Niantic to roll out sponsored location advertising on hit game Pokémon Go

Niantic, the maker of hit mobile game Pokémon Go which sent Nintendo shares soaring up over 50% since its release, now says it has plans to allow advertisers to sponsor locations on the game’s virtual map.
Pokémon Go uses virtual reality to allow gamers to capture creatures in real locations around them

The game works through a customised version of Google Maps, which shows the locations of creatures at special Pokestops – a supply station for gamers. Players engage with real-world locations in chasing the cartoon figures.
Initially free to download, the game currently generates revenue from in-app purchases as well as virtual items. The addition of sponsored locations would add a new revenue stream for Niantic.
Atul Goyal, MD, Jefferies, explains:
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“There are several ways that we see the potential for significant monetisation of Pokémon Go by Nintendo, and one of them is certainly the potential for paid advertising or paid deals that encourage players to come to a particular building or store. It is a huge opportunity.”

Niantic isn’t new to the virtual mapping game. It has previously released Ingress which came to the attention of brands such as Duane Reade and Jamba Juice wanting to pay to advertise local stores.
Speaking to the Financial Times, John Hanke, CEO, Niantic, said that the company was thinking about similar ads for Pokémon Go. He adds:
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“There is a second component to our business model at Niantic, which is this concept of sponsored locations, [where companies] pay us to be locations within the virtual game board – the premise being that it is an inducement that drives foot traffic”.

Advertisers are likely to be charged on a “cost per visit” model, comparable to “cost per click”.
Some US retailers have already commented that being featured in the game as a Pokestop or other location has increased their customer flow. A pizza restaurant in New York City saw business increase 75% once users unlock the location buying a $10 in-game power-up.
However, police have urged players to remain aware of their surroundings, whilst a small number of Pokestops have been criticised as inappropriate, e.g. holocaust memorials in Auschwitz and Poland.
Interestingly, advertisers won’t have to necessarily work with Niantic or agencies. Instead, they could collaborate with already established locations to put experiences there. For example, a drink brand could work with a local gym that functions as a Pokestop to advertise there.
Lee Maicon, Chief Strategy Officer, at digital agency 360i, told the Wall Street Journal that Snapchat helped to pave the way for the success of the game.

“Snapchat sort of taught us to look at the world through a particular lens and then add filters on top of it. This app is taking a little from Waze and a little from Snapchat. It broadens the palette for the types of experiences we can create for the brands with whom we work.”

It remains to be seen if Pokémon Go can sustain initial success, but if it does the advertising opportunity could be huge.

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