The Rise of the Game Titans
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Videogames have become a media force on par with the television and motion picture industries. This year will see the number of intensive console and PC gamers in the U.S. grow to 40 million, according to Jupiter Research, and by 2009 that number will reach 62 million. Knowledge Networks/SRI found games now account for 15 percent of teen males' media intake; and an AOL Games study found a huge contingent (43 percent) of dedicated female gamers. Measurement firms are taking note: Nielsen Entertainment recently began measuring video game ad exposure, and has partnered with Activision to provide standardized metrics on gamer demographics and behavior.
Enter the advertisers. With numbers like these pointing to a vast, diverse and growing PC and console gaming market -- particularly in demographics that are tending to evade traditional mass media -- agencies and game producers have begun a strong push to get more ads into games.
While ads have appeared in games for some time, there are signs the practice is being institutionalized. Starcom MediaVest Group was the first to get serious about it, launching its Play division in mid-2003. More recently, Young & Rubicam rolled out Bounce Interactive Gaming (BIG) to advance its clients' in-game advertising ambitions, both existing and anticipated.
"We're trying to get consensus between clients, publishers and agencies. Right now, you have a situation where every publisher does things differently. Some are aggressively pursuing these opportunities, while others are actively avoiding them," said Sam Huxley, director of Internet strategy for Y&R/Brand Buzz and BIG's chief strategy officer.
"Casual game players are not going to pay at the level a serious gamer would, but the production costs are a constant, and you have to augment that somehow," said Gary Stein, senior analyst with Jupiter Research.
The ultimate (still far-off) goal for agencies and game producers is to enable campaigns that can be created, tested and modified on the fly, as is now common on the Internet.
One of the obstacles to the large-scale implementation of dynamic ad placements in videogame titles is the lack of an integrated billing and tracking system such as that offered online.
A new company, Massive Inc., is trying to address that problem, and others, by applying a network model to the gaming environment. Massive has for several months been in talks with game producers whom it hopes to represent in aggregate, an arrangement that if successful would let advertisers deploy campaigns quickly and for a fixed duration across numerous titles.
"What we're trying to do is build an aggregated audience of gamers to create an ad channel for advertiser that want to serve dynamic ads to games," said Richard Skeen, Massive Inc.'s VP of ad sales. "No one's reaching them in an aggregate network."
Such a system offers benefits to both advertiser and game producer. Advertisers would have a much easier time meeting reach and frequency targets, as campaigns would be served where the impressions are. A product placement or "billboard" ad in a poorly performing game title would not be as irreparable a loss as it is now, since the media could be shifted on the fly to where the players are. As Skeen puts it, "there's no guarantee [game titles] will sell on time or in the volume hoped."
"It makes sense," said Stein of Massive Inc.'s network ambitions. "You don't want to cut deals individually. The existence of a network will be more attractive to a media buyer. It gets too hard to describe otherwise. If there's a network, it makes it turnkey for the advertising."
And dynamic ads lend relevance and realism to the gaming experience. Skeen gives the hypothetical example of a virtual city backdrop that contains Blockbuster stores. On the storefronts would appear auto-updated creative featuring the most current film releases.
Massive has signed up a number of small game designers, including Atari, Vivendi and Ubisoft. However, the big three -- EA, THQ and Activision -- are proving harder to snare, no doubt because they already hold so much clout and market share that they can do better on their own. Skeen is hopeful these giants of gaming will eventually want to work with Massive.
"EA is to publishing what Condé Nast is to magazine publishing," he said. "They've done an incredibly smart job of using their games to sell really clever sponsorships. But there's a limit to what you can do with that in terms of reach and frequency and timeliness. If I could use my technology to add to their games this network, it'd be the best of both worlds."
Another obvious challenge with building a gaming ad network is that it naturally has to be composed of games that are played online or are able to synchronize with a server sometime during or between game play sessions. For now, that feature applies mainly to PC, Internet and wireless games, although there are efforts underway by the producers of console games to build more connected platforms.
But the main problem faced by the would-be enablers of in-game ads, whether or not they hope to aggregate audiences, is that the majority of video game ads must be deliberately unobtrusive. This is counterintuitive to marketers, who must apparently choose between interrupting play (unpopular) and shrinking brand presence (ineffective).
"As a marketer you can't expect your product will be central to the game. It's bouncing out everything from city signage to product integration," said BIG's Huxley.
"The paradox is that you can't do too much advertising, because you can't get in the way of the game play," said Stein. "There's so much exposure, but the exposure is at a secondary level. I don't know that anyone's proven they're effective. There's a lot of faith; it's 'trickle down marketing,' to borrow a phrase from the great communicator."
While no independent studies have proven ad effectiveness in the gaming environment, a survey from Nielsen and Activision (the first to emerge from their partnership) reports more than a quarter of male game players recall ads from the last game they played. And informal research suggests gamers don't reject advertising that is incorporated thoughtfully into game play -- and they may even feel it enhances the experience. At a recent panel hosted by New York ad club 212, Electronic Arts SVP of Global Publishing Erick Hachenburg shared results from an EA survey that looked at this issue. The game developer gauged user reactions to the incorporation of a Honda SUV into the action of a snowboarding game (players earned points for jumping through the interior of the vehicle). Of those surveyed, 97 percent recalled the brand, 90 percent recalled where they encountered the ad, and 60 percent said it added to the game.
Further, Hachenburg said the value proposition posed by advertising in games is only beginning to dawn on brands, which are used to licensing their products to game producers. That's changing, he said, with an increasing number of companies willing to pay to have products appear in a game.
How they do it is largely uncharted territory, though a loose framework of ad and product placement types has begun to emerge. Jupiter's Stein cites three creative approaches that appear to cover most of what's being tried.
"One is the billboard, that's the window dressing; another is [when an ad is] somehow integrated into the play itself; the third is when it's a part of the storyline. For example, you can buy a branded tire after you've earned a certain number of points," he said. "There's a sense that those three should be three tiers of spending."
In truth, the creative possibilities are wide open, as is just about everything else about this very young category. The only certainty is the enthusiasm of agencies and advertisers. Until best practices and better tracking emerge, experimentation will reign.
"A lot of people are looking at this market with high hopes. They look at the amount of time that's spent on these games; they look at the spread of the demographic. It's a natural that models are starting to build around this," said Stein.
Said Skeen, "The numbers are there, the content is there, we just have to figure out how to package and sell it."