Games Aren't the Future of Mobile Ads

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  • Brian Wong, Co-Founder and CEO of Kiip

We hope to see you at the next Soapbox. We'll update this page soon with interesting tidbits about the event plus the podcast!

About Brian Wong

Brian Wong, co-founder and CEO of Kiip, may have dropped a couple of f-bombs at his Soapbox. But he also dropped some knowledge on the metrics that really matter — and it's not impressions.

It's about moments, Brian told us. That metric is what ultimately matters when it comes to how we engage with our customers. But at the same time, that power is very easy to abuse. He tackled how we can start thinking about our interactions as moments and how we can wield that to "surprise and delight" people.

Feel free to listen to the podcast as you read through the summary of the event below.

grayscale photo of Kiip founder Brian Wong

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An Opportunity to Change People's Thinking

Kiip rewards mobile app users with brand-sponsored achievements. The idea was born on a plane ride. Brian had gotten up during his flight for an "iPad creep." Well, that's what he calls peeking over to see what other people are doing on their tablets. And what he discovered, he told us, was:

Great opportunity to change people's thinking.

He noticed that everyone was playing games on their iPads. Then, something disturbing caught his eye — huge ads taking up too much screen space. He knew there had to be a better means to reach potential customers without bombarding them with ad after horrid ad. As he put it:

For me to get free content, my ass has to be kicked by terrible advertising.

It's no surprise that people pay to turn those ads off, he said.

And there's like millions of people employed in [advertising] that think they are creating this amazing thing, it's so creative. Then there are people paying to remove you. It's 100% true.

Own Emotions, Have a Bigger Impact

Brian began dissecting games, learning how they worked and how people engaged with them. He find a commonality among all of them — achievement. The joy someone gets from an achievement sparked Brian's interest.

And what I learned in marketing class in college was the best way to engage with people is through emotions because it sticks with them more. Has a bigger impact. So if I could own these emotions, maybe we have something quite powerful.

Brian asked himself, "why can't that same advertising actually build loyalty at the same time?" And thus was born Kiip.

The Coke of Loyalty

One thing Brian wanted Kiip to do was improve lives while at the same time building brand loyalty. And that meant not being just another ad network. The key to that: moments.

It's moments. It's engagement. It's sorta this extra way to describe something where we don't just annoy someone, [where] you provide value.

Rewards were the value. When someone reached a goal, they'd be rewarded with something they needed in that moment, say a Power Bar for completing a workout. It's like a gift from a friend rather than a game achievement.

When you feel it's a nice gesture, you feel something totally different.

Last year, Kiip doled out rewards to 10 million people. But it's not a measured reward, where it's doled out in a clockwork manner. It's unexpected. They didn't know they were getting rewarded, which activates a different part of the brain. "It's surprise and delight at the same time," said Brian.

But the rewards were never designed to be accumulated for some goal, such as a vacation in Thailand. They're meant to be consumed immediately. Think of it like Coke. What makes it a successful brand is that it's constantly being consumed. People always want more Coca-Cola.

We're like the Coke of loyalty.

Brian said the notion of accumulation is going way, giving way to moments. And that moments will be the new impression.

Moments are the New Impressions

Brian was quoted in a recent article, "Impressions are very mindless. They're just seeing stuff." During our chat, he elaborated on it more. He said that impressions just tell you that someone's seen your ad. It doesn't mean that it had any effect. What we really should keep track of our the moments in which users interact with our products and brands.

Moments imply emotions, the human element. Think about: when you whip out your phone and use various apps, you interact in a series of moments. You open up a game to fill a moment of boredom, and so on. But Brian warns that with great power comes great responsibility. You can't bombard users with ads at every moment.

A lot of marketers shit in this pool and make it worse. "Oh, great time to show a video."

Kiip trains brands about owning these moments. He said moments must have creative, copy and purpose. Is it creative? Is the copy appropriate? Does the purpose match the reward?

If a reward goes unclaimed after the third time users see it, that reward won't be offered again to the user, said Brian. That, in turn, panics some marketers, who worry that their impressions are "melting away."

He put it this way: if you ask a girl out and she says no, it doesn't mean that she'll say yes after the 30th time. But that's how marketers treat impressions. The more a message is shown, the more it'll lead to conversions. It doesn't, he said. No means no.

Nevertheless, moments are changing the way we think about advertising, said Brian. It adds more value to a person's life than just another mindless ad.

Our conversation with Brian continued as he talked about mobile game advertising and why Kiip is branching out beyond mobile gaming. We want to thank Brian and everyone who attended our Soapbox.

