In-game Advertising: The Future Is Here

In-game Advertising and Video Game Marketing: The Future Is Here


Abstract
With advertisers trying to re-invent their own game to keep up with the times, they are turning to the virtual world for marketing help from video games. Video game marketing comes in several forms, such as “advergames, pre- and postroll before and after games, virally seeded videos, trailers, and… virtual branded items and game-level giveaways” (Bulik, 2009). However, the most effective type of video game marketing is dynamic in-game advertising (Bulik, 2009). Today, as advertisers struggle to reach their targeted audiences through fragmentation and clutter, gaming is proving to be an extremely effective outlet for making some headway.

                   In 1952, A.S. Douglas, a doctoral student at Cambridge University, pioneered gaming for the masses (“The Video Game Revolution,” n.d.). According to PBS.org (n.d.), his Noughts and Crosses, or tic-tac-toe, game was the first documented computer game in history (“The Video Game Revolution,” n.d.). Now, over half of a decade later, gaming has become a cultural phenomenon, revolutionized by multi-game home consoles (“The Video Game Revolution,” n.d.). Approximately 57% of people in America, men and women nearly split evenly, play video games on three major gaming consoles: Microsoft’s Xbox  360, Sony’s PS3, and Nintendo’s Wii (Builk, 2009; Terdiman, 2009). This astounding percentage of the population has not gone unnoticed, especially within the advertising world (Bulik, 2009). Today, as advertisers struggle to reach their targeted audiences through fragmentation and clutter, gaming is proving to be an extremely effective outlet for making some headway. One study evens claims that “in-game video advertising trumps T.V. advertising in effectiveness” (Wauters, 2009). With advertisers trying to re-invent their own game to keep up with the times, they are turning to the virtual world for marketing help from video games.
         Video game marketing comes in several forms, such as “advergames, pre- and postroll before and after games, virally seeded videos, trailers, and… virtual branded items and game-level giveaways” (Bulik, 2009). However, the most effective type of video game marketing is dynamic in-game advertising (Bulik, 2009). In its infancy, an in-game advertisement was simply placing an ad, such as a billboard, within a video game, or static advertising (Sullivan, 2007). This idea was invented by a woman named Julie Shumaker, Electronic Arts’ director-advertising sales in 2001 and then national sales-video game advertising in 2005 (Oser, 2005).  She then took in-game advertising from “signage and banners in games to making the brand part of the game play,” which is considered dynamic in-game advertising (Oser, 2005). Engaging players is the key (Shields, 2007). Because of such strides, when Pontiac advertised their sponsorship of “March Madness” in video games, the gamers’ knowledge of that sponsorship tripled after game play (Oser, 2005). These ads were capable of reaching the desirable 18-34-year-old male audience, who spent most of the time playing video games rather than watching television in 2003 (Oser, 2005). Today, these numbers have risen significantly and also include women and children that are 8-years-old and older (Bulik, 2009; Oser, 2005). With a gradually worsening economy, these people and a growing number of consumers are turning to video games for an escape, making in-game ads more imperative than ever to produce revenue for the game industry, reach an audience for the advertisement sponsors, and put money in the pockets of advertisers (Bulik, 2009; Oser, 2005).
         Because video game advertising has become a viable marketing option, advertising agencies specifically equipped for the production of video game advertisements have emerged (Shields, 2007). There are three big names in video game advertising agencies: IGA Worldwide, Massive, and Double Fusion (Shields, 2007). IGA Worldwide claims itself as “the world’s leading in-game advertising network,” being the first in-game advertising producer for Sony’s PS3 platform (“Who We Are,” n.d.). The New York based advertising agency has worked for some of the most well-known names in the gaming industry, such as Activision, Electronic Arts, and Atari (“Who We Are,” n.d.). Along with the major players in the gaming industry, the agency has created campaigns for brands like Gillette, McDonald’s, Puma, and Toyota (“Who We Are,” n.d.). The next video game advertising agency, Massive, is a subsidiary of Microsoft that works with 40 game publisher partners and maintains over 100 game titles (“Company,” n.d.). The agency provides “contextually integrated content” as well as “game object” formats for buyers like Sonic and Progressive Auto Insurance to choose from (“Company,” n.d.; “Clients,” n.d.).  Massive offers advertising solely for the Xbox 360 and PC games carried by Microsoft (“Tech Integration Process,” n.d.). The last agency named Double Fusion prides itself in being “the first company to support dynamically changing 3D objects and rich media formats” as well as “[pushing] the creative capabilities of in-game advertising closer to the full marketing potential contained in the world’s most interactive medium” (“About Double Fusion,” n.d.). With clients like Dodge, Jeep, and Sony featured in game titles like Tom Clancy’s Ghost Recon, Tomb Raider, and Power Football respectively, Double Fusion plans to keep bringing in new businesses to the video game advertising market (“Portfolio,” n.d.; “About Double Fusion,” n.d.). With games costing more than $15 million and in some instances more than $30 million along with a new Nielsen study showing that in-game advertising increases brand familiarity by 64% as well as brand recall by 41%, these video game advertising agencies should have no problem bringing in new customers or profit within the coming years (“Why In-game Advertising?,” n.d.).
