Ads are coming to 'Pokemon Go'

Ads are coming to "Pokémon Go," the CEO of the company behind the wildly popular augmented reality gaming app has confirmed.

Speaking to The Financial Times, Niantic chief executive John Hanke said "sponsored locations" are set to come to the app soon.

"Pokémon Go" players hunt for the cartoon creatures at "pokéstops" and "gyms," which are set in real-world locations. The app uses the smartphone's camera to overlay the action on the real-world environment.

The game currently makes money by charging users for virtual goods, such as power-ups, but Hanke told the Financial Times that "there is a second component to our business model at Niantic, which is this concept of sponsored locations," where companies "pay us to be locations within the virtual game board - the premise being that is an inducement that drives foot traffic."

Niantic charges advertisers on a "cost per visit" basis, Hanke said.

Plenty of US retail stores have already become unofficial Pokéstops and Pokémon Gyms, driving huge increases in passing trade. Some businesses are even using the presence of rare Pokémon on their premises as a tactic to get customers inside, by placing signs outside their doors.

Prior to releasing "Pokémon Go," one of Niantic's other big releases was the multiplayer mobile game "Ingress," which has also sold promoted in-game locations with brands including Bank of Tokyo Mitsubishi UFJ, Zipcar, AXA, and Circle K.

On Tuesday, the CEO of brand tech network You & Mr Jones, David Jones - an early investor in Niantic Labs - told Business Insider there is huge potential for advertising on "Pokémon Go."

He said: "You can understand how anyone with anything to do with retail and location has that ability to get their brands to tie in. Real world food shops could have virtual berries; real-world pharmacies could have cures; sports stores, gyms, there are so many different things you can do. The potential is enormous."

Advertisers are likely to be intrigued by the apps huge runaway success, with little to no marketing spend pumped behind it.

Data from analytics company SimilarWeb suggested 3% of all Americans opened the game last Friday, only slightly behind the 3.5% who opened Twitter, and the game has been installed on more US Android smartphones than Tinder, the dating app.

However, this success is causing some issues for the app, with users reporting frequent crashes and bugs. Niantic has also had to pause its international rollout, meaning the game is only officially available in the US, Australia, and New Zealand - although that hasn't stopped users in other territories using a workaround to download the app.