Don't Miss Out on Our Next Soapbox


Ryan: How's everyone doing today? Excited for ZURB Soapbox? Are you super excited? Well, I just want to start with a little introduction. Brian Wong was on a plane once when he got up and did what he called an "iPad creep." Where you peak over someone's shoulder and see what they're doing.
In that moment, was born an idea for Kiip, which has revolutionized mobile advertising. Kiip is now in some 1,500 applications, has raised just north of $50 million. And is used by top brands like Pepsi and Disney. You might have heard of those.
But Brian recently made a pronouncement that Kiip wouldn't be dependent on mobile gaming. I want to get into all of that, but please give a warm welcome to Brian Wong. Thank you joining us, Brian.

Brian: I appreciate it.

Ryan: Well, first of all, before we get into that declaration, I do want to ask a little bit about the origins of Kiip and the application. And what exactly was it that you saw when you looked over people's shoulders?

Brian: Yeah. I always wanted to something related to games and brands and mobile. But what I found was a great opportunity to really change people's thinking. Because how many of us have experienced this whole dynamic of, "Pay $2 to remove these ads." It's like, for fuck's sake, we were paying money to remove advertising. And there are millions of people employed in this industry that think that they're creating this amazing thing, it's so creative. And then, there are people who are paying money to remove you. It's true, 100% true.
And that's just very unfortunate. Because we've now grown to accept this natural, necessary evil. It's like, "Okay, for me to great free content, my ass has to be kicked by terrible advertising." And I was like, "That has to change."
And so, when I started looking at the games, I started dissecting them. And I listed out all the components because I'm not a game designer; I had no idea. I couldn't design a game. But as a consumer, I noticed that there's one thing that was common, which was the achievement moment. And in that moment, I realized people were very happy, they felt something.
And what I learned in marketing class in college was, "Okay, the best way to engage with people is through emotions because it sticks with them more, it has a bigger impact. So, if I can own these emotions, maybe we have something quite powerful." And that's kind of how everything started.

Ryan: Cool. And speaking of that reward, Kiip rewards mobile gamers or people in advertising with brand-sponsored achievements. And I kind of wanted to know how exactly does that actually build brand loyalty and advertise at the same time without being this, kind of, huge billboard banner smacked onto my iPad?

Brian: Yeah, thank you for asking that. I did not pay you to ask that with loyalty and advertising, but that is really the main thing, like I couldn't stress it more. Why can't that same advertisement that you've spent all this money to push out and produce actually build loyalty at the same time and build brand love, right? And how is that possible?
It very much so is, because I challenge the marketers that I spend time with and I'm like, "All the products you represent, all the CPG's or big companies you work for. Somewhere in their mission statement is something that says 'We're going to help consumers in their lives,'" right, or at least they convince themselves they are, which is whatever's fine.
But I'm like, "But your products may be doing that, but your advertising is doing the opposite. It's annoying everybody." So, how can you make them do the same? How can you make your advertising of the product that you're trying to say improve people's lives actually improve people's lives as well?
So, our model is simply not even calling it advertising, right? The funny thing is the vernacular we chose was very important to the way we were able to sell this through and bring in the right people around the people. So, we went out there and we still don't do that. We don't ever call ourselves an ad network or advertising, in general.
It's moments, right? It's the reward; it's the engagement. It's sort of this extra way to describe something where you don't have to just annoy someone. It should have some value there.
So, to answer the question, it's like when we provide you with value in that moment, the consumer today is actually quite schizophrenic, right? We're very short-term memory, we're like a goldfish, right? We don't really want to think about things in the long-term. If you give me points I need to accumulate, I don't want to be bothered with that; I don't have time to think about that.
If you gave me something now that I can consume it now, it's like a little gift. It's like a gift from a friend. It's like a nice gesture. So, people will ask me sometimes "Do people want to game the system? Do they want to go in there and try to figure it out?" When a friend gives you a gift, do you try to game your friend to get another gift? It's not like that. When it's something that you feel is a nice gesture, it's a totally different experience.
And so, in order to mimic that, we actually made our rewards completely unexpected. So, it's one detail I wanted to share which is all the rewards we've ever given. And this is a number that's not actually public, but let's just say, in the last year, we've rewarded over 10 million people, way more than 10 million.
But under these 10 million people, they had no idea they were going to get rewarded. And that's the best thing. Because we're activating an entirely different part of your brain. Because when you don't know that you're aiming for something, when something comes to you, it's a nice surprise. It's a surprise and delight in the most physical sense of the word.
As marketers, sometimes we use that shit all the time in boardrooms. But it never fucking happens, right? It's true. "I will surprise and delight people with his ad." Delightfully terrible, right?
And so, that's how we build it. It's through the moment; it's through the serendipity of it. It's through the fact that you feel like there's value there. And if we do our jobs right, that reward is supposed to be useful for you within the next 30 minutes and nothing further.
So, for example, if you finish a run, we have 60 apps in our network that are all fitness. So, say you logged a run or you counted your calories or you finished cycling or you finished a yoga workout or whatever it may be, you would get something like a Gatorade. You would get something like a song download for your workout playlist. You would get something like an energy bar.
These are things that we all knew would be useful for you in that moment. And that's what really matters.

