3 Lessons Pokemon Go Can Teach Us About Location-Based App Monetization Success

Pokemon Go is bringing people from around the world together in a completely unprecedented way – they’re hitting the streets. This location-based app is literally funneling foot traffic straight into the arms of local businesses and companies are scrambling to find a way to get in on the action.  

For much of the past decade, app developers, major brands and digital marketers have been struggling with the challenge of closing the real-world to digital-world gap. Engaging users with physical products in a digital way has been nearly impossible – until now.  Given the incredibly fast success of Pokémon Go (we’re talking a global span and more daily users than Twitter in just a matter of days), we can see that the world is ready for this kind of experience.  

So what does Pokémon GO get right when it comes to a location-based app that people are interested in, when every other app before them has fallen short?

Eitan Yehuda

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Eitan YehudaCTO & Head of infrastructure Department

So What’s Pokemon Go Doing Right?

The short answer is that it’s fun, it appeals to a wide range of people, and its adoption is driven by an organic community of users instead of businesses and marketers.  Let’s break it down.  First, let’s look at the gamification aspect of the user journey.  Session-times are short and can easily be extended depending on the user’s preference (e.g., a morning walk with your dog or a weekend-long marathon around the city with friends). The built-in reward mechanism of catching Pokémon appeals to the neurological pleasure-seeking reward systems in our brain as the little spikes of dopamine keep us happy in a way that getting a geo-specific coupon just doesn’t.  

Second is the widespread appeal.  How do they do that exactly?  It’s a game whose appeal crosses age, socioeconomic and cultural gaps.  Anyone with a smartphone can play and the already established global Pokémon brand is playful, safe and nostalgic.  It’s entertaining and transforms our everyday world into a virtual playground.  Lastly, it’s a marketer-free zone  (now, anyway), which means that real users actually interested in the game are the driving force behind the app’s insane adoption rates.  The focus is on the customer experience and not on the business objective.  This is an important distinction to keep in mind and could very well be the reason that Pokémon Go may be the location-based app industry’s first real success.

Lesson 1: Gamify The Customer Journey With a Customer-Centric Approach

One thing Pokémon Go does incredibly well is that it gamifies the user’s everyday life experience.  It takes that world that we live in and turns it into an entertaining and rewarding space. Suddenly the user’s physical journey from point A to point B now offers a new range of opportunities that didn’t exist before.  Plus, the more you play, the more opportunities the game unlocks for you.  

Pokémon Go developers focus on the user experience first and created this app ripe for fostering organic communities through built-in social mechanisms (e.g., photo sharing). Instead of creating the customer journey around advertiser demands, Pokémon Go takes its design inspiration for the user experience from real human gaming behavior.  

It seems that the secret to a more successful product is to really examine how your target audience interacts with the world around and offer an added-value experience on top of that.  Capitalizing on existing behaviors will get them to go the extra mile (literally) as opposed to asking them to change their routine.

Lesson 2: Integrate Paid Advertising Channels Through Sponsored Locations

Location-based apps are not easy to monetize because they require more of an active investment in terms of time and engagement from the user.  In-app purchases are an integral part of any app monetization strategy but sponsored locations allows advertisers to capitalize on the user’s physical journey and literally lasso groups of virtual players into physical retail spaces.  

Advances in geo-targeting and associated technologies enable advertisers to pinpoint a consumer to the level of the building they are in and serve them highly-relevant mobile ads in real time.

Pokémon Go parent company Ninantic’s CEO John Hanke recently disclosed that the company would be introducing “sponsored locations” which would provide users with another revenue stream in addition to in-app purchases of power-ups and virtual items. Advertisers will be charged on a “cost per visit” basis.

This type of paid advertising literally draws users into local businesses and offers a win-win for both the developer and the advertiser. The idea of sponsored locations isn’t new but it’s an important one for location-based apps.

Lesson 3: Blend Into the Customer Experience – Don’t Disrupt It  

Augmented reality offers a world of possibilities for location-based mobile advertising.  By turning the world around us into an enhanced space, any location can now serve as an opportunity for brands to serve augmented content and creative ad-based experiences. This opens a completely new avenue for this type of unique content-based advertising that’s highly relevant and targeted. However, the key here is to blend into the existing enhanced world that the app provides without disrupting it.  

Learning to become part of the augmented world that the game itself provides is critical to understanding how to offer added-value content that increases brand awareness and value as opposed to detracting from it. (Simply put, don’t annoy the user – engage with them and provide tools to enhance the already entertaining experience the app provides.)  
To do this well, you need to become incredibly familiar with the user’s mindset and behavior and ensure that your development teams are on top of the latest trends in programmatic technology so when opportunity strikes, you’re ready to roll.  By learning to adapt to the changing landscape that augmented reality apps provide, advertisers can seriously leverage location-based advertising on a scale the world has never seen before.