That didn’t take long. With usage soaring and brands jumping to capitalize on the popularity of Pokémon Go, the CEO of Niantic, the company that developed the game with Nintendo, has revealed that ads are on the way.
According to the Financial Times, ads will come in the form of “sponsored locations” that allow businesses to drive foot traffic on a pay-per-visit basis.
This will allow businesses that aren’t currently on the Pokémon Go map to get in on the action being experienced by businesses that are on the map, like L’inizio Pizza Bar in New York, which says its use of a $10 Lure Module increased business by 75%.
A previous game Niantic built called Ingress featured similar sponsored locations. Brands like Duane Reade and Jamba Juice in the US and Tokyo Mitsubishi Bank in Japan have purchased these.
— Mr. Syndicate (@ProSyndicate) July 10, 2016
Beware the Groupon effect
While there’s the risk that Pokémon Go’s popularity will eventually wane, leaving businesses with a less-than-sustainable opportunity to capitalize on sponsored locations when they roll out, businesses also need to be careful that their efforts to capitalize on Pokémon Go don’t backfire.
In retail in particular, there is such a thing as too much business. A spike in customers can overwhelm a business, leaving it unable to adequately serve customers. In some cases, businesses are simply unable to accommodate a flood of customers and must turn some away. A number of local businesses that used Groupon learned this the hard way.
The worst part of “the Groupon effect” is that when customers have a poor experience, they are often less likely to return to a business, and more likely to voice their dissatisfaction on social media and reviews sites.
So what begins as an effort to acquire new customers can actually cause harm to a business’ online reputation, making it harder to acquire customers over the long-term.
Adding insult to injury, companies that attempt to take advantage of Pokémon Go might be tempted to resort to discounting in an effort to convert foot traffic into sales, erasing margins to the point where customers are unprofitable unless they repeatedly return.
Business owners should keep this in mind if and when sponsored locations become available in Pokémon Go.
Yes, sponsored locations will present an opportunity for businesses to increase foot traffic so long as Pokémon Go remains popular, but businesses that aren’t careful to ensure foot traffic doesn’t degrade customer experience could find that Pokémon Go is not the boon they thought it would be.
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