What A Pokémon Go Experiment Taught Us About AR Marketing.

Mass adoption of augmented reality is here—and it’s a breakthrough for consumers, and brands, on par with the launch of the iPhone.

Michael Koziol
July 20, 2016

Huge is known as a digital agency, but since last year, we’ve operated a café in Midtown Atlanta. Huge Café is our real-time, real-life test lab where we can connect innovation and customers quickly. It helps us understand the challenges, considerations, and implications our retail clients face when they contemplate making changes to their business. We put our theories into practice at the café first, at our own expense, so we can say with conviction that they work.

Leveraging the popularity of Pokémon Go—the mobile augmented reality game where players try to capture Pokémon creatures in the wild—was the café’s most recent proof of concept. We made a limited investment in the form of in-game currency in the first days of the craze to make the Huge Café a part of the overall Pokémon Go game play—and yielded an astonishingly high return on investment.

Activating Pokémon Go at the café just as the phenomenon took off helped us glean early insights about augmented reality’s potential implications for businesses and marketers. Studying user behavior and analyzing sales trends during the week we paid for active “Lures,” which attract Pokémon creatures to a specific location, yielded tangible data about how AR can impact retail businesses.

A 400% ROI.

Pokémon Go launched in the U.S. on July 6 with a slow build through the weekend, when usage of the app exploded. Within days of launch, Pokémon Go had more daily active users than Twitter, and players were spending more time in the app than on Facebook. Players walked (and walked, and walked) in search of more Pokémon to catch, to bars and restaurants and, yes, coffee shops. Hordes of people hit the streets to try out the game; strangers were talking to one another, bonding over Pokémon Go. Cars were rolling by the café with drivers yelling "Did you catch the___?” The energy and excitement was palpable.

A few establishments (some justifiably) found Poké hunters to be a nuisance, but we wanted to invite in as many as possible. Since we were located between two Pokéstops (virtual depots for picking up free game-related loot), we also had a geographic advantage.

On Monday, the first day we used the Pokéstop lures, most of the activity remained on the street, with a few new customers showing up inside the café for a drink. Activity spiked on Tuesday as Pokémon Go achieved scale and players experienced one of the game’s unfortunate side effects: battery drain. As a courtesy, we offered free device chargers in the café. This service brought players in and gave them the chance to cool off, rest up, and recharge. Many also placed an order. Sales were 27.4% higher than an average Tuesday.

On Wednesday, exhaustion started to set in. Active players had been walking in the Atlanta heat for days on end, as hatching some of the eggs meant walking up to five miles. Visitors to the café held down tables for hours at a time thanks to the proximity of our two lured Pokéstops and the convenience of charging, WiFi, and air conditioning (the high temperature on Wednesday was 93 degrees). Sales were 28.4% higher than average that day, and the upward trend continued for the rest of the week.

Across the week, we saw an ROI of 400% on activating Lures. More important than the payout, however, was what we learned about leveraging the transformative power of AR in retail spaces, and the potential impact of mixed-reality game play.

The Future of Mixed Reality.

This was not a one-time thing or a gimmick. It is the start of what we believe is one of the most significant and potentially disruptive trends and dynamics in digital and retail; investors have directed more than $1 billion into AR/VR technology in 2016 already. Pokémon Go is the current craze, but the larger phenomenon is about the convergence and rapid adoption of pervasive gaming, location-based activity, and mixed reality. This represents a new dynamic that brands, marketers, and especially physical retailers need to acknowledge and understand. There is a lot to consider and learn about AR, what it means for users, and what it means for businesses. A few initial thoughts based on our experience with Pokémon Go:

  1. Pokémon is just the beginning.

  2. Pokémon is the standard-bearer for AR gaming now—but it’s obviously not the singular future of this type of experience. While you need to understand the nature of Pokémon to successfully play the game, it is more important to have a handle on the model and mechanics of these types of games, as well as the role and power of the game maker.

    Beyond the in-game micro-transactions, the game has not yet been commercialized. There is no way yet to buy or sponsor a Pokéstop, build your own Gym, or introduce your own character. There is also no way to bait Lures from a distance to scale this beyond an immediate location. This will likely change as Pokémon matures, offering a greater variety of options for activating the game as a media property or event. It’s a useful exercise to imagine and plan out how you’d activate this game, or this type of game, across your footprint and within your locations. Also, consider the power making a game people fall in love with. In our small-scale and highly localized test, we saw how the game itself could dramatically affect foot traffic and migration patterns of individuals and groups on the street.

  3. Games can stress the service model.

  4. What do you do, and how do you react, when the primary reason certain people visit your business is not the primary reason you are in business? Games like Pokémon Go have the potential to turn any physical location into an attraction. Any corner or block could attract a Times Square—sized crowd if the mixed-reality game creates enough excitement and payoff for people to visit or converge. Retailers should consider how to do business with incidental visitors, asking themselves questions like: How do we accommodate customers who aren’t there for the direct service we provide? Do we merely tolerate them, or do we support—and even court—them? For example, we offered cards for free steamed buns at lunchtime to players who showed us their captured Pokémon, giving them an excuse to stick around or come back later. Exclusion is an option—but not a good one. It’s a potential loss of opportunity, as we saw with frustrated businesses putting up signs warding off players.

    We advocate the opposite approach: Borrow inspiration from Starbucks’ policy of opening up bathrooms and WiFi to everyone, building up some goodwill, and then converting strays into paying customers.

  5. Location, location, location means what?

  6. The Huge Café is on a nice corner in Atlanta’s Midtown district. There is good Monday—Friday foot traffic from offices and neighborhoods during business hours, but it’s quiet in the evenings and dead on the weekends. Last week, however, we enjoyed a spike in traffic and activity as a result of our proximity to two Pokéstops. Our rent does not today take into account the virtual attraction created by the game and our lease rate is based on the known population and traffic counts. What will happen when there’s a virtual overlay on the physical world that creates new traffic patterns that defy the conventional real estate models upon which rental rates have been established? Will we see the equivalent of Pokémon premiums for real estate? Again, this change isn’t coming tomorrow or necessarily in the next couple of years, but you can expect this will be a conversation in lease negotiations and renewals five years from now.

  7. You’ve got to play it to get it.

  8. You can’t figure this out just by reading about it. You have to get the app, play the game, and cast yourself in the role of the user to truly understand what it really means.

  9. Virtual experiences create real connections.

  10. Gamers are after virtual rewards, but they pick up Pokémon in real locations, which form a part of the entire memory. In other words, players don’t just remember catching a monster, they recall where it happened in the real world. Case in point: Last week, a customer tweeted his thanks for both a free steamed bun and a fairly scarce Pokémon called Starmie.

    Have we earned a repeat customer? We think so, and we’re counting our lucky Starmie.

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