Lootcakes has raised $2 million in enterprise funding to reward VIP gamers who share their knowledge about their taking part in habits in a privacy-safe means. It’s like a brand new type of frequent flyer rewards program.
New York-based Lootcakes requires gamers to belief it with their non-public knowledge, one thing that not everybody will do. However the firm says it has sufficient gamers opting-in to its reward program to create a profitable goal marketplace for advertisers who’ve new video games to indicate — with out sacrificing consumer privateness by giving it to 3rd events.
Spenders in Lootcakes’ neighborhood spend over $170 monthly on free-to-play video games, with the highest 1% spending over $2,000 monthly. It is a profitable neighborhood to focus on, and with adjustments that Apple is making to guard privateness, it might be one of many few methods going ahead to promote to players. (Apple is about to retire the Identifier for Advertisers, or IDFA, and drive customers to opt-in on adverts).
The Leisure Economic system
With its opt-in gamers, Lootcakes has created a community of gamers who’ve confirmed that they’re prepared to spend cash in free-to-play video games. It rewards them with “lootcakes,” a digital forex that’s redeemable for reward playing cards on main gaming platforms. That permits the players to purchase extra digital items of their favourite video games, successfully permitting them to be paid to play video games. That’s a part of what I name the Leisure Economy, the place sometime we’ll all receives a commission to play.
Lootcakes CEO Matt Littin mentioned in an interview with GamesBeat that the corporate calls this “rewarded data-sharing,” the place shoppers harness their knowledge to get extra of what they need, somewhat than passively giving it away.
“Our basic mission is to empower shoppers — on this case players — to harness their knowledge to get extra of what they love, as an alternative of giving their knowledge away for little or no worth,” Littin mentioned. “Client empowerment is on the coronary heart of what we’re doing.”
Konvoy Ventures led the spherical, with participation from SOSV and GAN Ventures. Lootcakes has famous that only one% of gamers account for 80% of in-app buy income. Advertisers would in fact love to focus on the spenders — typically referred to as whales — to new video games. And final 12 months, advert networks spent $10 million focusing on Lootcakes’ audiences, and this 12 months it’s anticipated to be $25 million. However as we’ll clarify, the advertisers aren’t focusing on Lootcakes’ customers.
“Our rewards enable players to stretch their dollars even additional,” Littin mentioned. “And on the consumer acquisition facet, our knowledge helps advertisers to extra successfully discover the players who’re nonetheless spending.”
Members of Lootcakes need to be trusting. They need to agree to permit Lootcakes to look by means of their e-mail accounts for in-app buy receipts in order that it may construct a profile of their shopping for conduct. In return, for each greenback they spend on any free-to-play recreation distributed through the App Retailer, Google Play or Steam, members obtain “lootcakes,” the corporate’s digital forex. Proper now, gamers enroll through a web site, however a cell app is within the works.
This forex is redeemable for reward playing cards to main gaming platforms, giving members extra digital items of their favourite video games. Members also can multiply their rewards by making purchases in promoted video games and by collaborating in game-specific social teams.
Konvoy Ventures managing companion, Jason Chapman, has joined the corporate’s board of administrators. The cash will likely be used to develop and launch a Lootcakes shopper cell app to take a seat alongside its present web-based service. As well as, the corporate plans to open its non-public beta to extra players, develop past the U.S. market, provide restricted version merch and digital items, and forge affiliate partnerships with YouTubers, streamers, and recreation communities.
Lootcakes funds its member rewards and generates income by serving to recreation publishers with VIP consumer acquisition. The corporate’s first business-to-business service leverages Lootcakes’ unique knowledge to create large-scale spender look-alike audiences. Lootcakes is presently engaged on eight titles ranked throughout the U.S. prime 100 grossing video games on the App Retailer and/or Google Play. The corporate is already worthwhile.
The corporate’s senior crew contains Littin, former cofounding member of leisure consultancy Cinetic Media; president Dan Laughlin; and chief know-how officer David Schleupner. The corporate began in 2012, however it took its time. Littin and Schleupner funded the trouble on a low finances.
“That allowed us to construct a sustainable enterprise forward of funding,” Littin mentioned. “Because of this, we are actually worthwhile. We have now a bunch of momentum. And we will responsibly develop the enterprise with our new funding.”
It was cheaper for Lootcakes to start out out on the net and develop its viewers throughout a number of platforms. Reasonably than require gamers to take footage of their receipts or manually ship them after each buy, Lootcakes acquired permission to look by means of their inboxes to search out the receipts. One of many byproducts of that method was higher safety, because it turned tougher for somebody to faux a purchase order.
“We need to make it as handy as potential for customers to share this knowledge. However along with that, you understand, we want to have the ability to validate the authenticity of the receipts,” Littin mentioned. “There may be potential for fraud with folks taking footage.”
Lootcakes is aware of how you can search by means of the emails to search out the automated receipt that comes from one of many platforms. So gamers can set and overlook it as soon as they hyperlink their e-mail accounts. They get rewarded within the background with no further effort.
“These gamers are driving the ecosystem, the financial well being of gaming firms,” Littin mentioned. “We’re serving to these invaluable shoppers to completely notice their worth within the ecosystem and get advantage of their knowledge as an alternative of passively giving it away.”
Littin mentioned Lootcakes will get paid as a share of the promoting spent. The corporate has additionally aggregated audiences of non-spenders and low-spenders. These audiences could be helpful underneath some circumstances. Lootcakes will launch a sweepstakes occasion that can give some members an opportunity to win significant quantities of forex.
As for privateness, that’s the lifeblood of the enterprise, Littin mentioned. The system makes use of a number of ranges of encryption to safe consumer credentials. It limits the search scope to focus solely on senders from the sport platforms. Customers with two-factor authentication can use an app-specific password.
Apple and Google are each anticipated to double down on privateness as effectively. As famous, Apple is about to retire the Identifier for Advertisers, or IDFA. It should require customers to opt-in to adverts and can not share user-level knowledge with third-party measurement companies and advertisers.
“We’re attempting to basically be on the vanguard of this new paradigm through which customers are proactively harnessing their knowledge,” Littin mentioned. “That’s our core mission. And so we assist the consumer having full possession and management over their knowledge.”
However one factor needs to be clear to each customers and Lootcakes’ clients. Lootcakes doesn’t promote and even share its underlying consumer knowledge with advertisers. It solely shares look-alike audiences, modeled from its consumer knowledge, that advertisers can goal with adverts.
For example, if an advertiser needs to achieve role-playing recreation spenders, Lootcakes critiques its member database and builds a seed viewers of RPG spenders. It then uploads this seed viewers to its personal advert account on main promoting platforms. From there, Lootcakes creates a a lot bigger look-alike viewers that shares the dominant behavioral traits of the seed viewers (however excludes the precise seed viewers by default). Advertisers can then goal the look-alike viewers with adverts. They will’t export the look-alike viewers, nor have they got any entry to the underlying seed viewers knowledge.
“It is a very privateness compliant course of through which the information of our customers is used to create these bigger audiences which exclude our customers,” Littin mentioned. “We receives a commission by recreation advertisers who goal these look-alike audiences.”
Lootcakes has stayed small partially as a result of it incurs prices when it offers rewards away to players. It doesn’t need to develop too quick till it is aware of every little thing in its enterprise mannequin works. However with the funding and the pending cell app, development will likely be coming. And at that time, Lootcakes will likely be sharing within the rewards of its invaluable players.