Last Thursday, I went to the Gamification Summit in San Francisco to answer for myself the question that arises in my head: Is this the next big thing or just a load of hype? The answer is below.C’mon, if I told you the answer immediately, what would be your incentive to click on my links and engage on my web site? Hmmm… I guess I did learn a thing or two at the G-Summit after all …

What is gamification?

For those not living in the Valley or Alley or who didn’t read my brilliant interview with Gabe Zicherman (Mr. Gamification, as I call him) recently, gamification can be defined as applying game mechanics on non-game applications, or doing a Foursquare and adding points, badges, and ladders to anything that lives and breathes

What’s old is new

First of all, let’s just get this out in the open. There is a lot of debate, even at the Gamification Summit itself, whether gamification is the next new thing or just a bunch of hype.

For all you lovers of gamification, it’s not the next big thing because it’s been around for years. There have been loyalty programs, point systems, and gaming mechanics in non-game activities since the invention of TV, radio, and advertising. It’s not the next new thing because there is nothing new here.

For all you haters of gamification, however, it’s not all a bunch of hype either. By combining the loyalty programs of old with the new social tools and technology where everyone is connected and every piece of data is collected, we are at a point where we truly can turn every activity we do into a game.

It’s a lovely and scary thought. I just read a book about the Vietnam War and shudder to think of what the impact of gamification would have been on the body count metrics used by the US military.

Gamification is nothing new, but the terminology and technology is. And for that reason, the Gamification Summit was a very interesting event.

The 3 B’s of Gamification

There are many gamification companies that have launched or are in stealth mode. For right now, the 3 big companies to watch are Bunchball, Badgeville, and Big Door.

Why? Because all 3 have actual clients and technology that is working today, as a result of the fact that they have all been doing this for a long, long time.

Rajat Paharia started Bunchball as a social games platform company in 2005 and then transitioned the business to a game mechanics platform in 2007. In his words, Bunchball was 2 years two early for social games and then had to wait 4 years for gamification to hit it big. Now that it has, they are already veterans in the space. Jesse Redniss, VP, Digital, USA Network, provided a glowing presentation of Bunchball’s heavy metric-driven and flexible platform in describing the success of working with Bunchball to help design and run it’s Club Psych program.

The story behind Badgeville is just as interesting. Based on a chance meeting between CEO Kris Duggan and Michael Arrington of Techcrunch, Badgeville presented and won the Audience Choice Award at Techcrunch Disrupt. Within 3 months, the company raised $ 3 million in funding, has grown from 4 to 20 employees, and have 20+ partners. According to Kris Duggan, Badgeville’s turnkey solution is heavily analytics-driven, more focused on helping partners build site loyalty than gamifying their product.

I did not speak with anyone from Big Door at the show, but they did make big announcement, offering a free version of their gamification service to any web site that wants it.

It’s all about the ROI

I had an interesting conversation with Irving Fain of CrowdTwist. According to Irving Fain, in all the talk about points, badges, and challenges, there is very little discussion about return of investment (ROI) of gamification.

Many believe that people are willing to engage in gamified activities for status and to win virtual items. Foursquare has grown because everyone wants to be a “mayor” of an establishment, which in most cases, which is more or less about bragging rights.

Mr. Fain believes, however, that this will get old quick and that people need to earn real world items of real world value to continue playing any game. If he’s correct (and he does have years of experience in the loyalty business), then a gamification project could actually cost a lot of money in the end, as the more successful you are in engaging your users, the more actual prizes you have to give away. CrowdTwist’s focus is how to help monetize and pay for these actual prizes as well.

Jesse Redniss of the USA Network supported this idea, saying that their program really grew when they gave out actual TV-related products as prizes (which were paid for by ad sponsors).

Call Centers and Engagement

There were two things I heard a lot at the Gamification Summit. One, every gamification company has at least one call center client. Meaning, that soon all those people you call to help fix your phone, bill, or computer will soon have be able to earn points to help you better (score for all)! Seriously, the lowest hanging fruit for gamification are call centers — who knew?

Two, everyone, including the G-man himself, Gabe Zicherman, thinks and wants to replace the metric of page views with engagement. Right now, web sites are focused and are valued on the number of page views they have. The reason is simple: the more page views, the more ads you can sell per page, the more money you make.

Engagement is more about how long a user interacts or stays on your web site, and what activities they are doing. It’s harder to measure and quite frankly, harder to monetize.

I’m not being a skeptic that engagement will replace page views as the standard metric for which we measure the value of Internet companies, but I am more a realist.

Right now, page views is the standard metric for web sites because of one company: Google. Google took its revenue models, cost per click and banner advertising, and allowed any web company to monetize their page views through their Ad Sense program.

There is no 800-pound gorilla like Google who can help web sites monetize engagement, but there is one in the waiting: Facebook. Facebook is planning to create an ad program to rival Google’s AdSense and it will be super-successful, given how many web sites are using Facebook Connect and “like” buttons on all their pages.

Assuming Facebook’s AdSense-Killer is designed to monetize engagement in the same way Google’s AdSense helps to monetize page views, I will concede that one day in the future, engagement could replace page views as the standard metric for the Web and beyond.

And on that day, gamification will truly be a multi-billion industry that is more real and less hype.