NBCU Knows where the consumers are

The big news yesterday seems to have been that NBC Universal has teamed up with in-game ad vendor IGA. The details are that NBCU will now be able to offer clients inventory within video games that are represented by IGA. This includes positioning in games produced by prominent publishers like Activision and Electronic Arts as part of a comprehensive multi-media package. The partnership is seen as atypical for several reasons, including NBCU's traditionally television-heavy portfolio, and how young the in-game advertising industry really is.

A true sign of what early stages the industry is in is that everyone seems to want a piece of it, but no one really seems to know how to go about implementing it. "For example, Massive Inc., one of IGA’s top competitor, was snatched up last year by Microsoft, which has a far larger footprint in the digital space, while earlier this year online ad leader Google acquired the startup in-game ad firm Adscape Media." NBCU's interest in expanding it's portfolio into gaming is a good sign for in-game advertising firms, as it may be the first in a long line of advertisers waiting to get their messages out to a highly engaged and constantly growing audience of gamers.

However, while all these in-game ad firms are starting up and being bought by and partnered with huge corporations, I have yet to see a multitude of advertisements in my games. And as much as people keep assuring that they are coming, I still don't really see how. Despite all the new technology and amazing graphics that now exist that can make some truly incredible in-game advertisements, the same problems keep coming back. The games that people are interested in playing and developers are interested in making are not generally conducive to the presence of advertising. Many of them are not set in worlds or time periods in which these brands exist. Making a game that revolves around advertisements is a cute idea for a free internet game for as long as people still think it's a novelty, but they will tire of the idea soon enough, and advertisers can make all the games they want, but people will not play them. For all the articles I keep seeing about how big this industry is going to be, I'd like for just one of them to tell me how.

The 'social' side of gaming

Something that I've noticed a lot of people talking about over the last couple of days, including Josh Lovison of Gaming Insider, and Jane Pinckard on Game Girl Advance, is the concept of social gaming.



Lovison takes the stance that games that are designed to be played alone are on the decline and that multi-player games are not only greatly expanding the gaming audience, but also serving as community builders. And this is true; casual gaming has made it so that everyone can play. Nintendo has put a great deal of effort into making gaming a social activity, rather than a solitary one, bringing people together. MMORPG's such as World of Warcraft have thousands of players at any one time, which has led to many of them forming guilds of 40 or more people who always play together.



Pinckard, however, explains how all this 'social' gaming may actually be making people less, well, social. Though the argument has probably been made a million times before, there may be some merit to the idea that the more wired we become, the less we actually interact with people. Pinckard sites a study done by Rob Nyland, which shows that heavy users of social networking sites “feel less socially involved with the community around them.” The relationships cultivated in these online games, or in the social (usually party) atmospheres in which Wii type games are played, are usually non-demanding and low commitment, which could possibly keep people from connecting. I'm not sure I agree, being that people have a tendency to make this argument about every new form of media that becomes popular, but the argument is there, and who knows - maybe it's valid.

And what does all of this mean for advertisers? Sure, there's a much larger gaming audience to target, but doesn't that just mean that they are no longer a unified group that can be targeted? And if people are playing with their friends, will that make them more or less likely to notice in-game ads? In addition, if we are creating a culture of lonely people who do nothing but sit in front of their computers or television sets and never talk to anyone, what does that mean for advertising in other mediums? Just something to think about.

Casual Gaming 2.0

I'm not sure why I've gotten so hung up on casual online games recently, but this tidbit from GigaOm's Wagner James Au caught my attention. Wagner talks about MyGame.com, a kind of "YouTube-meets-casual games proposition" with a very user-created feel. It's essentially a gaming site where developers can upload their games, and if they become popular enough, they can share ad revenue with the company. And now Google is reaching out to these developers to partner with it's Adsense/Adscape network. In other words (and unfortunately for me), it's a good time to know how to use flash.



These developers can make thousands of dollars off a popular flash game using a variety of different business models. The two most successful models seem to be the Pogo strategy, where free games are supported by ad revenue and subscribers can pay a small fee for added benefits; and the MochiAds strategy, which places interstitial ads that run in the beginning and in the middle of independent flash games. While there aren't huge profits to be made (Kongregate CEO, Jim Greer, estimates about $10 - $15 thousand per game if it's really popular), it's still a substantial amount of money for anyone who doesn't rely solely on flash game development as a source of income.

