Google Confirms Buy of Adscape Media

Without giving too much detail Google confirmed a much-speculated acquisition of in-game advertising firm Adscape Media. Terms of the deal including the amount Google paid were not disclosed.

The acquisition of an in-game advertising technology firm broadens Google’s reach across media channels. “It’s part of Google’s larger strategy to offer brand advertisers more options,” said Greg Sterling, founding principal of consulting firm Sterling Market Intelligence.

Information provided on a Google site page said, “In-game advertising is an area where we believe Google could add a lot of value to users, advertisers and publishers. Adscape Media’s technology and talented team are a great addition to Google’s current advertising solutions for advertisers and publishers.” Google was not available for further comment.

Adscape Media spent the past four years working on technology and acquiring patents for in-game advertising units. The technology added game plot and storyline integration to dynamically-delivered ads. Ads are served based on certain actions within a game, like achieving a certain score or completing a tricky move. Ad exposures could happen in a game, or as a follow-up through e-mail or over a mobile phone.

Whether Adscape will keep its action-based ad units under the Google flag remains to be seen. In an interview last August with Adscape’s VP of Marketing Eva Woo, she said, “The advertisers are really finding this of extreme interest. They’re now getting a click-per-action versus just an impression.”

The acquisition follows Microsoft’s acquisition of in-game ad network Massive last year. “It shows that in-game ads have been growing as an industry,” said Dario Raciti, gaming leader at OMD. “There’s interest from publishers, and also from giants such as Google. Google has been showing interest in the in-game advertising world for at least a few years….They finally figured out a way to make it work for them and in their model.”

It may be too early for advertisers and media buyers to tell how Google’s entry into the market will affect in-game advertising buys. Raciti was willing to spot one potential benefit to Google offering in-game advertising inventory. “Decisions made on in-game advertising don’t happen at the planning level, they happen at the group planning level or with the director of an agency,” he said. “Google may help bring that buying decision down to the supervisor or even planner level.”

“I think it’s going to be essential for Google to make this as simple as possible,” Raciti added.

As Adscape’s technology integrates with Google’s media offerings, it may push competitors to advance their offerings, according to Billy Pidgeon, program manager of consumer markets at research firm IDC. “Google’s buy-in to the in-game ads sector is a validation of game advertising’s potential, but it also represents a challenge for competitors to quickly actualize the opportunity. Adscape’s context-based approach meshes well with Google’s existing advertising strategy, so IGA, Massive, Double Fusion and other in-game ad players need to clearly define and differentiate their services.”

The in-game advertising space may be proven when Adscape becomes part of Google’s offerings. “Game advertising vendors must demonstrate sustainable revenue streams and marketing efficacy for brands if this advertising market is to outlast hype,” said Pidgeon.

The acquisition speculatively falls into Google’s sweet spot for acquisitions of between $20 and $23 million, according to Sterling. The purchase price is one part of the equation. “Google is fairly careful about its acquisitions, they tend not to just buy companies to take them off the market or add some feature to their arsenal. [Google is] pretty thoughtful about the whole thing,” he said.

Advertising within video games is seen as an effective way to reach men age 18 to 34 who are not consuming other media channels in a meaningful way. However, in-game advertising is still seen by some as having limited reach.

“Few games really lend themselves to making a lot of money simply because they don’t have a ton of players,” said Emily Riley, an analyst at JupiterResearch. “But essentially what you want to look at for Google’s sake is that they have only been a direct response player. This is a foray into brand-based advertising, rich media, it will be interesting to see how they integrate.”

Riley believes Google’s strategy is “to become a leader in dynamic ad serving across all platforms.”

Platforms under Google’s umbrella include print, TV, online video, and radio. There has been speculation that Google will broaden its TV ad distribution reach.