In-Game Ad Space Evolves with Performance-based Ads

Advertisements in games have to date been somewhat akin to outdoor placements; gamers run by billboards or see them in the background. Now in-game ad networks and game developers are working on more performance-oriented products to enhance engagement and response rates of gamers.

A new click to e-mail ad is one such unit, for which game developer Nightlife Interactive filed a patent earlier this week. The unit will be used in Nightscape, a massively multiplayer online game scheduled to be released in September of next year. The concept of the game is built around the advertising it will bring in. The ad unit, called the “seamless ad,” was created together with Florida-based search marketing firm In Touch Media Group.

Players can click on ads or products and have the marketing message sent via e-mail so as not to interrupt gameplay.

“We saw a tremendous opportunity with in-game advertising,” said Bob Cefail, chairman of In Touch Media Group and CEO of Nightlife Interactive. “With the seamless ad, in order to have a transaction-based advertising model, you have to find some way the player isn’t disrupted but can act on the product.”

The game will have a free and paid subscription model, and those that work their way up in the club world of Nightscape and own clubs will get paid real dollars in the form of affiliate commissions. Any transaction generated within the virtual walls of a particular club will earn the club owner a commission. Cefail expects to attract advertisers from the clothing, jewelry, music, consumer electronics, automotive and motorcycle sectors.

Meanwhile, in-game ad network Adscape Media plans to build its network with a similar product. The ad unit is based on a “Real World, Virtual World Gateway” which has been in development for four years. Marketing engagement happens when a player completes a trick or a level where an advertisement was placed. Through an opt-in program, Adscape will send an e-mail or SMS to congratulate the gamer, and likely offer a brand message or product coupon. Gamers don’t necessarily have to click on or interact with an ad to get the messaging.

“[Advertisers] are now getting a,,, per action [measurement] versus just an impression,” said Eva Woo, VP of marketing at AdScape Media. “You can really capture your audience and reach them in a different manner than posting billboard ads in the game.”

Adscape will put opt-in messaging within the game registration, or before or after entering a level. It gives advertisers the opportunity to sponsor an entire level, or a particular game in the case of sports games.

The company is about to conduct research with the ad unit in a game. “The goal of our research project is to compare gamer recall of a brand while interacting with a game versus looking at an ad,” said Woo.

Dynamic ads will also be served in the game like other ad networks. “The big differentiator for us is the Real World, Virtual World Gateway,” said Woo. “We believe that to really, truly get the gamer’s attention and touch them when they’re in a celebratory mood is a great way to get them.”

While a performance-based model should be attractive to advertisers, some will take a wait-and-see attitude. “I think some advertisers are looking for ways to measure a little more of what placements in games can do for them beyond just brand awareness or making a brand or product available,” said Dario Raciti, OMD’s group director and gaming leader. “Not all of them are interested in that aspect, so we will definitely be keeping an eye out for new technologies.”

Other new technologies are coming to light in in-game advertising. Double Fusion said this week it made a deal with a company called Vykarian to create 3D game elements in games. The company employs Chinese programmers to build models to be put into games. It’s worked with various titles from Electronic Arts and Sony Computer Entertainment. One of Vykarian’s two partners is esteemed game designer American McGee.

“3D advertising is a new field, and much of what you see in games today is 2D and videos, and it works tremendously well,” said Double Fusion CEO Jonathan Epstein. “To help people get familiar with this field, we partnered with Vykarian, an art production studio that works with game developers all over the world to produce 3D models.

Advertisers and agencies that don’t have the facilities to create 3D assets can use the service.

Objects like storefronts, cars, cell phones, soda cans and other products and brand advertisements can be rendered in 3D using this service. The idea is to cut down on the production time involved in product placement, and allow for dynamic updates to swap out product lines or even brands.

An example of a dynamic product placement might be a cell phone advertiser who can populate the game with the particular model cell phone used in the country where the gamer is located, or update the game with new models as they’re released. In some cases, if the cell phone company ends its campaign, Double Fusion could sell the ad to another cell phone company.

“Lots of games have cell phones in them. Typically those have been hard-coded integrations,” said Epstein. “Using the technology a sponsor could change the cell phone every time they have a different model or change a phone based on regions.”

Up until now, agencies worked with game developers directly to implement product integration. “In most cases the developer uses our assets, they give us a spec sheet like any other publisher on the Web, the studio in this case is a lot more involved in the creation than [publishers] in the digital space,” said Raciti. “We give them the basic assets, in some cases we have to give them wire frames.”

Raciti said there is generally less involvement from the creative teams within agencies than there is in other media channels.

Product integration like Raciti described often involves static placement, where the product will live on in the game. The partnership with Vykarian will allow for dynamic placement.

“Our belief is that games offer a dramatic and compelling media no matter what creative, but our goal is in working with advertisers and publishers in working out what the advertising should be, and that’s where we stake our ground,” said Epstein.

In-game ad networks like Double Fusion, Massive, IGA Worldwide and other players build networks of games and relationships with advertisers to grab dollars. Revenues for the channels are expected to reach $732 million by 2010, up from $56 million in 2005 according to a Yankee Group study.