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Google Subtly Wins the Ad Battle with Pokémon Go

Pokémon GoFinally, there’s a relevant and repeatable use for augmented reality! Pokémon Go is officially everywhere you look. Just walk outside and the chances are that you will see it happening outside your office building or in a park.

The biggest mobile app game in US history has people out and moving around, which is no doubt a contributor to the game’s rapid success. Playing Pokémon Go outside is the equivalent of free advertising. It also has the fortunate and potentially planned benefit of widening the demographics of the Pokémon brand customer set. While many initial downloads were likely those who were drawn to the 20-year-old brand by nostalgia, the nature of its visibility has created awareness across all age groups, young and old.

According to iOS usage data as of July 11, 2016, users averaged 33 minutes per day playing the game. To put that in perspective, the average iOS user spent 22 minutes on Facebook and 18 minutes on Snapchat. While these numbers are not necessarily more than is spent on other games such as Candy Crush, they are right at the top of the charts.

Pokémon Go was created by Niantic, which spun off as an independent company from Alphabet in 2015. That’s right, while Nintendo, The Pokémon brand, and Apple are receiving a lot of the public attention, Alphabet is actually the other major player. Google, Nintendo, and the Pokémon Company all invested in the company.

While I don’t know the exact cost of making Pokémon Go, a source from the game industry and close to the project says anywhere from one to three million is likely. The instant popularity of Pokémon Go is seeing results of $1.6 million a day in in-app purchases from Apple’s App Store alone. Plus, an increase of $7.5 billion to Nintendo’s valuation; a company who was desperately trying to stay relevant as PlayStation and Microsoft have dominated the game console market. Not a bad ROI.

Stock Prices of Pokémon Stakeholders

As we watch in-app purchase revenue and Nintendo’s company value soar, there is an entirely additional revenue source that we as marketers cannot overlook – advertising. Niantic just announced they will have ads within the game, and that shouldn’t be a surprise. If users are sharing their location information with Niantic, and therefore Google due to the required Google profile log-in feature, it is safe to assume that Google is too smart to sit by and not capture that opportunity. Even if you didn’t have to log into the game via a Google login, as an investor, I doubt Google would have sat idly by.

If users are spending more time on Pokémon than Facebook or Snapchat, that suddenly puts Google in a position to own and sell even more of a consumer’s screen time. Google does not plan on serving the expected pop-up or mobile banner ad. Instead, users that are walking by a retailer or movie theater will see a sponsored location. The advertiser is driving foot traffic but not necessarily delivering an offer. This is a clever way to keep the user experience uncompromised while keeping advertisers happy, which of course means that Google is happy.

With a game like Pokémon Go, the incorporation of geo-location presents significant possibilities for Google. In cases where Google did not previously identify a specific consumer’s mobile device, they now can. In cases where they didn’t have access to location specific information, they now do. The newly acquired data inturn makes Google’s other advertising products that much stronger. Advertisers themselves can further capitalize on foot-traffic driven from the app with special offers displayed on in-store signage. When 15 million people are using Pokémon Go and more of them do it on a daily basis than Twitter, Google has once again won the advertising game, with an investment the size of a Pichu.