The company behind Pokemon Go has a new plan to help businesses attract new customers, as it explores more responsible ways to make money than traditional advertising

• Niantic, the creator of Pokémon Go, is allowing small businesses to sponsor locations in the game for the first time ever.
• Pokémon Go has had advertising deals with giants like McDonald's and Starbucks practically since the game launched in 2016, but this is the first time that smaller companies will be able to buy these ads on their own.
• They can sponsor Pokéstops and Pokémon gyms, which Niantic says can attract big foot traffic - especially since they can also opt to host so-called raid battles, which pit as many as 20 players against more difficult monsters.
• CEO John Hanke says that it ties in to how Niantic feels about monetization in general: There are ways to do it that are non-invasive, and that serve the goal of getting people out into the real world, while still generating positive results.
• Niantic also announced that Pokémon Go players worldwide can now submit locations to include in the game as Pokéstops, so long as they're the maximum level of 40.
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Advertising has been a part of Pokémon Go almost since the very beginning.

In 2016, amid the post-launch craze, shares of McDonald's Japan spiked when it came out that it would be the very first brand to sponsor the game's signature Pokéstops. Since then, companies like Starbucks, Sprint, and Samsung have all inked their own deals to place ads in the game.

The game's developer Niantic announced at an event in San Francisco this week that, for the first time, it's allowing for small and midsize businesses to advertise in Pokémon Go, no big-money brand deal required. The program launches in beta soon, and will open up for customers to place their sponsorships in December.

The company also highlighted the success of Wayfarer, its program for allowing high-level players in certain countries to suggest and vote on points of interest that could become locations in Pokémon Go and other Niantic games. It's now available to all Pokémon Go players worldwide, provided they've achieved the maximum level of 40.

The news comes after Niantic raised a $245 million funding round that valued the company at just shy of $4 billion in January.

What this all means

To take a step back: If you ever played Pokémon Go, you know that while the game is on your smartphone, it's actually played by walking around in the real world. Certain points of interest, like public art pieces or historic landmarks, take on the form of Pokéstops and Pokémon gyms in the game, where players can obtain items and do battle.

In 2017, about a year post-launch, Pokémon Go added so-called raids - Pokémon battles that require up to 20 players to team up to defeat. Those battles are more difficult than usual, but come with the reward of catching rare monsters that are often otherwise unobtainable. Those raids are a big deal, and often draw Pokémon trainers together in real life to tackle the challenge.

This is the phenomenon that Niantic is hoping to capitalize on with the launch of this new advertising service.

Businesses of all sizes will be able to purchase the ability for their establishment to become a Pokéstop - ideally drawing players in to become restaurant patrons and shop customers. The proprietors of the business can even opt to be the venue for one of those raid battles, which could bring in even more foot traffic, Niantic says.

Carla Li, product lead at Niantic, said that customers like McDonald's have found success with this style of advertising already: By strategically activating raid battles, it can increase foot traffic at opportune times. Li said that pilot customers in the new sponsorship program, including stores like Boom Tube Comics in Connecticut, have already seen similarly promising results.

Better yet, she said, because raid battles are already part and parcel of Pokémon Go, this kind of advertising can bring players around "without disrupting the game balance."

A more responsible model

John Hanke, the CEO of Niantic, said at the event that he sees the sponsored location launch as being something of an "anti-Amazon" in the age of ecommerce. Pokémon Go has a proven ability to get people out and about, he says, and now it can help drive those players towards brick-and-mortar businesses.

More broadly, Hanke says, the majority of company's revenue comes largely from in-app purchases, in Pokémon Go and its other games, Ingress and Harry Potter: Wizards Unite. Analyst firm Sensor Tower estimates that Pokémon Go alone generated $26 million in revenue in September from in-app purchases.

Hanke says that it's found so much success with in-app purchases "from not being overly aggressive," meaning that players don't need to buy anything to enjoy the game, but can get more out of it if they do.

Similarly, sponsorships are an investment area for Niantic, not only because of the revenue potential - - "I think it'll grow over time," he said - but because it can "help define what advertising could be in augmented reality." It's not "invasive," he says, and doesn't rely on collecting data about users to function; it's just part of the game.

The company also says that the sponsorship platform presents a possible new revenue source for companies building on the Niantic Real World Platform, its nascent service to allow developers to use its technology to build their own location-based augmented reality games.

In other news

On the subject of the Real World Platform, Niantic announced a new $10 million fund to invest in companies building apps using the software. While the Real World Platform is still not available to the general public, Niantic also announced the Niantic Creator Program, where interested parties can apply to use the tool.

In that vein, Niantic also announced the winner of its Niantic Beyond Reality contest, where JC Soft - consisting of a developer team that also happens to be an actual family - won a weeklong hackathon for their project "Run To My Heart," a game that takes Niantic's technology and turns it into a game to encourage users to go running.

The company also showed off improvements to its augmented reality technology, with a focus on a demo of occlusion, the technique for allowing virtual creatures and items to disappear when they go behind things, as a real object or animal would. Hanke said that the company's technology is coming along nicely, and that it's poised to take full advantage when augmented reality glasses, like the ones Apple is rumored to be building, come to fruition.

Finally, and on a related note, Niantic did announce a little bit of Pokémon Go news: Its snapshot mode, which allows users to take augmented reality photos of their monsters, is getting a big upgrade with a new feature called Buddy Adventure. When it launches, at some unknown point in the near future, you'll be able to feed your monster berries, and even link up with a friend - across both iPhone and Android - to have your Pokémon pose together.

It's very cute. Just look at this: