Happiness Pays Off With Kiip

Happiness Pays Off With Kiip
Image credit: Photography by Eva Kolenko
Brian Wong is scoring big with Kiip

2011 Trends
Gamification Profile
Kiip
Gives out 1.7 million rewards per day

More on Gamification

With gamification being applied to everything from education to shopping to social media, it was only a matter of time before the concept made its way into the mobile advertising space.

Enter Kiip. The San Francisco-based startup exploded onto the scene this past April with a new "moments-based" model that doles out "real rewards for virtual achievements" in free or freemium versions of mobile games. (There's no official list of titles or rewards, but a quick search yields forum threads listing the latest updates.)

Picture this win-win situation: You're playing a game of Angry Birds, and you dominate the level--not just taking out the pigs, but achieving complete structural annihilation. At that moment of revelry, before you go on to the next stage, a screen pops up and informs you that you've also won a free smoothie from Jamba Juice. Ignore it by hitting delete; or, if you want it, plug in your e-mail address in the space provided and get back to the game. A redemption code or coupon will be sent to your inbox.

Related: 10 Hot Startup Sectors for New Business Ideas in 2012

"Traditional banner ads don't work that well, especially with mobile," says Brian Wong, Kiip's Canadian-born founder and CEO, who made a splash in the tech startup world at 18, when he landed a job steering business development at Digg. He realized that instead of annoying potential customers with distracting spam, advertisers should reach out at the right moment--when players score an achievement in a game. "We're leveraging happiness as a currency and delivering happy and intent-driven people who can associate those good feelings with a brand," he says.

After Wong had his epiphany, he got to work, and by September 2010, he'd rounded up an initial investment of $300,000 and recruited a superstar team. On one side, he pitched the service and attracted an impressive array of brands--think popchips, Sephora, Vitaminwater, Carls Jr. and Dr Pepper--to pay for access to a games network; and on the other, he talked developers of popular games into a 50-50 ad revenue split.

To hold it all together, Kiip provides the algorithm that maps out achievements and figures out how to match the rewards. "And the thing that makes us unique," Wong says, "is that the reward play is serendipitous and surprising."

It's also convincing. In trial phases, advertisers saw a 50 percent click-through rate--crushing the numbers for impression-based banner ads--and this past April, Kiip came out of stealth after closing a $4.1 million round with the likes of Hummer Winblad, Path, True Ventures and Crosslink Capital.

As of press time, Kiip had 18 employees, reached more than 12 million users, given out an average of 1.7 million rewards per day and boasted a network expanding by double-digit percentages every month (Wong estimates 50 games by the end of the year). The company also recently announced a deal to track the high scores of dexterous mobile game players for inclusion in future versions of the Guinness Book of World Records.

For Kiip--and for Wong--things won't be slowing down anytime soon. "Gamification isn't new. We're just deciding to call it something," Wong says. "The technology now exists that we can harness emotion in a more systematic way to promote different kinds of behavior, and the applications for leveraging happiness at achievement moments go beyond mobile games."

Jennifer Wang is a staff writer at Entrepreneur magazine in Southern California.

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This article was originally published in the December 2011 print edition of Entrepreneur with the headline: Happiness Pays Off.

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