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Table of Contents

Lead Story

Drive retail business with augmented reality - think Pokémon Go

Patti Murphy

News

Industry Update

PayPal, Mastercard expand partnership, payment options

Visa, Uber reward small merchants, riders

Fintech in sync with smartphone OEMs

Security analysts question Dropbox's response to hack

Views

Do you dream in retail?

Dale S. Laszig
DSL Direct LLC

Critical issues in payments today - Part 1

Brandes Elitch
CrossCheck Inc.

Education

Street SmartsSM:
Reap the benefits of shifting MLS roles

John Tucker
1st Capital Loans LLC

Grow your business with financing

Bob Neagle
Ascentium Capital LLC

GDPR: Why it affects businesses even outside of the EU

Lorie Schrameck
CSR Professional Services Inc.

Help merchants avoid subscription legal headaches

Theodore F. Monroe and Bradley O. Cebeci
TFM Law

Company Profile

Womply

Features

Peter Scharnell

New Products

Multichannel wallet for managing, monetizing loyalty

Inspiration

Focus prospecting to stir attention, interest, desire

Departments

Letter from the editors

Readers Speak

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

September 26, 2016  •  Issue 16:09:02

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Drive retail business with augmented reality - think Pokémon Go

By Patti Murphy

Pokémon Go took the world by storm in the summer of 2016, and while the mad rush of players may have begun to subside, that does not suggest this phenomenon was a flash in the pan. Pokémon Go is a mobile exploration game that illustrates the transformative power of digital media. And it presents inexpensive options that can help merchants (especially small to midsize businesses) bring in new customers.

Even if you're not an aficionado, you've no doubt witnessed the Pokémon Go phenomenon. Have you noticed crowds of folks walking around – streets, parks, boardwalks, even shopping malls – staring at their smartphones seemingly oblivious to passersby? Chances are they were playing Pokémon Go. It is a 1990s game (Pokémon) turbo-charged with 21st century tools, like location-based augmented reality, packed into a mobile app that has now been downloaded more than any other social media or gaming app.

Pokémon Go has been generating huge profits for its creators and backers. Co-creator Nintendo saw its stock price more than double following the app's launch in July. Within two weeks of its U.S. launch, Pokémon Go had 45 million daily active users. Players were said to be using the app more frequently than they were checking their Facebook accounts. By late August the number of active players had dropped to 30 million, but that still exceeded daily engagement on Twitter, experts noted.

Analysts at the brokerage Needham & Company LLC calculated in August that the ratio of paid Pokémon Go users to its total users was 10 times that of Candy Crush, the hit digital game that generated $1 billion in yearly revenues for its creator, King Digital Entertainment Plc, in 2013 and 2014, Needham noted.

Pokémon Go is the first augmented reality game to go mainstream – a rare viral phenomenon driving people from their electronic gaming coves and into the real world. It won't be the last. Nintendo rolled out the game's first spinoff – a wearable device dubbed Pokémon Go Plus – in early September. And published interviews with the developers reveal that at least 10 new iterations of the augmented reality game are on the drawing board.

Businesses are beginning already to seize on marketing opportunities presented by the trend. "It's driving more real-world activities; getting people to go places where they wouldn't normally go," said Alex Panagiotopoulos, co-founder of Kingston Creative in Kingston, NY. With a population just under 24,000, Kingston is a small city by New York standards. But it has been a hotbed of Pokémon Go activity. Kingston Creative developed an online infographic (http://kingstoncreative.net/infographic-kingston-ny-pokemon-go-map/) detailing over 100 Pokémon landmarks and gathering places throughout the city. The infographic had over 800 hits in July. "That's pretty phenomenal for a city this size," Panagiotopoulos said.

It isn't just players who benefit. Some local merchants close to Pokémon stops have been joining in on the action. As players, they can purchase lures (for 99-cents each) to entice other players to their locations. Merchants lucky enough to be at or near designated "PokeStops" simply put out signage and draw players in.

Slant, a Chicago-based marketing firm, reported in August that a survey of 500 Pokémon Go players revealed 68 percent had visited businesses in response to "lures" had been lured to a business while playing the game. When players were asked how frequently they had been lured to a business as a result of the game, one third said a couple of times a week; nearly a fifth (18 percent) reported being lured to businesses daily during Pokémon Go play. Forty-eight percent of those lured to businesses reported staying on average 30 minutes or more while there.

In all, 82 percent of the Pokémon Go players Slant surveyed reported visiting a business while playing the game; 51 percent said they had visited a business for the first time because of the game. "Capturing the hearts of people everywhere and getting them to go places they otherwise wouldn't visit is the secret sauce in Pokémon Go," Slant wrote in a blog post detailing the study results.

"This could be the next thing in loyalty programs," said David Leppek, President of Omaha-based ISO Transaction Services LLC. Dee Karawadra, President and Chief Executive Officer of Impact PaySystem LLC, a Memphis-based ISO, suggested merchants could offer reward points or special deals for players who achieve certain goals. Clearly, Pokémon Go takes mobile marketing to a new level of sophistication with the potential for in-the-moment deals for players in search of Pokémon monsters and gathering places. It's an especially good way to reach millennials, marketing experts noted – a demographic that shuns traditional marketing ploys, yet is flush with cash. The average age of a Pokémon Go player is 29, based on Slant's research. That's not surprising given the original Pokémon games were widely popular when millennials were youngsters in the 1980s and 1990s.

