In its infancy, advertising was an interruption. Ads were part of the price of watching TV or flipping through a magazine. More recently, brands have experimented with ways to make their messages desirable in their own right, via social engagement and branded content.

But at a Social Media Week event at the Time-Life Building in New York City this month, Gabe Zichermann argued that in the future, brands will use game mechanics to go beyond just getting a customer’s attention. Instead, they will make themselves a part of the rhythm of their customers’ lives. Games are “a process, not a destination,” Zichermann argued.

Zichermann said he defines “gamification” as the use of game mechanics and game-based thinking to solve problems and create user engagement. But more broadly, he explains, a solid game-based marketing program is really just the final incarnation of the loyalty programs businesses have been using for almost 200 years.

In the first phase of loyalty programs, customers were given free merchandise for buying a set amount of product. Think of those cards that promise you a free pizza after you buy nine pizzas at the regular price. These are still the most common form of loyalty program, he says, but they’re not the most effective. They tend to offer incentives to customers who don’t need them. A customer who buys nine pizzas will probably come back for a 10th whether it’s free or not, he argues.

I don’t know if that’s true for all goods and services — heavily commoditized products would seem to be a likely exception — but I think he’s probably on to something when he says that businesses give away more stuff than they need to, especially if you buy his argument that other loyalty incentives are more powerful and cost-efficient.

The next phase of loyalty programs offered customers a points-based rewards system, such as credit card reward points or the old S&H Green Stamp program. These systems create virtual currencies that can be traded on private markets for certain goods — but their cash value is never precisely defined, he notes. By getting someone to buy into a private economy, you create a more lasting bond that goes beyond scoring that free pizza, he argued.

Next came status-based systems, such as airlines frequent-flier clubs, that convey privileges. The value of a privilege can be even harder to calculate, he notes, because different people in different circumstances might assign different values to not having to wait in line. But Zichermann argued that access to perks can be a more powerful motivator than material rewards because they turn customers into members of an exclusive club — something they can’t readily buy through other channels, he said.

With gamified loyalty, status takes the place of actual rewards, he said. Players are aiming to amass virtual rewards that have no real world value, but do possess personal value. Sometimes, that reward is a virtual item, but it could also be the sense of accomplishment that the player feels. The best games keep the player involved enough to ward off boredom, but not so involved that the activity makes them anxious — a state known as “flow,” Zichermann said. I suspect anyone who has played a really addictive game will recognize this state — it’s the compulsion to play just one more turn without even thinking about it.

Zichermann explained that in old loyalty paradigms, businesses exchanged rewards for purchases in a transactional, linear fashion. Gamified marketing is different because its based on a cyclical model in which a player sees progress toward a goal and that progress increases their engagement and makes them more receptive to an organization’s message. But you can’t use virtual rewards as a bandage to cover up a lousy set of game mechanics or a shoddy product. It’s not enough to slap on a Foursquare-style badge mechanic and call it a day, he said — drawing murmurs of approval from the crowd and plenty of emphatic agreement via Twitter.

Creating a gamified system requires understanding your customers’ desires and pairing them with mechanics that tap into those motivations in a way that also serves the brand message, he said. Zichermann then pointed to the work of British researcher Richard Bartle, who divides gamers into four distinct categories based on their motivations for playing:

  • Achievers: Want to win a game as thoroughly as possible.
  • Explorers: Want to see everything the game has to offer and experiment with it as much as they can.
  • Socializers: Want to meet and cooperate with other players, with the game serving to facilitate that interaction.
  • Killers: Want to win the game, but they also want to see others lose. Zichermann argues that even these players can make positive contributions to a game’s community if they are given proper ways to explore this desire.

I suspect that combining brand messaging and player desires in a coherent way will remain a stumbling block for many brands for some time. Very few brands have developed games that serve their message in an organic way — as opposed to just creating product-placement opportunities. But that doesn’t mean it’s impossible.

The idea that people would voluntarily watch ads was laughable until the infomercial came along — and the idea that customers would want to convince each other to watch ads was every bit as ridiculous until the rise of branded viral videos. Placed in that context, the idea that we’ll someday itch to play games that reinforce a relationship with a brand doesn’t seem so far-fetched.

What companies and organizations do game-based marketing well? What stumbling blocks do great game-based programs need to overcome?

Image credit: kencameron, via iStockphoto

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12 responses to “Exploring the serious business of game-based marketing”

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  2. […] This post was mentioned on Twitter by SmartBrief on SocMed, Lisa Lisa, Greg Satell, Ricardo Lucas, Vinny Poliseno and others. Vinny Poliseno said: interesting concept RT @SBoSM: Exploring the serious business of game-based marketing #smwnyc […]

  3. David Perdew says:

    This strategy makes sense, in the sense that you'd want to intice fans of your brand to participate in your marketing by making it more fun to do so. It's also an interesting perspective, since most people wouldn't think of their online advertising in this way up front. It does hint at a way to increase loyalty, though, and maybe this angle is one that separates you from your competition in a specific market. Thanks for the insight, Jesse.

