So there are other ad networks out there that put brands in games but there’s no performance metric to that. And then, for us to — these types of incentivized programs where we deliver real-world products and incentives to users that are immediately redeemable in the app are not possible without our technology that we’ve built over the last 10 years operating the legacy business which is the foundation of what we’ve done. So from a competitive standpoint, others are offering incentivized channels but nobody is offering uniquely attributable, trackable and performance-based programs that we are. It’s important to note that the competitors do not offer a win for the game publisher and a win for the brand. It’s either one or the other typically.
And our programs address some of the largest problems on both groups and as a key differentiator. Our brands are seeing, as I mentioned earlier, this stickiness by putting a mobile game and the Chevron app, we’re seeing it perform better than really any other tile placements they’ve ever had in their app. And conversely, as I’ve already touched on, we’re delivering really great return on ad spend results for the game.
Robert Berlacher: And are you seeing any — you’ve talked about gross margins or kind of alluded to the gross margin piece of the equation. Are you seeing any challenges that risk to profitability going forward, say, 2 or 3 quarters out, if it’s the third quarter that you hope to exceed the legacy business and hopefully, the gross margins and potentially cash flow positive, what are your hurdles? Are there — what are the challenges, I guess, in that space?
Tom Akin: Yes, maybe…
Kim Carlson: I can…
Robert Berlacher: Addressing that question. I guess on margins, talk a little bit about pricing and the direction of how you see pricing going for the remainder of this year?
Kim Carlson: Sure. So I think Bryce [ph] touched on this, that the majority of the brands that we have on board right now, we’re in our infant stages with those brands when it comes to optimization. So we have a lot of levers that our data team — we’ve hired 3 — I think 3 new data scientists to look at optimization of the audience. So things like we’re watching people that are clicking but not installing or maybe we’re seeing certain set of people are enjoying Solitaire games more than a Match 3 games. So we’re building the infrastructure just like a mobile ad network would with this predictive technology or predictive algorithms to segment the audience by brand. So to me, we’re just starting with some simple levers to pull on the optimization.
A couple of things are going to happen. We’re going to see better customer experiences for those users in the branded app but we’re also going to see better — even better return on ad spend for the gaming partner which should lead to even higher CPIs. The commercial model for gaming is pretty simple which is put a dime in and get a quarter out. And right now, we’re positive in that equation but we expect with our optimization and ability to build these algorithms that should increase our CPI costs that the game publishers are paying us. So build the optimization, add more brands, add more gaming, create new algorithms and the whole flywheel starts to improve, both on a consumer perspective and a performance which should drive our commercial terms higher.
Robert Berlacher: And then, what is your strategy…
Tom Akin: Sorry, Bob, can we hold on…
Robert Berlacher: No. Yes, you can go on. I’m sorry. I didn’t…
Tom Akin: I said, Bryce [ph], do you have anything you’d like to add to that?
Unidentified Company Representative: No, I think Kim hit the majority of it. But there’s always risk to growth but we feel really good about the health of the pipeline that we’ve built to date and the results from what we’ve achieved already in 2024. And then as Kim mentioned, gross margins really are dependent on the performance that we’re delivering to game publishers. And for all the reasons Kim mentioned, we feel like there’s a lot of upside in what we’re doing to improve that.
Tom Akin: Yes, I think the key to realize, Bob, is this is a new channel. It’s a differentiated channel but it’s really a different channel than a lot of — any of our games — of our brands have done before. And the pricing is going to be something we’re going to have to discover. It seems like people like our pricing now. We’re seeing a lot of activity and the return on ad spend is very favorable. So we’re happy to see that we’re headed in the right direction but there’s going to be a lot of adjustments to the process over, well, daily, weekly, monthly and every quarter. So we have a lot to learn. We’ve learned an awful lot in 2023 on what to do right, what to do wrong. And we’re excited that we’ve developed a product that has got some major, major brands participating and they want to continue to participate.
So that’s really — I apologize that we didn’t get the financials that we had them lined up but that really doesn’t tell the story for what’s going to happen in ’24 in any case. Does that answer your question, Bob?
Robert Berlacher: Yes, it does. I was just going to — you — my last question, I promise. You had talked about the brand but are there — and you have 4 that you’ve launched with, it sounds like as well as potentially other smaller ones. Can you talk at all about the gaming companies, publishers, gaming publishers that you’ve done partnerships with?
Kim Carlson: Specifically, the game develop — the publisher names?
Robert Berlacher: Yes. I was just curious — just if there are any that I would — that people might be familiar with, I don’t know.
