🔒Portland venture aims to change advertising paradigm

Two Portland-based entrepreneurs have received $400,000 in seed money for a venture they hope will change the paradigm of online and mobile advertising from a nuisance to a novelty.

Robert Bruce and Colin Snyder have spent the last several years developing BoodleUP, an online game designed to promote local products and services. The game makes ads the primary content an online visitor seeks, rather than an obstacle to overcome on the way to some other content. (Think of those annoying pop-up ads that appear when you're trying to read a news article online.)

Bruce, the president and CEO of Zylo Media, which is developing the service, says the online game attempts to build a positive connection between businesses and customers in a way that doesn't devalue a company's product or service, and doesn't intrude on the consumer.

"The advertising we see on our phones or on the web is rarely something we're seeking out," Bruce says. "It's trying to intrude on our space. I wanted to change that paradigm."

Traditional advertising is inherently intrusive, says Bruce, because it interrupts television and radio programs, or comes into the home as direct mail or newspaper ads. Online advertising in the form of drop-down and pop-up ads is particularly intrusive, he says.

BoodleUP uses gaming to put a company's brand and products in front of engaged, willing consumers, says Bruce. Potential customers are invited to register and play a tic-tac-toe style game, with prizes supplied by the advertisers. Once a potential customer wins, he or she has the chance to redeem the prize, or to keep playing for the chance to win something more appealing. Once a player decides to redeem a prize, the customer's information — demographic, product preferences and more — is revealed to the advertiser offering the prize. (See "How it works," page 25.)

Bruce says the game offers advertisers three benefits: visual branding, since people are coming to the site specifically for the products; direct response, since winners must redeem their prizes in-person at the stores or service locations; and lead generation, since businesses receive reports about how the service is being used.

Bruce says Zylo Media tested the game in Portland late last year. About 30 Portland retailers, restaurants, bookstores and sports teams offered products to give away. He says the data generated was eye-opening.

Skeptics assumed people would take the first prize they won, but Bruce says that was not the case. Over a nine-week period, the focus group of 250 people, ranging in age from 12 to 72, played the game about 33,000 times.

The game was set to produce a winner one in every three tries. Bruce says gamers, on average, viewed and considered 39 products before accepting one. Customers also regularly threw back $10 cash prizes to keep playing.

That response, he says, meant that all the participating companies were getting more and perhaps more meaningful ad impressions than traditional advertisers.

"That's a pretty powerful dynamic," says Bruce. Winners were locked out for up to a month from playing for the more expensive products once they claimed prizes, but when the lockout was lifted, 82% of users returned to play again.

Participating businesses were sent regular reports about how people were using the site and how they responded to their products. Information included demographics, age, offers, throw-backs and web hits. "That was really powerful data for [businesses]," Bruce says.

A different slice of the pie

BoodleUP differs from Groupon and LivingSocial, which offer people substantially discounted products and services. Bruce says the discount offers often devalue the products being sold, since customers expect to get those products at a reduced rate.

BoodleUP is free to customers. Bruce says that creates a sense of value for both the customer and the business — the customer is pleased to win something without feeling roped into spending money and the business is pleased the customer chose its gift over others.

"As a merchant, you want your customers to value what you provide," he says. "We're trying to build a goodwill relationship" that will lead consumers to become regular customers.

"We're allowing the merchant to give something to the player — it's almost a way of thanking a consumer for choosing that store or paying attention to that restaurant," he says. "And it's a way to highlight what that merchant really believes is emblematic of their brand."

Something ventured

Zylo Media has come a long way since Bruce and Snyder, the co-founder and CTO, solicited family and friends for the initial $90,000 to develop the idea and prototype in 2009. The duo currently has a patent pending for the technology, says Bruce.

Zylo recently received $400,000 in venture capital from the Maine Angels and out-of-state investors in Florida and the Silicon Valley. That money is being used to launch a commercial version of BoodleUP in Cambridge, Mass., where advertisers will pay about $500 a month to be featured on the site.

Sandra Stone, chairwoman of the Maine Angels venture capitalists, says she was drawn to the proposal because Bruce, whom she called a "serial entrepreneur," had already managed a successful exit from another venture, Entrix, a colorectal cancer screening company that was sold to Quest Diagnostics in 2004. Bruce also was a partner in Tribal Asset Management, which built Foxwoods Casinos, where he realized the power of gaming in commerce.

Stone says investors were also impressed with Snyder's technical acumen, which led to the creation of the game and lockout technology that Zylo is trying to patent.

"It was a team that very much impressed us," says Stone.

The psychological component of the game is important, too, says Stone. Zylo's test period revealed that players by-and-large continued to play the game until they won the prize they wanted. The more they played the game, the more ad impressions were made.

"[Advertisers get] an opportunity to have impressions put in front of players in a very regular, repeated way," she says. "The advertiser has complete control."

Bruce says Zylo is concentrating on Cambridge and other greater Boston markets to roll out the technology because of the area's higher concentration of tech-savvy young professionals, local businesses with bigger ad budgets and the potential for follow-on financing.

"[Cambridge] is usually a hot-bed for startups," he says. "It's also a very visible community [for] speaking to the country about the potential of what we have."

Zylo plans to launch its Cambridge game in March and release iPhone and Android apps in April. Bruce says Zylo's business model predicts the company will break even once the Cambridge market comes on-line.

The company will continue to be based in Portland and eventually release a commercial version of BoodleUP here, Bruce says, equating the duo's business to Fresh Samantha, which produced its juices in Scarborough while trying to break into the Boston market.

"We're making the juice in Portland and we're committed to Portland," he says.