Mining “Happiness Moments” at Mobile-Rewards Startup Kiip

Whatever you do, don’t tell Kiip CEO Brian Wong that he’s in the advertising business.

Yes, if you’re playing a mobile game that uses Kiip’s service, you’ll see pop-up screens offering rewards from big brands like Pepsi, Disney, and Best Buy. But these aren’t ads, Wong insists. They’re moments of reciprocity prompted by an achievement on your part, like shooting the boss zombie. And they might just signal the end of an era for traditional online marketing.

Wong is one of several startup founders striving to blow up the whole traditional banner-advertising model in Web and mobile commerce and replace it with something that’s more effective for brands and more appealing for consumers. That something, for Kiip, is the achievement—the “happiness moment,” in Wong’s terminology. “It’s this amazing moment that every good game in the world has—a natural pause in play when you are happy. Dopamine rushes to your head. You feel like you’ve accomplished something.”

The hypothesis Kiip and other companies are testing is that this dopamine-rush moment is the perfect time to reach out with a brand message—say, an offer of a free burger at Carl’s Jr., or some virtual currency to spend in an online store, or a discount on a game rig. For mobile game developers, showing players these reward offers—and earning a slice of the revenue in the process—is now simply a matter of plugging in some code from a reward network such as Kiip or its competitor Beintoo, an Italian-born company that just relocated to San Francisco. Builders of console or PC games can now tap into a similar rewards system from Raptr, the San Mateo, CA-based community for gamers.

The entrepreneurs at all these companies are convinced that gamers are far more likely to respond to an offer if it comes at a natural pause in a game, in response to an achievement, than they are to interrupt themselves by clicking on a banner ad. Wong says he grasped the seed of the concept on a long plane flight back in 2010, when he noticed how many of his fellow passengers were amusing themselves with smartphone games. “That was the epiphany,” he says. “What if I could harness these moments and do something with them?”

Wong, a 21-year-old business graduate from the University of British Columbia, got his start in Silicon Valley doing business development at Digg, the social news aggregator. After getting swept up in a round of layoffs at Digg, he traveled for a while, had his epiphany, connected with co-founders Courtney Guertin and Amadeus Demarzi, and raised $300,000 in seed capital from Transmedia Capital, True Ventures, and a small group of other investors.

Gamers no longer respond to the banner ads distributed by Google’s AdMob and other ad networks, Wong argues. An ad on the Web is essentially a billboard shrunk down to the size of a PC or laptop screen, he points out; on a smartphone screen it’s smaller still. “You are taking a model from an old platform and trying to jam it into a new one,” he says. “There is no innovation there. We decided to throw that all away and figure out what we would create if we were to invent the entire concept from scratch.”

Using a self-service platform that Kiip introduced two months ago, game developers can download a software kit that allows them to specify which achievements in their games should trigger a reward offer from Kiip. Then, at the appropriate moment—say, between levels, or when a game is over, or when … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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