Ryan: It's tailoring the reward at the specific moment that person needs it.

Brian: Exactly. And let me describe it this way, too. Coke, you guys are drinking some of that, right? Super-high margins, super-profitable. Why? Because it's consumable. Because you have to consume it. It's something that's constantly being consumed.
So, we like to say we're like the Coke of loyalty. Our rewards were never designed to be accumulated. They were never designed to be stored for some aspirational goal of going to some big vacation in Thailand. Our rewards were designed to be used on the spot.
And that, I think, is the new dynamic of loyalty. And I'm hoping I can indoctrinate all of you today, that that's what really matters. The whole notion of saving up points and stuff; that notion is fading away. Very rapidly, actually, mind you.
I may care about one or two programs right now, but anything beyond that, I have no mind space for that. There's too much to think about. So, when we can hit you right in-between the eyes and have something that matters to you in that moment, that level of appreciation from the consumer. Not only have you told them about your brand and what you're offering, but you've also built a very interesting loyalty peace with them.
Mechanically, I'll describe it as well. Funnel, we all know the funnel. Usually, loyalty happens after the conversion, right? You buy something and then you get rewarded. But what if we took that reward and put it at the beginning of the funnel and used that reward to drive awareness? Ta-da! That's Kiip, right? Really, that's it. So, that's what we did; super simple.

Ryan: Why wait until the end to reward someone?

Brian: Why are you going to wait? The guy was going to buy it anyways, you know what I mean? Those are the questions that are being asked in boardrooms all across America right now. Are we reinvesting in the same dude that was going to buy the same thing anyways? Or do we just use that and make it an acquisition mechanism?

Ryan: That kind of leads to something interesting you actually said in a recent interview, which was just published a few days ago in terms of metrics and measurements and moments. You had said, "Impressions are very mindless. They're just seeing stuff. It's like me walking around with my eyes open. It doesn't mean I'm feeling anything. It just means my eyes are open."
And I wanted you to elaborate on that a little bit and what is this metric you kind of almost touch upon at the moments? And the achievements that we should be focused on and how we use that to captivate an audience and remember our brand?

Brian: Exactly. So, moments, I think, are the new water of a marketing industry. And the reason is, moments imply emotion. They imply a human element. So, one of the things that we always forget sometimes is because of technology and all of the tools that are available today to optimize pricing and target people.
When you describe people as "target demographics," it's almost like you're talking about them as a dartboard. They're not actually people anymore. And so, we forget that people feel. That's actually what makes us unique, right? Honesty is what separates us from a lot of species, at least from what we know, is that we have emotions. And then, that emotion part is, I think, the reason why we exist.
And so, we can highlight those emotions. And when we look at moments, I'll break it down very simply. You use your phone in a series of moments. So, if I'm hungry, I'm going to whip out Seamless, right? If I need to do something or I feel I have an idea, I'm going to whip out Evernote. If I want to do something, I'm going to whip out If I want to kill my boredom, I'm going to whip out Mega Jump or Cut the Rope or whatever. And by the way, these are things that we're integrating to.

Ryan: See how he slipped that in? There's your achievement right there.

Brian: You whip out these things. And so, what happens is, those are all your moments of need and so, there's a feeling behind it. And so, when the brand is going to serve you there, you have even more of an affinity.
However, there is a huge danger there. Because if you abuse that, it can even be worse. So, the consequences are even worse. And so, that's why I say, "With great power comes responsibility" like Spiderman's uncle once said.
You basically have a lot of marketers that may actually shit in this pool and make it even worse, right? By going, "Great moment to show a video ad." Or I hate companies that [Inaudible 00:11:30]. In the moment, they'll be like, "Great, here's another app download. You just got rewarded with another app to download. Good for you." That's just not natural.

Ryan: And that's not targeting, like you said, the specific need in that moment. It's forcing a need on someone.