Wagner's question essentially added up to "how can this survive as an industry if there is so little money to be made?" Well, I suppose it really couldn't if the people that were making the games were large businesses. However, if the only real "businesses" that are involved are the host game sites, then there is still plenty of ad revenue to go around, and anyone with a fun idea and a lot of patience for designing games in Flash can make a little money for their hobby. And we've seen the popularity of user-generated content on the web - there is no lack of support. People can make the games that they want to play, developers can make some money for their work, and advertisers can still find places to put their ads through the host sites - everybody wins.

Casual gaming to become... not so casual

Recently, Jane Pinckard of GigaOm brought up some interesting questions about the future of casual gaming revenue. IGA has just signed an in-game advertising deal with casual game publisher Merscom. Merscom makes both DS games and downloadable games for the PC, which, the author claims, are the kinds of games that are likely to face pressure to become more sophisticated in graphics and sound design, making in-game advertising necessary to reduce costs.

At the moment, casual online games are essentially broken down into two groups: the pay-to-download games through PC and Xbox Live, and free web games on gaming sites. Consumers are highly sensitive to advertisements in games that they pay to download, and in these games it is crucial to make ads fit the context. Consumers are a bit more forgiving about advertisements in free web games, as that is how the host sites keep running. However, there is still a certain amount of sensitivity surrounding ads, and each ad needs to try to keep with the theme of the game. Additional complications arise when one considers that advertisers do not want to risk making the mistakes of others. Microsoft (MSFT) Casual Games’ studio manager Chris Early cautioned against using to many in-game ads, saying, "If we get to the point of getting like commercial television on cable channels where ads are so intrusive of the experience, then people won’t play anymore.”

So, if people don't want to see an abundance of ads in their on-line games, how do publishers make the kind of money that it takes to create the more sophisticated games that their audience is beginning to demand? The author's idea was simply to charge people for everything they might want to do in a game. Want to challenge a friend? Pay a dollar. Want to customize your leaderboard? Pay a dollar. Enough of this, and in-game ads become completely unnecessary. People will then have to decide if they would rather pay more for their gaming experience, or put up with an ad every once in a while; and in today's society where people are getting more and more used to getting a lot for free, I doubt they'll want to be nickeled and dimed by the gaming industry. But hey - maybe that's just me fighting for my beloved in-game ads.

Gamer Babies

While the main age demographic for core gamers remains in the 18-34 range, a much younger group of gamers is coming around the bend. According to a recent article in Advertising Age, more and more children around the age of 6 are becoming serious gamers. NPD Group released their annual survey of children and video games this week, which stated that while older children still spend more time per week playing video games, there was a significant spike in the amount of time that children ages 2-5 and 6-8 spent playing. 6 to 8-year-olds spend an average of 75% more time gaming than they used to, with an increase of 3 hours per week. A full half of children ages 2-17 play 6-16 hours or more each week.

However, the transition into serious gamers doesn't just mean an increase in the amount of time spent playing. These children are also switching from "kid" systems to portable and console systems. For the moment, PC's dominate the gaming market for children 2-17, with a 58% usage rate. NPD Group Director David Riley speculates that this is because computers are the most accessible and the least expensive.

So what does this mean for marketers? Well, nothing at the moment. "We are a nascent industry. ... This is not the time to be dabbling in grey areas," said Julie Shumaker, senior VP-sales and marketing at Double Fusion. Kids may be getting more sophisticated with video games at a much younger age, but advertising to children in video games runs into the same issues that television has run into time and time again. Before the age of 15, parents are more in control of what video games get into their kids hands then the kids themselves are, and these concerned parents will not be appreciative of games that send repeated and tailored messages to their children without their knowledge.

Does this mean that advertising can't exist in games tailored to this expanding younger audience? That depends. As children become more sophisticated gamers, they are likely becoming more sophisticated consumers as well, though more research may need to be done on what age at which children can recognize when they are being advertised to. However, until all the rules to advertising in this medium have been worked out, we may be missing out on an ever-increasing young market.

devisions and challenges

A recent article in eMarketer contains an interview with IGA Worldwide CEO Justin Townsend, who discussed some of the challenges advertisers are facing in the effort to reach the gaming audience. Specifically, that there is no single "gaming audience". The audience itself is broken down into core and casual, the gaming channels are divided by console or PC, and the types of ads that are available to advertisers are divided into static or dynamic, each of which has pros and cons. The goal of each game advertising campaign requires a specific and complicated blend of possibilities.

