Bunchball raises $6.5M for gamification expansion

Rajat Paharia, founder and chief product officer of Bunchball, said in a recent interview that Playboy, which is out to get more young subscribers, has been able to use Bunchball’s Nitro platform to power a Facebook app called Miss Social. It’s a month-long competition where any woman who aspires to be in Playboy can get her friends to vote for her. If she succeeds, she is crowned Miss Social for a month and can get a pictorial (clothed or not) on Playboy.com.

Women submit their photos and have to win more votes on a given day of the month than anyone else. Users can engage in a variety of activities on Facebook to generate more votes. Then the women can encourage their friends to save up their votes for a particular day. The result of the Bunchball gamification has been an 85 percent rate of re-engagement and a 60 percent improvement in revenues from one month to the next.

“We’ve seen huge growth in gamification over the past year and we’re thrilled to see that translate into genuine customer demand,” Paharia said.

The gamification efforts can be full custom jobs or small efforts. In the case of Playboy, marketing firm IMHO Media created the app and used the Bunchball platform. So it required very little extra effort from Bunchball before it started generating revenue. By contrast, some companies pay Bunchball fees to create custom jobs, such as a game that Bunchball created for Bravo TV’s Top Chef All-Stars TV show (pictured at top).

Bunchball’s customers include ABC, CBS, NBC, Bravo, USA Network, SyFy, Warner Bros., Comcast and Telemundo in the TV space. It also teamed with Chiquita and Twentieth Century Fox to create a gamified cross-promotion campaign — where users get a chance to win prizes based on their engagement in the campaign — around the hit movie Rio. And it has worked with a bunch of companies across the retail, corporate, and health sectors to integrate game mechanics into broader company campaigns and loyalty programs.

On average, Bunchball says, Nitro users see page views double, page views per visit increase 60 percent, unique visitors increase 30 percent, time on site increase 100 percent, and repeat monthly visits double. The result is a 400 percent return on investment with a payback time of as little as three months. Today, Bunchball reaches more than 70 million users per month across its customers’ web sites.

That all sounds pretty good. In the macro picture, there are a lot of gamification bulls. Market research firm Gartner says that 50 percent of companies will embrace gamification by 2015. Market analyst firm M2 Research estimates that revenue from the production of gamification projects will grow from $100 million in 2011 to $1.6 billion, or 23 percent of social media marketing budgets, by 2015. The Gamification Summit drew a big crowd in January. Gamification experts Gabe Zichermann and Amy Jo Kim are doing regular gamification workshops.

But gamification has seen some backlash as well, says Tim Chang, principal at Norwest Venture Partners. Speaking at a recent SF Game Developers Workshop talk, Lightspeed Venture Partners managing director Jeremy Liew said he believes gamification won’t work on activities that are fundamentally not fun, like exercising more and eating less.

But Paharia says he disagrees. Research shows that there are very different motivators for work. The No. 1 thing that makes people feel like they had a good day is making progress at work, Paharia said. The second most valuable thing is recognition, he said. Gamification offers something on both of those fronts in providing incentives that are more powerful than dollars, Paharia said.

If there’s an explanation for why gamification is hot, it might be a natural successor to free-to-play and social games. Free-to-play games — where users play for free and then pay real money for virtual goods such as better weapons in a game — took off on Facebook, allowing apps to build up huge numbers of users. If just a few percent pay for the app, then that generates enough revenue to offset the costs of the non-paying users, and it’s usually enough to make the app profitable. Social games have trained people to appreciate virtual goods, virtual currency, and leveling up. Right now, 120 million people around the world are accruing points, leveling up and earning rewards.

Gamification is pretty much a collection of all of the tricks and tips needed to motivate those users to move from the casual, unengaged user to the paying, enthusiastic and engaged user in non-game apps. Getting users to take actions that move them on the path toward paying is what Bunchball does, and it is now getting users to do about 2.5 billion of those actions per month, Paharia said.

That’s why there’s a dozen or so companies (Big Door, BadgeVille, Gamify and others) in the gamification market now. In terms of revenues, users reached, and customer base, Paharia said that Bunchball is the biggest. In the future, Paharia believes that gamification will move beyond consumer markets into the enterprise, as companies gamify their processes to get employees more engaged. Paharia said there are a number of such enterprise projects already underway at Bunchball.

Bunchball has 31 employees.

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