Brian: Because I have to train the brands that work with us to be like, "Okay, why don't we use the conversation around owning moments?" So, brands will come to us and they'll say, "I want women 35-plus with kids and work." And I'm like, "Fuck." What's the purpose of this?
And they're like, "Our product does this and it does that." And I'm like, "So you want to target fitness moments in the morning? You want people who are working out in the morning before work. So, why don't we reward people after they work out between the hours of 7:00 and 9:00 a.m.? And fine, you think that only women can use this product, I actually think both sexes could, but that's fine. We'll do it for just women."
Sort of ease them off this addiction of going after. Just because my eyes are open and I'm in the demographic doesn't mean I give a shit. And find the moment when that need is correlated very deeply.

Ryan: Right. Awesome. It's almost as if you just have to let go of some of these old-school notions when you're trying to actually build that brand. And that brings to kind of, you guys and you're building a brand as well. How do you build your own brand, especially in something that is, you call it an advertising outlet or ad network is and how a lot of us have that visceral reaction to ad networks. Like, "Oh, God. Why?"

Brian: As I said, avoid even saying that altogether. I'll mention it in an industry because I do get challenged a lot. They're like, "All right, but it is a blah, blah, blah." You really want to break it down, right? You can say a car; it's on four wheels. There are a lot of things that are on four wheels, too.
So, what we're trying to do is to build a brand is a few things. You have a brand promise that you have to uphold. This is all textbook shit. Brand promise, you have to represent in all the things you do and the quality of those promises have to show through it.
So, for us, we actually branded all of our rewards. We actually just have the little Kiip badge on the bottom. We kind of looked at it as like an Intel Inside, like an ingredient brand strategy.
I actually did in the beginning because I wanted to hold our team accountable. As I said, how else will people know if we fucked up, unless we know that every single reward that came out was a Kiip reward that we're responsible for? So, we actually use it as a way to keep ourselves accountable.
Because when you see an ad, you don't really know where it's coming from. It could come from any server, any network, any whatever. The brand did it, but the guys who put it out there and did the media for it, you have no idea. So, for us, we wanted to brand that.
And the second thing was we wanted to keep it consistent. So, all of rewards, we have a rule with all of our reward providers. We call it CCP, "Creative Copy Purpose." So, essentially, is it creative? Does it look good? Is there an element of it that people will go, "Oh, that's interesting?" Is the copy appropriate for the reward? And is the purpose of the reward matched? Are you saying they're getting something and then the reward that they're actually getting in the e-mail is completely different?
So, those are the things that we try to make sure they align to. And so, those are the things that I think are truly important. How do we show that promise across all the rewards that we have? Describe ourselves so differently that people kind of have to put us in that other category.
Now, this works for different things. So, I will say that when you're in an industry meeting. I'll be surrounded and sometimes, 15 media buyers in a pitch. And all of a sudden, basically what they'll hear from me is, "He's very difficult to buy. His media is very complicated, cannot fit in my dark or my media mix modeling. And this shit is crazy; I can't put this back. I can't fit it into the model that I'm being held accountable against."
So, when I'm with agencies, the way to describe it is going to be different. But when it comes to the press, when it comes to the consumers that we are exposing our rewards to, we truly need to make sure they realize that we're looking at something differently. On a technological level, we wanted to build this out so that we had complete control as well.
So, we actually don't go through mediation layers, we don't have any other SDK's to represent us. It's our technology that sits in those games and those apps. So, in the 1,500 apps that we're in, it's our SDK.
Now, there have been so many times, I can't even count in the last three years, where we have been challenged. And people have been going, "Why don't you go through AdMarvel and Burstly," these SDK aggregators. But what those guys do is they optimize on pricing. They optimize on the mindless metrics.
We told them, "We optimize on whether or not you fucking want the reward or not." Little things. Like if you see the reward three times and you don't put your e-mail address to claim it, we will never show you that reward ever again.
So, imagine the face of a media planner when I say that. They'll be like, "My impressions are literally melting away because you're now capping my impressions." And I'm like, "Yeah." So, if you ask a girl out 20 times and she says no it doesn't mean that you ask her out another 30 times and she says yes.
That's like the way that impressions and GRPs, gross rating points, which is the same equivalent in TV, really work. How many times did I show you this message? The more I've shown you it, the more I know that I've shown you it, the more likely you are to convert. Same thing, right?
That girl said no, man. She means no.

Ryan: Yes, we've all been there, right? Anyway, let's move on. But it is very important. Because at a certain point, if you're just playing the same ad over and over again, it creates blindness. No one gives a shit anymore, right?

