What Interpublic’s investment in Kiip means

The news earlier this week that Interpublic and other investors put $11 million into Kiip focuses attention on another promising revenue stream for mobile games. I first wrote about Kiip when I saw its founder speak at the Social Gaming Summit in 2011 and am excited that this investment validates that there are monetization opportunities outside of in-app purchases.

Kiip provides a service that allows advertisers to serve rewards to game players after accomplishing something in a game. For example, they may get a coupon for a free T-shirt from Abercombie & Fitch after reaching level 10. The advertiser pays Kiip to serve this offer and Kiip then gives the game publisher a share of the revenue. On a high level, it seems like a win for all three parties: the player gets something for free, the advertiser can interact with potential consumers at the height of their pleasure in a game and the game publisher receives additional revenue. The rewards should also benefit game companies by encouraging both retention and engagement in players, as they are more likely to come back and earn more rewards.

Although Kiip is a promising option for social game companies, there are other services that provide similar or related monetization opportunities. Some that I find exciting include

• SessionM is also an investor darling with a very strong pedigree. One of its founders, Lars Albright, was a co-founder of Quattro Wireless, a mobile advertising platform that was acquired by Apple and evolved into iAds. SessionM is touted for its fantastic advertiser relationships. Unlike Kiip, rather than giving a specific reward for an achievement, players earn points that can then be redeemed for rewards. This mechanic gives the player more options and could generate better retention as the player will want to continue building their points. On the other side, it provides a development challenge as the reward points almost serve as an additional currency, so in a typical social game with a dual currency system, you now need to design and balance to optimize for three currencies.
• Playhaven supports in-game promotions where players earn a reward (normally in-game, such as premium currency or a limited edition item) by watching an ad.
• MediaBrix offers a suite of reward products that are built to encourage social sharing.
• P4RC is a social rewards network for mobile games that allows players to compete with their friends and win real prizes from sponsoring brands. In effect, players play against their friends and the winner would receive the Abercombie coupon.
• Beintoo is an Italian rewards platform with a similar model as SessionM, where players earn Bedollars that they then redeem for rewards from advertisers.

I can’t recommend one solution over the other as different companies and games have different needs. You should access all the providers and see which one (or what combination) has the greatest impact on your lifetime value (I had to mention lifetime value), since it is not just about monetization but also its effect on retention and virality.

The most important point is that monetization does not stop at in-app purchases (which only touches 2-5 percent of your players). When you look at monetization, you should look holistically and create a monetization strategy that both serves your customers and optimizes total revenue. It is not simply tweaks that enhance ARPDAU but using monetization to create a relationship with all your players and long-term profitability for your company.

Author: Lloyd Melnick

I am GM of Chumba at VGW, where I lead the Chumba Casino team. Previously, I was Director of StarsPlay, the social gaming vertical for the Stars Group. I was also Sr Dir at Zynga's social casino (including Hit It Rich! slots, Zynga Poker and our mobile games), where I led VIP CRM efforts and arranged licensing deals. I have been a central part of the senior management team (CCO, GM and CGO) at three exits (Merscom/Playdom, Playdom/Disney and Spooky Cool/Zynga) worth over $700 million. View all posts by Lloyd Melnick