Business Report

Scvngr's Hunt: Retailers Who See Dollars in Game Dynamics

Can location-based games for smart phones boost foot traffic at stores?

The Cambridge, Massachusetts, headquarters of the game company Scvngr (pronounced scavenger) is a hand-me-down from the French phone company Orange–a lavish custom-built affair with bamboo gardens and a “war room” equipped with moving walls. This is also where Google’s Android platform was later conceived. Now the workspace belongs to Seth Priebatsch, the 21-year-old “chief ninja” of Scvngr, a startup that aims “to build a game layer on top of the world.” The hyperkinetic entrepreneur informs me that people can get points in a Scvngr game by climbing onto the roof of the building and leaping over the bamboo canes. He’s done it.

Shoe shopping with Seth: One Scvngr game involves snapping photos of sneakers. But will it boost sales?

Amidst such silliness, Priebatsch hopes he’s found a business model that will finally unleash the marketing power of the smart phones that hundreds of millions of people now carry everywhere. If you download the company’s app, available for both iPhone and Android, you’ll see a whole list of such dares, ranging from difficult athleticism to more modest stunts–like making an origami figure out of a tinfoil burrito wrapper. “There is real value to engaging with a place–to playing with a place and having fun, to building a type of experience that you can’t get with any other type of social media,” says Priebatsch, who founded Scvngr while he was a freshman at Princeton.

Companies in the Boston area are piloting Scvngr to see whether it can get customers to engage with their products in new ways. For example, the car-sharing service Zipcar is “challenging” users to find new pick-up locations and snap pictures of themselves posed next to the vehicles. Besides earning rewards, the users learn where they can pick up Zipcars. “We’re hoping for a deeper connection to the Zipcar brand, and we want folks to have a little fun,” says Rob Weisberg, the company’s chief marketing officer. “Our members are tech-savvy and highly engaged in the social space. We want to play where they play.”

City Sports, another brand trying Scvngr, has similar goals. “Here at City Sports we’re all about creating a store atmosphere that is both inviting and exciting for our customers,” says Rob Wittmann, the retailer’s director of integrated marketing. City Sports is using the game to challenge customers to find products in particular arrays of colors. Wittmann adds that he hopes Scvngr will open customers’ eyes to new products inside the stores.

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Scvngr also has a deal with the shoe retailer Journeys, which offers a 10 percent discount to people who get a certain number of points completing challenges at a Journeys location–such as snapping a photo of the store’s smallest shoe (see video).

Scvngr is one of a new crop of apps that rely on the location knowledge built into smart phones. But while others, like Foursquare, place users on a map and enable them to “check in” at specified places, Scvngr’s game takes matters a step further. If other players have been there, they may have left behind challenges, which the user can complete for points. After visiting a location enough times, users earn the right to create their own challenges.

Scvngr relies on principles of game dynamics that Priebatsch has gleaned from reading hundreds of academic research papers and doing his own experiments. Why, for instance, do players of games such as Tetris get so obsessed with reaching the next level?

Kneeling shoeless on the floor of his office, which is lined with toy cars, Priebatsch deals out game dynamics cards from a deck the company has created to showcase the underlying ideas. For example, there is the progression dynamic, which is the idea that if you present people with clear, achievable guideposts on the way to a goal, they will be strongly inclined to aim for the next guidepost. In the bestselling Sonic the Hedgehog 2, for instance, players must collect 50 rings to earn a red halo of stars, which in turn helps Sonic stop the evil Dr. Robotnik from capturing Sonic’s friends.

For now, businesses seem to be just scratching the surface of these kind of motivators in their efforts to get more customers in the door. For example, Journeys challenges visitors to find a pair of shoes they like, try them on, and take a picture of themselves wearing the shoes. By then, Priebatsch points out, the customer is wearing a pair of shoes that he or she likes and identifying with them by recording the experience. He believes that offering the customer a discount will have greater impact at that moment and be more likely to result in loyalty and repeat visits.

It’s not yet clear whether this approach will work: companies like Scvngr still must prove themselves. Marketers are uncertain how to measure the value of location-based marketing campaigns, and it remains to be seen whether users who check in at a location are more likely to return or feel loyal to the product.

Controversy over a recent marketing campaign that McDonald’s operated through Foursquare illustrates the difficulties. Initially reported as having vastly increased foot traffic to the restaurants, the campaign turned out only to have increased the number of Foursquare check-ins, not the amount of food purchased. Companies are searching for ways of quantifying real results.

Nevertheless, sophisticated investors are betting that results will follow. Scvngr has backing of nearly $5 million, most of it from Google Ventures, with Highland Capital Partners, DreamIT Ventures, and Bantam Group also having provided funding in earlier rounds.

Priebatsch is using the capital to develop a second generation of the technology, with more sophisticated games. He is also expanding Scvngr’s sales force beyond Boston, Philadelphia, and San Francisco to New York and Seattle, with the goal of proving that Scvngr can move up a level, beyond the novelty stage and into the realm of truly increasing sales at thousands of retail locations.

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