Brian: Exactly. Well, we acted it out. We said, "If you don't do it, we won't show you that reward group ever again." We have these rules. People are like, "Why three times?" Because we just made up that number, to be honest with you.
There's really no science behind a lot of this in the beginning. Now, we've tested it. We've tried four; we've tried two. Three was the right number. Obviously, we [Inaudible 00:17:56]. So, it's like, how do we optimize for our assumptions.
So, as a startup, as you guys probably know, it's like you won't have perfect data. You won't pick the things that you know will potentially could work. And just test and validate the hypothesis or not. It's super simple.

Ryan: Right. And speaking of that, you guys also use a cost-per-engagement and, it's a moment, the engagement in Kiip. But how do you kind of continually measure for that and how do you continually change that? You mentioned that you don't show the same reward if someone doesn't get it. But how do you constantly keep yourself evolving this?

Brian: So, we chose CPE because there's a company called SAY Media that kind of invented it. And it became part of the vernacular of advertisers, especially in their IO's and their RFP's, do a dropdown menu. And they could pick CPE. Because if we weren't in any of those, it would be extremely difficult. That was the one reason.
If I had a choice, I'd call it cost-per-reward redemption or cost per, whatever something that was more unique. But doing that would have been a death wish, essentially.
And so, it's a performance metric. So, that's when someone actually puts in an e-mail address and claims the reward. Now, here's the interesting thing that we learned. It's so black and white sometimes in this industry, which is for better or for worse, right? But it's performance. "Oh, you mean you do CPA? So, you do acquisitions, because that's performance?" I'm like, "No, it's an engagement."
So, you can't actually merge brand with performance or else people, they don't even know where they are anymore. So, I'll be in meetings and I'll be like, "Yes, so not only we can help you acquire and build performance metrics and pay for that performance, but people will actually like your brand and you can measure brand lift and recall." And they'll be like, "That's not me. I don't do the brand lift stuff, that's the other guy."
It's the difference in most brands between the guy who does promotions and couponing. And the guy who does the brand stuff. The guy who makes you think of Pepsi or Coke more than the other competitor.
So, the metric, we thought, it was key. If we picked any other metric, I don't think I'd be sitting here right now. Because we needed something that was easy to buy.

Ryan: And then, you still had to be understandable for those who were still caught up in the old-school way of doing things?

Brian: Yeah, I like to say this. So, now, with this loyalty piece and I'm so glad that article came out this past week. Is we created something quite unique, which is this loyalty in the moment idea. Really, [Inaudible 00:20:33] streamline even further, just so you guys know. Our mission is to build value into consumers' moments throughout their day.
So, that value would be, "How do I improve on the [Inaudible from 00:20:43]?" Either complements your devices or it will be good for you. But, for example, if you finish a to-do, we'll give you a free download of a TV show. Because clearly, you have time to watch TV now that you've finished a to-do. Just like that.
Anyways, build value in every moment. And this vision is to own every single achievement moment on the planet. We know that these moments have to have added value by a company that actually cares about it. Obviously, we're very biased; we think that that's us.
And when we look at the actual value. I say that we kind of created a Porsche for a very wealthy ten-year-old in the beginning. So, this ten-year-old is the media buyer. So, they're really rich. They're from a sheikh in the Middle East or something; he represents a really rich family. But they don't even have a driver's license. They can't even drive the Porsche. They're like, "I just want it because my client wants it." So, we built it for them.
And then, now what's happened is some 25-year-olds have arrived. And they've got, "Yeah, I know what this Porsche can do for me. I've got a driver license; I know it drives fast. I know it can pick up chicks. It's great." So, they actually know what it does.
Kind of keeping the metaphor going, basically what we're saying is this same platform, this same ability to reach someone in the moment. The level of thinking that that buyer or that user is at is where we're evolving. It began with the media side and it still will have that component of it. But we know that the true marketers are the ones that want to acquire a consumer.
For example, we are now across the U.S., one of Hulu's top three acquisition partners. And just that level of efficacy and being reflected in that performance is, for us, a huge deal. For a company that's so maniacally focused on that, but also has a big brand. And that's the best part about it.

Ryan: And speaking of, you kind of touched a little bit on some of the places you're at and I have to switch gears a little bit. But to kind of get you here on the mobile ads, make up, really, a huge percentage of revenue from games. And why are mobile games detrimental to the future of mobile advertising? And why make the statement that you guys wouldn't be dependent upon it?