  4. jstanchak says:

    We featured SCVNGR in a post we ran on Monday about cutting edge mobile apps:

    I agree, it's got potential.

    Another kinda nifty looking mobile game is Shadow Cities:

    Too bad it's only in Finland.
    My recent post Is there value in buying display ads on social sites

  5. @tiedtiger says:

    There's so much misinformation around gamification at the moment.

    …With gamified loyalty, status takes the place of actual rewards, he said. Players are aiming to amass virtual rewards that have no real world value, but do possess personal value. Sometimes, that reward is a virtual item, but it could also be the sense of accomplishment that the player feels. The best games keep the player involved enough to ward off boredom, but not so involved that the activity makes them anxious — a state known as “flow,” Zichermann said. I suspect anyone who has played a really addictive game will recognize this state — it’s the compulsion to play just one more turn without even thinking about it….

    This is wrong on three counts:

    1. Players do not randomly ascribe value to virtual awards and status. The value of those awards is directly linked to how hard they have worked to attain those rewards. For example, a high score is an achievement because a player has spent a long time getting better at their game to the point that they have achieved that score. However an easily attained points score is meaningless fluff.

    2. Keeping somewhere between boredom and anxiety is not "flow". It is amusement. You could argue that slot machines are an example of this, or roulette. Flow, on the other hand, is all about investment and involvement and emotional connection. Anxiety absolutely IS involved in flow. A lot of gamification marketers seem to think that all they have to do is create a version of Cow Clicker on a site, and that's job done. It's really not.

    3. A lot of people in the social and gamification business are deeply misrepresenting Bartle in the talk of player types. What they are espousing is the idea that it's all just a matter of different kinds of rewards for different folks. Again, no. Any kind of serious game design involves creating compelling actions, loops and game dynamics first and foremost. Long before you ever get into wondering whether a game is oriented toward one player type or another, the gameplay has to – at root – actually function. Otherwise you are completely wasting your time.

    On my own blog (What Games Are) I wrote an article not too long ago that speaks about why this sort of frankly sloppy thinking around gamification has taken root (in short: it sounds cool) and why it actually really is just a next generation version of Air Miles. Air Miles is fine, but only makes sense if motivated by tangible rewards because points are cheap.

    Here's the post:
    My recent post How to Get to Work in Games Video

  6. ilyaboo says:

    I agree with @tiedtiger totally. There seems to be a lot of hype on gamification and how it's the next brand marketing and loyalty generation phase, but there is no substance on the challenges and creation of the games on a business level.

    It's interesting to see how the TV show Psycho… is using gamification to engage their fans. It seems their have found ways to get people to visit their site, "Fans can play games, watch videos and answer trivia questions. If fans share something on the site, they get 200 reward points. If they take a poll, they get 50 points. The challenges are posted on the home page every week; that drives return visits, with 50,000 coming back every day. For every shared piece of content, the fan gets 10 points for every additional fan who shares the content with someone else."

    This site in my mind can be defined as gamification as such. They probably work because they get people to watch videos and play games reward them with points. It may work for a media company, but this can't work for a serious business brand.

    For businesses to integrated gamification on a serious level, they require their challenges to be competitive, stimulating and not frivolous. What are the options? Sudoko for Hermes? Monopoly for Construction companies? Risk for the Elections? Cluedo like games for Fraud Companies? Scrabble for Banks?

    The concept of gamification needs more thought on how challenges on a serious level can work. Not harp on about the different virtual currencies and badge designs!

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  8. @barrykirk says:

    Excellent debate here on the topic of gamification, something I've invested considerable time in exploring this past year as a consultant in the loyalty marketing space. I think many of the criticisms lobbed at this approach are well-founded, particularly that some so-called gamified experiences are actually rather shallow applications of game mechanics with no real understanding or interest in the emotion and psychology that drives well-designed games. But many of us in my space are sincerely interested in developing the deeper expertise needed to apply more authentic game thinking to loyalty programs, seeing those programs as experiences that are deeply in need of more meaningful, challenging, cooperative and social interactions.

    My one critique of those who decry the loyalty industry's interest in gamification as the work of shallow marketers with no understanding of the art of games is that it shows a lack of understanding of how much "design" actually goes into the creation of a loyalty program experience. Effective loyalty programs include complex virtual economies, emotional pull, applications of behavioral economics to lead members through the arc of the program life cycle, and layered, targeted communication components. Real loyalty industry experts are more than marketers, we are experience designers — our interest in gamification is to evolve our design work by attempting to find a compelling intersection of program design and game design.

  9. […] opportunitiesNot all games look or act the same, but a big problem with modern game design (and especially gamification and social game design) is that designers have somehow got it into their heads that the ideal game state (or ‘flow’) […]