AR is one of those technologies and media formats that require native thinking. Unlike various video channels (mobile, desktop, etc.), you can’t port media from one to the other. It’s a specific format that involves a deliberate – and still developing – development playbook.

This concept carries over to monetization, including ad support. One looming question is how to integrate ads in AR. Given the native angle, it’s ineffective to simply slap display ads or pre-roll videos on AR experiences. Snap’s sponsored lenses have cracked this code.

Now, another major AR player has developed a native ad formula: Niantic. At the recent Cannes Lions festival, it unveiled Rewarded AR ads. These integrate with gameplay through immersive branded content that’s anchored to physical places – congruent with Niantic’s game mechanics.

For example, players engaged in location-based gameplay (think: Pokémon Go), can discover treasure boxes containing rewards for nearby businesses. Other formats include floating balloons that are anchored to deliberate real-world places, just like organic in-game elements.

Has Niantic Found AR’s Peanut Butter & Chocolate Moment?

Location, Location, Location

The operative word above is “organic.” Not only are ads integrated with gameplay, but they support contextually-relevant promotions. In other words, Rewarded AR is natural for coffee shops and convenience stores, given the hunger worked up through migratory gameplay.

And Niantic has already validated this concept. Circle K’s Rewarded AR campaign positioned in-game rewards whose discovery is meant to spark moments of serendipity… just like Pokémon Go itself. It achieved a 76 percent engagement rate and a 95 percent completion rate.

Beyond contextual relevance, another factor is at work here: location relevance. As we’ve examined, user intent correlates to proximity. Mobile users are more likely to be closer – in both time and place – to transactions. Much of Google’s ad business is based on this principle.

This is likewise reflected in Niantic’s stated goals. First, Rewarded AR can increase brand awareness through immersive storytelling. Second, it assists user purchase decisions through AR product visualizations. And third is the location element to drive tangible foot traffic.

Niantic is positioned to pull this off because of the location graph it assembled in the process of developing Pokémon Go. The byproduct is a world mesh and location dataset that lets it precisely place content in location-deliberate ways… including sponsored content.

The AR Space Race, Part V: Niantic

Monetization Minded

Powered by 8th Wall, Rewarded AR will live in Pokémon Go, but it’s much broader. Niantic’s core product is no longer its hit game but the Lightship platform. This brings Rewarded AR to a broader range of titles, while attracting monetization-minded game developers to Lightship.

Backing up, that more expansive opportunity for Rewarded AR is analogous to Niantic’s own expansion. After putting itself on the map with Pokémon Go (which is still going strong, despite less press attention), it made a series of moves to maintain momentum in AR.

That includes becoming a platform. After the success of Pokemon Go – and all the work it did to build location-based gaming architecture and scale it to millions of players – it decided to package it all up in an SDK for others to build similar titles. The Lightship platform was born.

To further diversify revenue – thus far including user in-app purchases and platform/ SaaS – it launched an ad business. It acquired AR creation engine 8th Wall, with the thought that location-relevant gaming experiences are a natural home for native ad integration.

It has already applied this concept through its Sponsorship Platform that lets local businesses plant themselves in Pokémon Go. Now it takes the next step in its evolution towards native ad monetization, which could be a model for others as the AR playbook continues to evolve.

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