Brian: Let me clarify that a bit because I'm not saying that mobile games are bad for advertising. I'm not saying that mobile games aren't the future either. I'm not saying that we wouldn't be working with them. In fact, they are still amazing partners and we love all of them that we work with, just for the record.
You guys know "Business Insider" loves sensationalizing everything and they always optimize for page views. So, they're going to make the title as catchy as they can. And the way they'll do it is things like, "This 22-year-old just took a fart" or something. And they don't even tell you who the person is at the title. They just say, "This company," or, "This person," and they know they're doing that.
The point is the games are still the future. They're still important because of the fact that there's a large chunk of engagement, the pie of engagement in mobile. You're going to spend a lot of time on games. It's just a given. It's statistics.
Now, the reason why I said something along the lines of that in that interview was what happened with Candy Crush, as an example is, they started to get too rich. They started to earn too much money. And they started to earn too much money too fast with IAP, in-app purchases.
And they looked at their little pie charts and their graphs and their metrics and their dashboard. And they said, "Shit, that's growing a lot faster. What if we removed advertising so we had more opportunities to sell people more," what is the currency in Candy Crush? What do they call it? "Gems" or whatever? No one actually knows in here?
This company [Inaudible 00:24:46] a good IAP for $5 billion off of virtual candy. I think I feel like it feels like a little deja vu of a company that just IPO'd for a virtual farm a few years ago.
Anyways, they said, "Okay, we're earning way more money selling virtual candy than we are off of advertising, at least right now." Later on, they may break it back. But the way that they'll think about it is they'll think about it in those optimizations.
You think about any industry in mobile that is so unbelievably good at optimizing in the short-term, it's games, right? That's what they do. They literally know, minute-by-minute, how their LTV is being affected. What their average revenue per daily active user is, which is ARPDAU, so you may hear that type of acronym once in while. And these types of things, they all know all these things.
Anyways, long story short is, what we realized is we could either wait for these guys to self-filter themselves out of the picture temporarily because they're optimizing themselves in these short-term metrics. Or, we rely on a more diverse portfolio.
So, much like when you invest in any stock, you don't want to put your eggs in one basket. And for us, yes, we did invest a lot in games in the beginning and that was a great way for us to grow. Because again, guess what? While they were figuring other things out, we knew that those moments were worth something and we were able to obviously add value.
Now, of course, a lot of them are, again, [Inaudible 00:26:06]. And still have the traditional perception of advertising. So, if you ask the Candy Crush guys, their view of advertising is that it ruins the user experience.
So, if I get my way and I get into all their heads, they'll know that advertising doesn't necessarily have to ruin user experience. They actually add to it, they actually create more retention. They actually create more loyalty, as we just talked about.
So, those same dynamics. If they accept those new laws of physics, then we apply. But unfortunately, there are a lot of people who think in the old laws of physics there. And of course, they'll optimize advertising out of the equation.
So, am I making sense? Obviously, if I were to explain this is an interview, that's [Inaudible 00:26:47]. That's why, I think, this is important for us to clarify.
So, for us, that's why we went to five verticals in total. And we did it very calculated. So, we have a promise where we're going to do one every quarter. So, in total, we have five right now. We have games, fitness, productivity, food and music. Again, moments are games are leveling up, fitness is finishing a workout, productivity is finishing a to-do, music is favoriting a song, adding a new song to a playlist. And food is bookmarking a recipe.
And then the sixth that we're launching this quarter is sports. We're super excited about this. So, it's so obvious once I tell you. But it's like, hey, when your favorite player scores or when your team wins, these are all moments, right? And imagine how valuable this is for a brand to ride out of how happy you are in that moment and actually reward you for that as well.
That was our thinking was. How do we help brands own winning moments? And that's what this is. For sports, it's winning moments. That's the next vertical.
And so, when you think about it, it makes so much sense, though. Because the amount of tech tweaking we needed to do to reward someone in a fitness moment and a recipe moment was minimal at best. Because these moments are still a moment when you're feeling something. And a moment where presenting something that's useful to you in that moment could be valuable to you and improve your life.

Ryan: Right. It's not that we're leaving gaming behind, but we're just evolving to other things.

Brian: Yeah and let me tell you. I'm a typical entrepreneur much like you most of you guys. And I have a lot of ideas and I get very excited about things as well. And the reason I'm why I'm so 180,000 percent focused on Kiip. People always ask me, "Do you have any side projects?" I don't have any.
Because here's the thing. I love education and I love health as industries, that I think are a lot of innovation [Inaudible 00:28:40]. But let me tell you something about what we have here at Kiip and why every day is so unbelievably fun. In education, what is my goal? I'd like to create something that helps educate more and more kids, or helps improve the quality and the structure of institutional education today.
And then the second is health; I want to make people healthier. So, with Kiip, literally, I have projects right now that I'm working on. Where, by rewarding people in the moment, we can help kids learn faster, help kids have more fun learning. And in health, actually make people healthier.
So, I've never seen an idea, obviously, that we've just grown and it's blossomed. Where it could apply and help and add so much value into so many people's lives. And it started off with, again, "Holy shit. What if we gave people a latte for leveling up in game?" And now, it became, "Holy shit. We could actually help improve moments in people's lives."
It's changing the world one moment at a time. So, that's the reason why I hope you guys see it now. It's like the advertising thing is so minuscule when it compares to the overall potential impact. So, I get really frustrated when you don't see it.
And I'm much like most of you when you spend time with some advertisers. Is that, unfortunately, these short-term metrics really do drown a lot of people. And it suffocates creativity and it suffocates the ability to improve people's lives.

