E3 Highlights Growing Role for Ad-Supported Gaming

Los Angeles– The marketing industry was out in force at the E3 video game conference this week at the Los Angeles Convention Center, hoping not only to interest publishers and console markers in programs for their upcoming products, but also to track how consumers increasingly spend their leisure time.

Most of the marketers at the three-day event that concluded Thursday weren’t eyeing the traditional console world dominated by Nintendo, Sony, and Microsoft, but rather the rapidly growing audience now actively involved in social media games such as Farmville and Bejeweled Blitz.

The biggest spenders in that category of games are traditional consumer companies like Unilever, Procter & Gamble, Kraft, and General Mills, according to Dave Madden, executive VP with game-based ad company WildTangent.

WildTangent recently worked with social media game company Playdom and its Facebook game Tiki Farm. WildTangent brokered an arrangement that allowed Tiki Farm players to obtain in-game goods, which would normally require spending virtual cash, simply by interacting with Dove products. “Users can view the ad and obtain that item via the Dove sponsorship, which creates a value exchange that really benefits the user,” Madden said.

Helping the growth of game related advertising is that the programs can use traditional online advertising standards. “The IAB internet standards work great for Web based games,” Madden said. “We serve all of our advertising with DoubleClick, and we’re able to measure them in the same way that Yahoo would measure their ads.”

The rise of advertising in social games has made up for the fact that ads in traditional console based games have yet to gain traction. “The original hype surrounding in-game advertising was that it was going to help defray the increasing development costs for console games,” said Billy Pidgeon, an analyst with M2 Research. “That hasn’t really happened, but advertisers remain interested because they realize their consumers are spending more and more time around gaming.”

Sony Computer Entertainment announced at E3 that it is partnering with Coca-Cola on a massive promotional campaign for Move, the new motion controller for the PlayStation 3. The campaign, set for the latter part of 2010, will have Move ads on 130 million packages of Coke, Sprite and other products in North America.

“I think game publishers and the hardware makes realize they going to need effective cross-marketing strategies,” said Pidgeon, who added that while the combined global installed base of the Nintendo Wii, PlayStation 3 and Microsoft Xbox 360 is now more than 140 million, that doesn’t mean every new console game is going to find an audience. “Competition is getting tough, and it’s not a matter of consumers not having the money to buy more games, it’s that they don’t have the time to play more games.”

With multiple revenue models – including retail sales, digital downloads, subscriptions, and micro-transactions – gaming isn’t necessarily as dependent on ad dollars as other online entertainment industries.

But Min Kim, Marketing VP with Nexon America, predicted that eventually more marketing resources will be devoted to reaching gamers, especially as advertisers begin to grasp just how many people are playing games in one form or another.

Nexon is a Korea-based company and has found huge success, primarily in Asia, with free-to-play immersive online games such as Dungeon Fighter Online, KartRider, and Mabinogi. In North America, their largest game is MapleStory, though the company used E3 to unveil several new titles, including Vindictus.

Though the company generates more than $500 million annually worldwide from micro-transactions as consumers purchase weapons and other virtual goods as part of their play, Kim said, “We’ve already seen tons of ad programs in Asia, including deals with Coke and Mini-Cooper. In the North America market we haven’t seen a lot of that yet, but I think it’s going to come.”

Part of that is simply getting marketers to realize there are plenty of online games beyond Farmville, Mafia Wars, or even World of Warcraft that have massive active audiences. “If you look at our Dungeon Fighter, it’s one of the biggest games in the world with more than 200 million registered players,” Kim said. “We believe in globalization through localization and that’s the way advertisers work anyway.”

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