Holiday Gadgets To Shape Next Year’s Campaigns

Marketers who asked Santa for a new ad platform this holiday season may see their wish come true. It comes gift-wrapped, and will be tucked under the tree.

This year’s longer e-commerce buying season translates into a larger and longer push to move products online, particularly in the personal device and gaming categories. The much-hyped “Halo 2,” by Xbox, set records in pre-sales last week following an aggressive campaign and viral Web site from agency AKQA. Surfers will, of course, be inundated with a parade of gadgets, including digital cameras, laptops and handheld devices.

The companies behind these gadgets are ramping up their marketing spend this quarter, as they do every Q4. But that’s only part of the story. In particular, this year saw the debut of many devices that hold implications for marketers that go beyond next month’s media buy. A new breed of gizmo is shaping the campaigns of 2005… and beyond.

The Third Screen

Digital cameras and phones are both hot gifts this season. Increasingly, they’re bundled together.

“Before too many years go by, just about every wireless phone will be considered what we call today a ‘smart phone,'” said Steve Koenig, senior manager of industry analysis for the Consumer Electronics Association (CEA). “Wireless phones are increasingly becoming Swiss army knives. They are the ultimate convergence products.”

Long on the distant horizon, the new breed of converged handheld appears to be here at last, and entering the mainstream. These devices deliver better voice, better data, built-in cameras, bigger screens, and ultimately, richer ad campaigns.

AvantGo Editorial Director James Ryan is looking to integrate smart phones like PalmOne’s Treo and Sony Ericsson’s P900 to extend his company’s audience and advertiser reach. AvantGo has, until now, maintained a near-exclusive focus on PDAs with no voice functionality. Ryan says larger screens on new smart phones are well-suited to the company’s mobile content service and other offerings.

“In terms of Avantgo’s content and ad delivery, the PalmOne Treo and Sony Ericsson P900 smart phones are great platforms,” he said. “They let consumers take advantage of sync-and-go as well as wireless connectivity.”

PalmOne’s Treo was long a business-class device, but according to its creative agency, AKQA, that may be changing. When consumers start using such powerful data-driven devices, several of which are entering that market this holiday season, graphical content interfaces and design-driven ads may reclaim some of the mobile marketing hype SMS seems to have usurped in recent years.

AvantGo recently launched a program for Land Rover in which its audience could view a video commercial on PocketPC-based devices. “These devices are also becoming more video capable, a great opportunity for [regular] content as well as marketing content,” said Ryan.

Critical Mass for WiFi

The makers of smart phones and handhelds are also beginning to bundle WiFi and Bluetooth into the devices, extending both the broadband content and ad capabilities of the mobile medium. However, those devices, including Palm’s Tungsten C and HP’s iPaq, are still above a price point that could be considered consumer grade.

Elsewhere, WiFi is already expanding interactive campaign reach — albeit to the living room and kitchen, rather than the taxi. IDC reports 64 million WiFi systems will have been sold by year end, up from 24 million in 2002. Sites like ESPN.com and Yahoo have added features aimed at people who simultaneously surf and watch TV.

Laptop makers are keeping pace. Sony’s Viao and Apple’s iBook G4 are getting the biggest raves among wireless-enabled machines, but most new laptops have a WiFi option. As these make their way into surfers’ hands, broadband connections are extending to all corners of the home. Cooks can access Epicurious.com recipes in the kitchen. CNN junkies watch press conferences in the bathroom.

Other niche wireless devices are contributing to converged home media environments. This year saw the release of a slew of digital media server devices. Components such as D-Link’s Medialounge and Apple’s AirportExpress let consumers connect their television or stereo to their PC, where audio, video and other digital files reside.

“You see more products coming to market that allow you to use your PC as a media server,” said CEA’s Koenig. “Its one way WiFi is augmenting content in the home.”

Advertisers will have to think creatively about how to approach the converged home. A desktop-bound audience of one is no longer the appropriate paradigm for thinking about all interactive marketing.

Halo 2

The hot gift with the perhaps biggest implication for marketers isn’t a gadget at all. It’s a piece of software. Microsoft spent an estimated $20 million developing “Halo 2,” which shipped last week. The action game pre-sold a record 1.5 million copies. It promises to be one of the biggest game releases ever.

In the last year, game developers such as Electronic Arts (EA) have steadily ramped up their efforts to package advertising into games. The huge price tag associated with creating the hottest new games creates added pressure for the games to make bank.

Last month saw the launch of two companies that propose to apply a network ad model to the gaming environment. Massive Inc. and inGamePartners are both trying to strike deals with game publishers to serve and track single campaigns across multiple titles.

“If you’re a top-tier advertiser trying to reach 18 to 34 year old men, you’ve got to be in video games,” Massive’s CEO, Mitch Davis, told ClickZ. “Advertisers are looking for media that reaches that target group, is accountable, and is time-based, so a campaign can run for a length of time and then be changed.”

While the revenue now earned through advertising consists of only a fraction of what game developers make on a title, the potential reach of a game like “Halo 2” is vast. While fantasy games are generally considered ill-suited for product or ad placements, the enormous attention accorded to one particular game this holiday season could mean more agency and advertiser focus on games as a marketing medium.

“Branded gaming is really taking off, both in terms of boxed video games and Internet games,” said AvantGo’s Ryan. AvantGo’s parent, iAnywhere, is beginning to explore the mobile gaming space with gaming applications for phones.

Additionally, escalating budgets and revenues for the hottest games will translate into larger marketing budgets for new releases as Sony and Nintendo pitch their games and systems against Microsoft’s Xbox. Expect to see game ads with production values that rival those of Hollywood movie trailers.

Beyond the Holiday

In the short run, producers of hot gadgets and game titles will inundate Internet users with ads for their products. This holiday season and beyond, expect a burst of advertising from makers of camera phones, converged handsets and game titles.

The long run is when things get interesting. Eventually, advertising will proliferate within those very gadgets and games.

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