Ryan: Touching people's lives one moment at a time. I think that's the perfect place to leave it and open it up to audience questions. Yes, sir?
So, I'd like to be [Inaudible 00:30:28] as online video advertising is the highest return of investment, form of advertising at 81 percent. So, obviously, you're higher than that. So, what is your return on investment and how do you measure that?

Brian: We show them by their engagement rates. So, how many are actually claiming their rewards. And then, also, from that, how many are converting? So, Hulu, for example, that will be how many people who actually bought a subscription to Hulu Plus, right? For a Pepsi, it would be how many people actually went into the store, used the coupon and redeemed for it.
For a 7-Eleven, we just wrapped this up, it was one of my favorite campaigns. Where we gave away free Slurpees to people who were playing games in cities that were over 70 degrees, which is pretty much most of America. It was really fun.
I think we took on San Francisco there for a couple of days. The place was great; it's always hot. So, that's the way we measure ROI. And then, they back it into the CPEs that they're buying and they see what their return on investment is on that CPE pool that they spent on. So, I hope that makes sense.

Audience: Do you have a percentage?

Brian: What percent? Like average engagement rate? Average engagement rate is 13%. So, the number of people who actually put in their e-mail address and claim a reward is 13 percent of the people that see the reward.

Audience: You mentioned you were in 1,500 apps? So, how do you get to 10,000? How do you 10? What's your strategy and thought about driving that much larger...?

Brian: Thank you for sounding like my board.

Ryan: He's not on your board?

Brian: No, he's not on my board. I literally had a board meeting yesterday morning and I'm pretty sure I heard that voice five times. It's a great question. I think a part of it is making ourselves indispensable and natural in the early stages of an app creation process.
So, I want to sort of share a quick bit about this whole dynamic of SDK fatigue. When I first started the company three years ago, that wasn't an issue. Only a handful of companies had SDKs and a Web developer would be "Oh, that's great. SDK used to mean something useful. Because a software development was supposed to make me and my tools more efficient," blah, blah.
Now, SDK only screams annoying, too much. I've got other stuff in there; I've got to maintain it. Fragmentation in Android makes my life so miserable and I don't want to do it anymore. And managing 30 other external SDKs is a pain in the ass.
So, basically what I'm saying is it's a lot harder now. But there are companies like Google and Flurry and SharkBoost have managed to be a part of the natural life cycle. And I looked, actually, at what SharkBoost because they were very clever. In the beginning, they said, "Okay, you know how way back when, we used to do affiliate-linked training when you first started to build your site just to get traffic from each other?" It's basically the same thing. It's how do we pool together our traffic and trade traffic. And that's what SharkBoost did. So, they kind of created a tool to do that.
So, I guess my only answer to you would be, without giving things away and I don't want to kill you. Is this whole idea of, "How do we have tools that make us indispensable in the early stages of your development?" And these could be, not limited to these things. But things including analytics, things including retention. Things including item management, things including cross-promotion. Things including installs, all sorts of things.
Now, will we build all that shit? Probably not? Will we get to the point soon where we can actually take some of the companies that thought that it'd be nice to build this very nice little niche SDK thing but not actually have enough money or enough resources to continue further. And they need a place to bail themselves out. There's a lot of opportunity there.
Consolidation in the marketplace is happening right now as well, right? Everybody and their mom has an SDK now, right? This is how do we figure out to find the one that truly matters because enough time has passed. In the three years that we've been around, I'd say four-ish people who have directly copied us have evaporated. Because either they made the wrong bets or they copied the wrong things. You have no idea. But I hope that makes sense.

Audience: What about in terms of technology stack and differentiation there? What sets you guys apart? It sounds like blindside analytics are some of the things we're working on. Big data and [Inaudible 00:34:59].

