Startup Watch: Kiip Gives Gamers Something to Play for

Will Free, Branded Stuff Be Welcome in the Realm of Gamers?

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Can a free bag of chips buy gamers' love?

We've seen a rash of advertisers underwriting free access or giving away free stuff: they're unlocking news pay walls , doling out free soda for watching commercials or bonus Farmville cash for clicking ads. Another young startup Kiip is bringing that logic to mobile gaming.

When you beat a level or get a high score, Kiip will bring in advertisers to gift free food, lipstick and, soon enough, cars or vacations for playing games gamers are already playing.

But the question remains: While mobile gaming currently has next to no advertising, will free branded stuff be welcome in the realm of gamers? Or would they prefer to go on tapping and killing cartoon villains undisturbed?

"Gamers are going to decide whether it's worth their time or not," said Matt Story, director and gaming expert at Publicis Groupe shop Denuo. "I do think that gamers will be receptive if it's worth the interruption."

Here's how Kiip works: It's like an ad network, except for rewards. You don't "see" it, but for beating levels or winning a certain number of points, Kiip will send a gamer a pop-up that they've won a free bag of Pop Chips, or lipstick from Sephora. They can either enter an email address for instructions on how to collect the gift later, or ignore it and go on playing. In return, advertisers get sampling or to snuggle up to the gamer in that warm, elated moment when they're, well, winning. Kiip gets paid on a cost-per-action basis.

Less than a year out of the gate, we haven't yet seen proof that gamers are gaga for Kiip rewards. But already the startup's 19-year-old founder Brian Wong has wrangled advertisers like Vitamin Water, 1-800-Flowers, GNC, Carl's Jr, Hardees and Dr Pepper. He's also raised $4.3 million from Hummer Winblad, True Ventures and Crosslink Capital. Digg founder Kevin Rose is an adviser.

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Find out more from Brian Wong at the Creativity and Technology conference in New York on June 9.

Visit the CaT website to buy tickets.

But don't get too excited -- this isn't brands' gateway to the millions of rabid "Angry Birds" fans -- the developer of the wildly addictive mobile game, Rovio, is not one of Kiip's game partners. But Kiip does claim to have 12 million players through a number of developers of primarily free gaming apps.

It's also a way to get in front of a fast-growing market with little current advertising. There will be 72.8 million mobile gamers in the U.S. this year, according to eMarketer. However, the category hasn't yet had to rely on advertising to keep the lights on. Of the more than $1 billion in revenue mobile gaming will bring in this year, only about 7% comes from advertising, according to eMarketer.

It means the most successful game developers -- again, turn to Rovio with its golden goose "Angry Birds" -- won't necessarily need to look to advertising for revenue. (This follows Zynga's lead; the massively popular social-gaming company has relied less on advertising to make money than direct-from-consumers payments for virtual goods.) However, for those games looking for extra incentive to lure in players -- beat level three and win $20 in free flowers for your mom! -- or extra revenue for free apps, Kiip's another revenue stream from ads beyond the click or banner, especially since mobile ads have developed a bad rep for being low-rent.

"We have opportunity to reach people in these games, but you don't want to pervert your brand in anyway by annoying people with a banner," Mr. Wong said.

We're not exactly sure where Kiip will dole out brands' stuff; it won't disclose its developer partners, so curious ad or technology types can't game the system. Regardless of the network, it'll be the gamers that will either embrace or reject the platform and the early brands that set the hurdles they'll have to clear to get free stuff. "What are we going to require for a free latte or a $20 coupon?" asked Denuo's Mr. Story. "The early brands are going to have to be careful with setting those expectations."

Kiip: A Welcome from kiip on Vimeo.

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