The big lesson from the hoopla over Pokémon Go is the need to be on top of trends in social media and geolocation gaming platforms. "You need to be paying attention to how consumers spend their time," Panagiotopoulos said, adding that you also need to be open to embracing new things and quick to take action. "A lot of small businesses were too slow to take advantage of [Pokémon Go]," he noted.

Harbortouch President Jared Isaacman concurred. "The writing is certainly on the wall," he said. "We've all got to watch this."

How it works, how to work it

Pokémon Go is a free downloadable app that runs on any iOS or Android smartphone; it also requires a Google Mail account to log in. Players create individual avatars and go out in search of animated monsters (Pokémon) that pop up on a Google Maps grid that displays the players' paths and surroundings. The app uses the player's smartphone camera to capture images of the street and overlay those with Pokémon the player seeks to capture. The maps also display floating blocks, or "PokeStops," typically local landmarks such as statues, buildings and parks. Tagging PokeStops with their phones earns players "Pokeballs," which they then use to capture Pokémon. The game includes other features, too, such as "Gyms," where players can train and collaborate on doing battle with Pokémon monsters.

PokeStops and Gyms are established by the game's developers and cannot be influenced by players or other outsiders. Knowing where those spots are, however, gives businesses a leg up on luring customers. Publicly targeted lures and privately targeted Incense are in-app purchases, which at 99 cents a pop can be used by players to entice Pokémon to their locales, as well as other players on the prowl for Pokémon.

One pizza parlor owner told the New York Post that it was able to drive a 75 percent increase in foot traffic one weekend this summer by releasing just $10 worth of lures. Bar crawls that encourage participants to hunt Pokémon in participating establishments have also been reported by media outlets in several cities. And Yelp has even added a feature that helps consumers find restaurants and stores that have nearby PokeStops.

Niantic Labs, the Google spinoff that developed the underlying technology for Pokémon Go, made no secret of its desire to sell sponsored PokeStops. And according to published reports in August, McDonalds' 3,000 locations in Japan became the first sponsored PokeStops.

Taking it to the streets

Several ISOs contacted for this report said they were familiar with the Pokémon Go phenomenon, and how it might drive store traffic. The big question, Karawadra pointed out is, "How do we monetize it?"

Other than "driving consumers to specific locations where they probably will spend money," which hopefully generates card fees, there may be no direct revenue opportunities for ISOs and merchant level salespeople (MLSs) today, Isaacman said. But over time, the proliferation of augmented reality games like Pokémon Go could cause a sea change in retailing. "This is going to influence commerce for some time to come," he said. "I see it being like Google Ad words." Isaacman predicted a Star Wars-themed augmented reality game is likely in the offing.

There are no definitive maps of PokeStops and related locations. But maps can be made, as Kingston Creative demonstrated. It took time ‒ about 10 days, Panagiotopoulos said. The project leveraged maps of portals created in the past for an augmented reality game called Ingress that was also developed by Niantic, he said.

Several marketing outlets published tips for businesses that want to tap into social gamification and augmented reality trends with more people-centric marketing techniques. ISOs and MLSs should consider passing these on to clients, when appropriate. This list has been culled from published lists and interviews:

Not all businesses are a good fit for Pokémon Go, of course. High-end jewelry shops, for example, may not want a rush of visitors more interested in looking at their phones than at cases of jewels. Slant's research suggests businesses faring well in attracting Pokémon Go players include restaurants (86 percent of those surveyed by Slant said they had visited restaurants while out looking for Pokémon); coffee shops/cafes (47 percent); grocery/convenience stores (38 percent); bars/pubs (26 percent); and clothing/accessory stores (23 percent).

Copycats appear

Several large businesses are testing similar customer engagement techniques, trying to cash in on this new way of engaging customers and prospects. The department store Bloomingdale's, the Baltimore Ravens football team and Delta Airlines all have launched scavenger hunts via Snapchat, a mobile app that allows users to capture videos and pictures.

Delta has been running a hunt throughout the city of Los Angeles, placing geofilters (digital landmarks) around the city for players to find. Once players discover a geofilter they snap photos with their phones and send them to Delta for a chance to win prizes, such as meeting with influential locals, Sky Club memberships and even airline tickets.

The Ravens partnered with the brewing company Miller Lite in setting up a scavenger hunt around the team's home city just before the 2016 playing season began. In a competition for game tickets, participants hunted for large LED letters that spelled out the team's name. And Bloomingdale's ran a nationwide in-store scavenger hunt in early September that had customers snapping in-store selfies and submitting them for chances to win gift cards and other prizes.

Will other businesses follow with similar gamification marketing endeavors? Experts agree chances are good, given the early success of Pokémon Go. "There are a lot of opportunities out there if you just pay attention to what people are doing," Panagiotopoulos said.

Isaacman noted that augmented reality games could have a direct impact on card spending. "This is really powerful," he said. "We need to make merchants aware."

SIDE NOTE: The more you know

Pokémon Go is just the first step in what many expect to be a trend toward augmented reality games. The marketing firm Slant recently surveyed Pokémon Go players. These are some findings:

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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