Brian: Well, the stack, honestly, when you think about it, is going to be a combination of the same tools that people are using. And I'm just saying this by pretending to sound smart because I'm not my CTO. He's going to have a better answer for this.
But we're now using Go as a new type of language to try putting things together. I think this is a Google thing. You guys have probably heard of Go. Go is really hot right now, apparently.
Anyway, so what I described for technology defensibility is the following. A lot of people will try to build stuff on their own and claim that they can do it. In this particular scenario, I compare us to a payment [Inaudible 00:35:40]. So PayPal or Stripe or Braintree. Braintree's not PayPal.
But let's say you want to integrate payments into your app. You can theoretically go out there and sign up for a merchant account from a bank and try to process credit cards on your own. You could go out there and technically do that.
But why would you? Because there's a tool that's already making it super simple and you just drop it. So, we're like that, but for rewards. People could try to build a whole rewards management system and figure out a fraud-protected and managed volume and creative and analytics and tracking. Or they just could use us.
So, I think when you look at defensibility in our ecosystem today, it's a combination of brand. It's the combination of your data. A combination of your ecosystem's strength from the validation you have from your partners.
But when it comes to building it, yeah. The saying goes, Google could just throw a billion dollars and build your product in two days. Again, the thing that ultimately will set us apart is how many patents we're holding or how many individual IP unique black box algorithms we have. But how we execute in the ecosystem and how our partners validate us.

Audience: Are you doing anything internationally with multiple languages?

Brian: Yeah. So, we now support 12 languages. And we recently opened up internationally for brands with our self-service. So, our whole thinking was, "Hey, 60% of our traffic is U.S., 40% is international. Basically, developers aren't making money off of that 40% if they're just using us. Let's start leveraging more of that by opening it up to people to actually be able to put in their rewards." And languages range from a Japanese to Russian to Spanish, you name it.
So, Japanese is really fun. We actually just announced a big integration with Yahoo! Japan in Japan. And that was a really big integration for us. And so, international is a big focus for us right now.

Audience: Are the moments different? In the sense that, culturally, some things are positive or other cultures are not positive here, vice-versa?

Brian: I think I'll find out when Christmas and New Year's rolls around. There's a lot of learning during the holiday period, I would say. I'm really interested. We did a test last New Year's about holding on to New Year's resolutions and this was globally. We actually did a visual of the amount of people who were working out on January 1st and January 2nd and then tracked those same people throughout a month.
And the falloff in America was astounding. Pretty much 100% of the people that started working out stopped working out. Now, in Europe, it was completely different. I think 30% of the people decided to stay and continue working out. I don't know if this is cultural or just chronic laziness, I have no idea. But these are just small little things. You get to see certain things like that, I guess.

Ryan: We have time for one more question.

Brian: I don't want my board member. I'm messing with you. What's up?

Audience: Talk to us about the business model. What it was? I have one more question. Because oftentimes, the [Inaudible 00:38:58] changes, you're trying to maximize the revenue with either more customers or share of wallet.

Brian: Our business model?

Audience: The difficulty of the new language?

Brian: So, our business model, luckily, has stayed the same since inception. Which is brands buy-in with CPEs, so they pay per engagement. And then, we rev share that with developers that integrate our SDK. And when we serve the reward into their app and someone claims their reward, they'll get a rev share on that.
So, that's the same. The challenges, I will say and they are challenges. They're obstacles. They're more how do we get more international inventory? How do we increase engagement rates? How do we optimize pricing? I will say optimizing pricing; it didn't even exist in our company until six months ago.
Because in the beginning, you're just like, "All right, fine. A dollar." Whatever, right? And then after a while, you kind of just tweak it and see what optimizes the yield for both yourself and for the developers.
Those are mechanics that you just test. And it's pretty by the book. You just see what works better and make sure you're testing across timeframes that are valid and not showing you skewed data. And then, across both irrational and rational customers. So, -

Ryan: Wait, what's an irrational customer?

Brian: An irrational customer will be, again, it would be a brand or an agency that's buying off of relationships. Or buying off of how they feel about you. Yeah, that's irrational.
And then rational would be someone who says, "Okay, you're performing like a Hulu," and then continue to do the same thing over and over again because they know that it's working. So, who was it that asked the conversion number? We could technically have made the best conversion for a big brand for someone buying something at a Whole Foods.
But if they measured on how much love was measured, your brand lift or brand awareness or brand recall. Then, that final number may not have mattered to them at all. So, there are so many things that you have to look at. And I think the challenges for us have just been the diversity of those needs. Because brands have many things that they will measure against.
And so, I'm lucky that we've now found more rational customers. And then use that as a predictable, scalable measurement so that we have that solid pool of revenue. And then allow the irrational buys to take its course as bonuses. So, there's ways that we look at it and that's kind of been how the economic model has grown.

Ryan: Very good. I want to thank Brian, once again, for joining us today.

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