HOT COMPANY PROFILE: Mobile wallet and deals service Crowdmob

Incentivising mobile gamers

Mobile gaming and daily deals are both in vogue. Crowdmob aims to combine the best elements of the two. The firm has two strings to its bow: it partners with third-party app publishers to offer deals to consumers who are playing mobile games and then bundles free apps alongside gift cards for retailers such as Amazon and Starbucks in an attempt to incentivise consumers to use its mobile wallet. Crowdmob CTO Matt Moore believes the space is evolving and tells StrategyEye it’s only a matter of time until one player attracts millions of consumers.

¤ What makes Crowdmob different from similar services?
We’re focused on making a mobile wallet that people are incentivised to pull out of their pockets. We want people to use our mobile wallet to pay for things in stores and we do so by giving them free gift cards. And the only way they can use those gift cards is by pulling out our mobile wallet. We essentially take advertising money from a partner and we give most of that back to our consumers. So if you interact with an ad, or download an entire game, if you get to a certain level in a game or share it, the publishers are willing to pay us for those actions because that’s generating valuable customers for them. In return we issue credit, so after you download five games you get five credits and you can spend those credits on gift cards with merchants.

¤ What is your business model?
We partner with mobile games or mobile apps publishers and they bid on a cost for action. For example they’re willing to pay USD1 if a user gets to level one or shares the game on Facebook. There could be a whole host of different things depending on what that game is. We show that to our users in our mobile app called LootUp, and if they do those actions, they earn points and they can then turn those into gift cards for retailers such as Starbucks or Amazon. It’s great for the consumers because everything’s free – free money and free entertainment as well – and it’s great for the publishers as it gives them access to people they normally wouldn’t have access to. It’s a new advertising channel for them essentially. For each action we’ll take a little bit and charge commission on it.

We’re definitely pre-profitability. But the beautiful thing about our model is that for every time we get a commission that often pays for us to be able to get another user. It’s a really self-fulfilling cycle and it’s primed for growth.

¤ Who are your main competitors?
If I had to pick one that I’m most worried about it would be Google Wallet, not because of what they’ve done in the past but what they’re doing in the future. They are acutely aware of the fact that they 100% failed on Google Wallet the first time around. Now they’re moving away from NFC and more importantly they’re actually going to start integrating it with their local deals platform.

Google could be a great partner if they stay open and open up APIs like they’ve done in the past with Android. But they could also be a competitor as well if they battened down the hatches and employed integrations with search and local. They haven’t done that in the past, but now with Larry taking the reins and focusing on cross-product integration, it’s a real possibility.

¤ What’s the biggest challenge you currently face?
By far the hardest is focus. There are so many opportunities right now and we’re talking to a lot of big merchants. We could do integration with Home Depot, or AmEx or Capital One. There’s a whole host of things that we could do and we have to re-focus every week. For example, we get all these incoming requests to work together, but which ones actually matter? It’s very hard when you have these companies that are so big and theoretically could catapult us to where we need to be. But at the same time you have to decide which partnerships will bear the most fruit.

¤ What do you think is the hottest trend in digital media?
In the mobile wallet space there’s going to be one of two winning strategies. There’s going to be one company that finds a way to get millions of consumers and every merchant by default will have to integrate with them. That’s our strategy and that’s where it’s going. The other potential strategy is that there’s going to be one company that builds the platform that many different mobile wallets can use, like an open graph or an API, for offline payments and a whole bunch of different apps are going to integrate with that. I see one of those two winning out.

Crowdmob is built around both providing value for its publisher partners and, crucially, generating revenue for itself. In the current climate, it’s almost refreshing for a startup to focus so readily on its business model from the off. Though the firm is not yet profitable, as Moore points out, its model is primed for growth, but key to Crowdmob’s success is ramping up user adoption. This will come from partnerships with app publishers, which should be the firm’s primary focus as it seeks to grow, linking with one of the top 25 titles in Apple’s App Store or Google Play would greatly increase Crowdmob’s exposure with the dollars sure to follow.

But one problem is how the mobile payments market will develop. Picking a technology that will go mainstream, never mind the players involved, is not easy. And, lurking on the horizon is the threat of being squeezed out by the competition. Moore is all-too-aware of the potential of the bigger fish to flood the market, and with so many mobile-focused deals offerings, it is a struggle to stand out. He is right to highlight Google Wallet as an issue. This is where Crowdmob’s decision to incentivise mobile gamers stands it in good stead. Adding an added layer of rewards to publishers’ titles is a shrewd move, but the firm needs to add amass more partnerships if it’s mobile wallet is to gain traction.

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