First of all, advertisers must decide if they want to hit core or casual gamers. The differences between these groups consist of everything from demographics to CPM, to the type of ads that are available to those types of games. Core gamers are typically considered to be males aged 18-34, while casual gamers are typically older women, however, these definitions are broadening quickly. The CPM for core games is typically around $30, while casual games see a CPM of $5 or less, though the cost of advertising in casual games varies wildly. The advertising in casual games tends to be things such as banner ads that are largely click-based and take people out of the game itself. However, core games tend to be more a part of the gaming environment, such as billboards or radio ads, and they tend to have a much higher recall value.

Just within the category of core games is the division between PC's and the various consoles available (though the Wii is often more of a casual gaming console). Advertisers face the problem that if they want to reach the entire core gaming audience, they have to put in insertion orders for every console as well as PC games, and this is not always possible, because they don't always contain comparable games in which to place the ad. In addition, Microsoft's "Massive" is affiliated with the Xbox Live arcade network, and no other advertising firm can include that network in their strategy, dividing the market even more. In addition, while static ads can be placed in multiple games, dynamic ads that actually get the player involved with the product can only be placed in one game at a time, limiting the advertisers audience to what that particular game sells. What we really need, Townsend claims, is a game released on all platforms so that advertisers did not need to create different ads for every game that they want a presence in. However, this doesn't seem like something the gaming companies are likely to support.

So what's an advertiser to do?

Advergaming gone horribly wrong

So, last week I was talking about the Burger King games and asking why nothing along those lines had been done since they came out last year. I mean, getting your customers to not only see your message, but to interact with it for longer than they would ever spend with an ad is a good thing, right? However, this is really only the case if your game is executed properly; a message that apparently never reached Toyota when they were planning their new Xbox 360 game, "Yaris".

"Yaris" is the first game on Xbox Live Arcade to be fully brand-supported, making it free to download. It's a racing style game where you drive a Yaris down a futuristic looking track while shooting robots with a gigantic arm coming out of the hood of your car. The cars themselves are customizable, and you have a variety of weapons to choose from. You can race your friends or take out your robot enemies alone on eight different tracks. Why not? Sounds like as much fun as any other casual game I've heard of, at least for a few minutes - especially because it's free.

Well, not so much, according to Dan Dormer, a game reviewer for Joystiq. Dormer describes the game as: "Crafted in a circle of Hell even Dante didn't believe existed, the developers of Castaway Entertainment created Yaris with an objective I can only believe is to cultivate anger in those who play it." He goes on to describe how the game does nothing right, from the graphics to the controls to the online play, and concludes that Toyota should stay far away from all advergaming in the future, saying that scooping his eyes out with a rusty spoon would be more fun than playing the game. Ouch.

The rather unfortunate example of Toyota's venture into advergaming should serve as a warning to all advertisers. Games can be a great way to promote your brand and get people involved in your products. However, people can smell advertising from a mile away, and they almost never like it. They are not going to play your game just because it's there and they can't wait to interact with your product. Also, they are getting used to extremely sophisticated gaming with incredibly life-like graphics, and if your game doesn't make some effort to be worth their time to play, they won't. The heart of advergaming has to be the GAME, not the advertisement, which is what made the Burger King games so fun to play, and what could bring a lot of advergames in the future a good deal of success. Don't put any less effort into your games then you do in any other aspect of your marketing, or it will simply get thrown back in your face.

They know what you're thinking right now... (j/k)

I’m taking a quick break today from my casual gaming bit because I found something on Game Daily that I thought was really cool. EmSense, a company started by a couple of MIT grads, has developed a way to use empirical data to read people’s emotional responses to games. What they have is a simple headset (the lack of large quantities of wires and gels was a major breakthrough) which monitors everything from eye movements, heart rate, and brainwaves, to how players furrow their eyebrows, blush, and sweat.



Game developers are always looking to find ways to get people more engaged in their games. This headset is capable of giving a continuous stream of data that show what is normal for a game, and what is a better than average response, as well as which parts of a game are more engaging than others. This allows developers to better determine where the climax of a level should be, and how to lead up to it. It also allows them to see what techniques are more successful at bringing about desired responses, allowing them to make better games that people are more engaged in, and are more interested in playing.

While this technology has been used on television commercials, it has not yet been tested on in-game advertisements. This is largely because of the lack of money that companies put into advertising in games as opposed to on television as of now. However, they believe that the same techniques could be used to gain some very interesting information. Because they are able to see how engaged they are in a game at any given point in time, and because they can see whether or not people even looked at the ad, they would be able to very accurately determine what ads are effective and at what points in the game.