         The prediction of ad dollars spent on video game advertising has been inconsistent with reality, but each prediction has included some sort of growth. It was reported that $55 million was spent on in-game advertising in 2006, $40 million on static ads and $15 million on dynamic ads, and predicted that within six years that number would increase to $805 million (Rodgers, 2007). They also reported that the amount of static ads will virtually stay the same, but the amount of dynamic ads that are purchased will ultimately rise (Rodgers, 2007). At the Advertising in Games Forum that same year, video game advertising as a whole was reported to have brought in $70 million to $80 million in 2006 and was predicted to gain a whopping $2 billion by 2010, a 25% increase (Shields, 2007). The actual growth may be somewhere in-between, possibly $971.3 million by 2011, but the projection of $2 billion seems unlikely as 2010 approaches due to a slowdown in the economy as well as digital competition by OnLive (Shields, 2007; Terdiman, 2009). That is not to say that the gaming industry is not going strong, though. In February of 2009, gaming sales were an astounding $1.47 billion, a 10% increase (Bulik, 2009). Video games are also maintaining low prices, around $60 per game, which, in reality, should cost $90 per game due to inflation (“Why In-game Advertising?,” n.d.). Even Microsoft has lowered the cost of its lower end model of the Xbox 360 to gain new customers during the economic crisis (“Five Brands Doing It Right,” 2009). There is no doubt that growth will still occur for the gaming industry, and video game advertising will undoubtedly continue to be a part of its success as well as a success itself.
         The big question about video game advertisements is how gamers feel about these intrusive ads in their video games. Many advertisers have leaped into in-game advertising without wholly understanding the gaming industry and, more specifically, the gamers (Oser, 2005). In 2006, Electronic Arts released Battlefield 2142, complete with a privacy disclaimer for its new in-game advertising system (Jenkins, 2006). The in-game advertising system created by IGA Worldwide compiled anonymous tracking information from the game user, such as the time when the game user is playing the game or his or her IP address, for geotargeting (Jenkins, 2006; Carless, 2006). Many gamers were appalled by the in-game advertising system, and many began to refer to it as spyware (Jenkins, 2006). Some gamers were also not keen about the borderline futuristic game having present-day advertising embedded in the content (Carless, 2006). They were promised that IGA Worldwide would create generic or near-future elements for the advertisements featured in the game play instead of any intrusive or interruptive modern-day ads (Carless, 2006). This problem can also occur with fantasy, role-playing, or shooting games in which gamers do not want to see real brand advertisements within these virtual worlds (Bulik, 2009). Sports games that have arenas or stadiums are ultimately a better choice so that game play is not interrupted (Bulik, 2009; Oser, 2005). New ideas such as free add-ons and free map-packs are making headway as well, concerning the consumers (Shields, 2007). Despite any backlash from gamers, though, advertising in video games will not stop any time soon.
         Video game advertising is still a young venture in the advertising world, only a little over 20 years old and just expanding within the past decade. Over its short longevity, it has seen many changes, though. The main development has come from the advertisers’ themselves and their understanding of the gaming industry as well as the gamers. Dynamic in-game advertisements are now offered alongside their predecessor, static in-game advertisements, allowing advertising changes over time instead of one permanent ad in a game forever (Bulik, 2009). This provides the gamers up-to-date advertisements for specific products and brands, and the gaming industry, advertisers, and businesses all benefit because of an opening in space. Video game marketing, in general, is becoming broader as well. With more understanding from advertisers, new approaches, other than in-game advertising, have been proposed and used. Effective forms of advertising that will progress in the future will be virtual branded items, free add-ons, add-ons available for micropayments, free map packs, game level giveaways, and even brand-central games (Bulik, 2009). No matter what marketing technique is used, video game advertising is certain to be effective and long-lasting.

References
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