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Why Kiip thinks wearables could supercharge virtual achievements advertising

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Photo credit:

JD Lasica

Kiip’s ad platform is different from the norm: its ads offer rewards – but only when the user has actually achieved something. Founder Brian Wong talked to Hot Topics about the universal appeal of the idea, and why he hates programmatic exchanges.

Brian Wong is the exact opposite of the reclusive mogul. He gets a ton of press. Profiles are everywhere, which is understandable as Wong is very young (23), ridiculously energetic and very personable. Even for the world-weary hack, he’s hard to resist.

But possibly the biggest reason why Wong gets so much attention is that his company, Kiip, offers something we can all understand.

It’s this: Kiip gets brands to reward consumers when they achieve something in an app.

So, if you post a new high score in a game, or reach a certain number of steps in a fitness tracker, an ad will pop up telling you to claim a music track or a drink.

Kiip calls its big idea ‘real rewards for virtual achievements’. And in a world where digital advertising is overrun by complex data-led concepts such as real time bidding and programmatic exchanges, it’s compelling.Kiip virtual achievements

Wong famously hatched the idea for Kiip on a plane journey, where he noticed virtually all passengers were playing mobile games. It struck him that brands were interrupting their fun with crappy, intrusive banner ads. There had to be a better way.

Bingo: real rewards for virtual achievements.

He knocked up a quick presentation before he landed. A few days later he talked himself into a meeting with True Ventures partner Phil Black. By the end of the pitch he had $200,000. Soon after, Wong teamed up with former Digg colleague Courtney Guertin and designer Amadeus Demarzi to launch Kiip.

Now, it’s an old VC truism that you invest in a person more than an idea. Smart bundles of energy like Wong tend to get funding. But in the case of Kiip, the idea is looking pretty good too.

The firm has raised at $15 million more in funding since launch, as well as an undisclosed amount from American Express Ventures in August. It’s generating between $10 million and $20 million a year and counts P&G, McDonalds, Pepsi, Unilever, Skittles and Ford among its brand advertisers.

Hot Topics asked Wong about Kiip’s journey and where it might go next.

You’ve run thousands of campaigns. But are there some that don’t work? If so, why?

There aren’t many. But the ones that don’t work so well have poor redemption flows. The method is too complex.

What’s the balance between digital rewards and physical ones on the platform?

It’s changing. A year ago we were skewed to virtual rewards redeemable online. Now, it’s more like 50:50, and it’s because of the fact that digital coupons are more widely adopted by retailers. We can now generate codes that show up on screen and are scanned in the store.

Do you ever have an issue with brands that mess up the fulfillment?

Not really. I think our brands really enjoy the fact that they are the ones fulfilling the offers. They’re in control, and they take that very seriously.

Kiip seems like a very visible brand considering it’s a B2B play. What’s the thinking behind that?

In the beginning we were inspired by Intel and AmEx and others. We were aware that we were trying to create a new category, and that we should be prepared to be public about it. Four years later that still applies. We see people tweeting about us and talking about us, and that’s a good thing.

But is it making a difference to performance?

We think so. We have two engagement rates – one for overall levels of engagement and one for cohorts, meaning users who have already claimed rewards. Now, if Kiip is a good brand, the cohort engagement rate should be massively high and it is: 30 to 40 per cent higher.

So do people choose an app because it’s running Kiip?

No. And we don’t want them to. They don’t know Kiip is inside before they download the app and we prefer to keep it that way.

You have this cost per engagement model that’s different from the norm. How do brands respond to that?

We still get push back. Some clients and agencies really resist it. I have to explain that, if you pay me on clicks you’re tempting me to show the person the reward as much as possible without letting them redeem it. That just doesn’t make any of us look good. And they’re, like, “oh I see”. Basically, CPE is natural to the rewards flow and once someone claims a reward, we don’t show it again.

Do people get sick of rewards? Are there frequency caps?

We’ve used frequency caps for a while. It varies by genre. We show fewer ads in games than in fitness for example because if you work out five times, you deserve more. Levelling up in games? Maybe not so much.

How do you feel about programmatic advertising exchanges? They’re really dominating how ads are placed. Does Kiip have a place in that ecosystem?

Programmatic display may be a hot topic, but it is not good for the industry. It’s a margin cruncher, and it’s leading to the rapid commodification of the banner ad. People can play in that arena, but it’s a race to the bottom.

Now because Kiip is unique and premium, we don’t play nicely with any of the supply or demand side exchanges. We’re a separate mobile play that people look at differently. We’re just not playing alongside every other bit of commodity real estate that people are tired of buying without real results.

What about about wearables? In one way, the space seems to play into your platform because it’s all about measuring physical activity. But on the other hand, there’s the user interface…

I’m bullish on the smart watch. I think it will be first mass wearable, and will let us experiment with physical signals. The proximity of device – that’s where we can get the most impact. There are ways to do it. We don’t need to show the reward. We can build a platform where you’d be notified on the phone. The challenge is really to think about the most appropriate moments for brands to reward. There will be so many opportunities so brands need to ask themselves which moments they want to own and how to be responsible with that.

Some people think the app is going away, and that push notifications, sensors and things like Google Now will replace it. What will happen to Kiip if the app dies?

The app will obviously evolve and we can’t know what will happen. What we do have on our side is that we’re all about the moment. So it comes back to the wearable and the connected home and the Internet of Things. Wherever and whenever people have emotional moments we can offer rewards. That’s a basic human thing and it’s not going to disappear.

Kiip at a glance

Brands: 1,100 including P&G, McDonalds, Trident, Pepsi, Unilever, Skittles, Ford

Apps: 3,000 including RunKeeper, Cut the Rope, Better Homes & Gardens Must-Have Recipes, AllRecipes Dinner Spinner, and Any.do

Funding: $15.3 million plus undisclosed amount from American Express Ventures. investors include Hummer Winblad Venture Partners, Crosslink Capital, True Ventures and Relay Ventures.

Rewards claimed: 30m

Percentage of players claiming rewards: 11 per cent

Daily active users: 12m

Annual revenue: $10m to $20m revenue

Cost per engagement: 75c to $2