This new technology will likely change a lot of things about how games are developed. More importantly for my purposes, it will likely change the way in-game advertisements are thought of. If the level of engagement that people have with in-game ads can be directly monitored and rated using the kind of empirical data not even available before, then maybe we will be seeing not only more ads, but ads that are much more effective in catching gamers’ attention.

A look at mobile gaming

Moving on to the next casual gaming genre: mobile games. This term often includes hand-held gaming systems such as the PSP or DS, but for the moment I am sticking strictly to cell phones. US mobile gaming revenue for 2005 reached $600 million according to eMarketer, and it is projected to reach $1.5 billion in 2008. At the moment, these profits come largely from people buying simple puzzle games, however, this may not be the case forever. Nokia has teamed up with G-Mode to develope multi-player games that better utilize newer phones internet capabilities, and bring mobile gaming to a much more advanced stage. These games are popular with large audiences, and are only getting more advanced.

Mobile advertising, on the other hand, is in its younger stages of development, according to The Economist, with companies having spent $871 million world-wide last year. However, buzz is beginning about the future possibilities of this mode of advertising. There are 2.5 billion mobile phones around the world which are often carried around with people everywhere they go, giving advertisers the opportunity to reach people outside their homes and offices. In addition, by using mobile firms profiles of costumers (assuming they can get this information), advertisers can send out relevant ads that would fit with each subscriber's habits, hopefully making such advertising less annoying to the consumer. One way advertisers have been utilizing this is by placing ads on pages where people go to download games. Another is similar to internet usage, where people have the option of receiving free content in exchange for watching one or more ads.

However, there are still several problems which need to be worked out in order for mobile advertising to grow. First of all, only about 12% of people use the internet capabilities on their cell phones because of high rates and small screens. Newer phones such as the Apple iPhone are combating the small screen issue, but the high rates of accessing the internet on a cell phone may cause problems for advertisers for a long time to come. Another problem is that of accessing people's personal information. Cell phone service providers have a lot of information about their customers that would be very interesting to advertisers. However, privacy laws prevent them from getting it, and it could be argued that this is a good thing, however much it may decrease their ability to connect with the right people.
One more problem is the issue of how welcome these advertisements would be. Most people consider their cell phones personal, and do not want to deal with the intrusion. Quickly Bored mentions that 90% of users are against the idea of receiving ads on their phones; not that this means they won't put up with it if it means that they will receive something in return.

Finally, the problem exists that advertisers have not reached a consensus on how mobile game advertising should be done. There are several different formats that would be possible, but for reasons such as lack of interoperability between carriers it could be difficult to even make this type of advertising particularly profitable.

In conclusion, while mobile games themselves are only getting stronger and more popular, it may be a while before advertisers get their acts together when it comes to using this new medium to their advantage.

More fun with advergaming

So, while it isn't terribly recent, I found Burger King's Sneak King in a GameStop the other day and decided I had to try it out. For anyone who hasn't played it or heard of it since it came out late last year, you play as the ever-creepy Burger King and run around trying to surprise people with various food items from the BK menu. It's surprisingly fun for about 15-20 minutes, and every bit worth the $1.99 to play. The key here is that it's fun for 15-20 minutes - which is much longer than anyone ever spends looking over an ad, and it's fun enough, and novel enough that people are willing to pay for it. Check out this video, made months after the game came out, which shows just how involved some people got.

So my question is, why hasn't anything like this come out since? It was an example of advergaming at its finest, getting people really excited about engaging with a product in a medium that is entirely theirs. The vast majority of advergaming consists of examples like the ones I gave last week, with games on the company's website that make it interesting to go to, which is a good start, but that doesn't get anyone interested in the product to begin with. They have to visit the site to even be exposed to those games.

Obviously, the Burger King example would not work with all market segments, but maybe that's not important. In a recent post by Doug Meacham, the point was made that campaigns that try to target everyone are not necessarily the best way to go about things anymore. Marketers who are able to maintain the loyalty of a narrowly defined market are going to see much greater profits, because consumers want to be treated as individuals.

With Sneak King and the other two games that came out at the same time (Pocketbike Racer and Big Bumpin'), as well as the mobile games that are in the works, Burger King reached out to a specific market segment and connected with them on their own terms, instead of just expecting them all to migrate to the Burger King website and trying connect with them there. If more companies took advergaming to that level, they would probably have much greater luck reaching their harder-to-reach target markets.