for instance, Buffalo Wild Wings held a March Madness contest in which customers could undertake challenges, such as take a photo or eat a certain dish to earn points in the game. Over a 12-week period, the game garnered 184,000 players. Foursquare also tried various marketing tie-ins, including a 2010 program that offered 25% discounts at Gap stores for check ins.

In perhaps the highest-profile such effort, Niantic, which was spun off from Google in 2015, used sponsored locations for its augmented reality game Ingress in 2014. That game featured integration with New York drugstore chain Duane Reade (a unit of Walgreens). Each store had a game asset. Players could scan codes on the items to unlock one of the game’s tools or weapons. “We saw positive returns related to store visits on the small-scale tests that were executed,” a rep told CMO.com.

The game also had integrations with Jamba Juice and Zipcar. “Zipcar’s integration into Ingress generated a significant amount of foot traffic to Zipcar ‘pods’ [areas where Zipcars are parked], which appeared as portals in the Ingress game in a number of North American cities and in Europe,” said Andrew Daley, Zipcar’s VP of marketing. “We’re excited to apply those early learnings into more virtual reality programs moving forward.”

While neither Zipcar nor Duane Reade provided metrics on the integration, Boland said his sense is that none of those deals brought in huge amounts of traffic. “My guess is that they probably didn’t fail, but they really weren’t really successful because the scale and usage of the game never reached critical mass,” he told CMO.com.

In contrast, Pokémon Go hit critical mass very quickly. On July 14, eight days after it launched, the game had been downloaded 15 million times and had more daily active users than Twitter. Savvy small-time retailers quickly learned how to take advantage of the trend. Tom Lattanzio, owner of a Queens pizzeria, told The New York Post that he paid $10 to have a dozen of the game’s characters housed at his restaurant. In return, he said the shop’s business rose 75%.

In the future, Boland said, a national chain such as Taco Bell might benefit from such an arrangement. “That’s where the opportunity will be,” he said. “Those multilocation businesses have an opportunity to roll out a national campaign through the system where all of their locations will light up. That’s easier for Niantic, Nintendo, and all of the entities involved here to do the management with one entity that has many locations instead of doing thousands of deals with mom and pops, which would just get unwieldy.”

That said, it’s unclear whether fans would put up with such placement. “It’s a little disappointing in the sense that it’s giving marketers exactly what they want,” said David Berkowitz, principal of the Serial Marketer consultancy, referring to the idea of sponsored locations. “That often winds up disappointing people in the community. It’s going to be really tough to do this in a way that keeps the communal spirit alive in the game.”