EA Names In-Game Ad Partners

Electronic Arts (EA) has taken its first definitive step into dynamic in-game advertising, assigning the sales and management of marketing messages in seven of its titles to two video game ad networks: Microsoft’s Massive Inc. and IGA Worldwide.

The twin agreements, for which terms were not disclosed, may be the biggest sign of the in-game ad market’s maturation since Microsoft acquired Massive earlier this year. EA is the world’s largest video game publisher by many measures. The company reported 2005 revenues of $3.1 billion, and will release 20 games during the upcoming holiday season. Its portfolio includes the game franchises “Need for Speed,” “Madden NFL Football,” “The Sims,” “FIFA Soccer” and “Harry Potter.”

The Massive deal is particularly noteworthy as it marks one of the first attempts at dynamic ad serving in the console gaming environment, as opposed to PC-based online gaming. Massive will manage advertising in select EA games for Microsoft’s connected Xbox 360 gaming platform, which by the holidays will have an audience “running into seven figures on a reach basis,” according to Massive CEO Mitch Davis.

Massive Inc. will sell and traffic ads in EA’s “Need for Speed Carbon” to start, and IGA Worldwide will represent “Battlefield 2142.” Another five games, as yet unannounced, will be split between the two networks. EA declined to identify all the titles it’s committed to serving ads in, but said it would work with other networks.

“These two deals are the first steps in the process of building out the infrastructure behind in-game advertising,” Chip Lange, EA’s VP of online commerce, told ClickZ News. “Our business strategy includes multiple partners… Expect more deals like this in the future.”

EA previously inserted static, hard coded ads into its games. Those were sold on a sponsorship basis, since the company had no easy way to track impressions and interactions. The sponsorship sales also required early commitments from marketers, as game development cycles take from one to two years.

“The flexibility that the dynamic business brings to the advertiser opens up a wider number of advertising opportunities,” said Lange. “No longer do you kneed to have your ads up six months in advance. Instead of selling brands, we can sell the product of the day.”

The company will maintain an in-house sales operation for brand advertising that involves tighter storyline integration, the inclusion of a car that a game character can actually drive, for example. “We believe that business is sold differently, integrated differently with the studios and requires a different toolset,” he said.

Massive now represents advertising in 66 games, and will add 30-plus more within six months. Advertisers in the network have included Fox, Warner Bros., Toyota, Kraft and Unilever. The company has not disclosed its total audience reach.

“We have a level of robustness in our network,” said chief executive Davis. “Ultimately, advertisers buy based on the reach of your network and the quality of your programming. We’re seeing very substantive growth in the in-game advertising market, just because we’re delivering on those two key factors.”

IGA Worldwide, an independent company, said its deal with EA would add “hundreds of millions” of impressions to its network, which has so far served under five billion impressions. The company is on the short list of providers of ad management and reporting for game environments.

IGA’s chief executive, Justin Townsend, said he expects publishers like EA to earmark more inventory for dynamic sales and management as they gain experience with it. “The industry is embryonic,” he said. “As the publishers become more comfortable with in-game advertising and see how the deals are integrated and serviced, then will be the time to make a more informed decision about offering more games from their portfolio.”

It’s difficult to gauge the worth of in-game ad partnerships like those announced yesterday by EA. Advance payments and guarantees are common for such relationships, as networks bid aggressively to work with game publishers — of which there are few relative to online media. “You do tend to see in some advertising mediums, there are upfronts and guaranteed advances,” said IGA’s Townsend. “It’s not really odd that that would happen in the in-game advertising industry. However there’s a fine line for negotiating a reasonable guarantee for any medium.”

The inclusion of Microsoft’s Xbox 360 console in EA’s advertising platforms begs the question of what EA will provide for ad insertion in other gaming platforms. Sony, for example, will release its Playstation 3 by the holidays. Lange declined to say whether the company expected to traffic dynamic placements there. “A lot of people are talking to them. As the online penetration rate picks up with that platform, it becomes a valuable business area.”