In-Game Advertising Built Momentum in ’07

While Microsoft’s “Halo,” the most anticipated video game to hit store shelves in 2007 was off limits to advertisers, the sector gained momentum both in games and around games.

Among the hot titles packed with advertising was Activision’s “Guitar Hero III.”

“The biggest thing this year is the momentum, the acceptance of the medium, the increase in size in the advertising buys, and increased acceptance in the publisher community,” Cory Van Arsdale, CEO of Microsoft’s Massive unit told ClickZ News.

In addition to advertisers and publishers, developers became more receptive to the appearance of brands into games. According to Van Arsdale, developers continue to obsess about the storyline, however they are considering advertisers in the process “They’re increasingly thinking about[ad] inventory quality and how that might work.”

Publishers are beginning to prioritize how and where ad insertion happens in a game. “There’s only so much room in a game. When we look at priority, it’s dynamic,” said Shelby Cox, senior director of ad sales at Electronic Arts, the publisher of the “Madden” and “Need for Speed” series among other franchises. “The stuff we typically sold will now have dynamic tags on it.”

Dynamic placements are able to be updated with new brand campaigns while static insertions are hard-coded into a game and remain with the same creative throughout.

“I think you’ll see blurring of the lines between dynamic and static,” said Van Arsdale. “Static ads that are in the game stay, they are shipped with the title, they never change, and you can’t measure exposure. If you make those dynamic you can actually track that.”

Earlier this year Double Fusion began offering dynamic product integration on its network. Massive has the ability to do the same, and expects to tag static items in games to provide metrics on gamer exposure and interaction. Without tags, a brand will know how many copies of a game are sold, but not how many gamers interacted with the brand.

Previously, marketers with large-scale integration bought additional dynamic ads to provide metrics, though the metrics didn’t necessarily correlate with interaction with the brand in the game.

Momentum grew in in-game advertising in a year when the video game industry took part in a more businesslike Electronic Entertainment Expo (E3). Media buyers were privy to more meetings and invites than in previous years. “E3 of the past was a great place for [agencies and brands] to come get a snapshot [of the industry],” said Cox. “Some of the folks we talked with [this year] found it to be disappointing, but we did get a lot of business done meeting with the agencies that actually did come.”

Many agencies, brands, and even in-game ad networks decided not to attend. Massive’s Van Arsdale has only attended E3 in past years as a spectator. Though from a business standpoint, he said the emphasis for Microsoft is on the Game Developer Conference, Cannes, and Microsoft’s Strategic Accounts Summits held throughout the year.

The next hurdle for in-game and around game advertising is to establish standards and metrics. “You have IGA Worldwide with one definition of an impression, and Double Fusion and Massive with another,” said Cox. Massive counts a cumulative :10 exposure as an impression.

The onus is not entirely on the networks, but a general industry understanding. “We need to set standards and metrics buyers understand, and to come up with a vernacular,” Cox said. “The research is there, but as an industry we need to do a better job making it easier for buyers to buy.”

The Interactive Advertising Bureau’s (IAB) committee on advertising in video and Web-based games released its first findings. The document was primarily definitions and a baseline of information.

“I think [the IAB] is going to have an increasing impact going forward,” said Chris Houtzer, senior director of new media and games at RealNetworks. “Having the IAB recognize in-game advertising as a significant media for advertisers and the games industry in general is really important.”

The IAB’s goal to establish standards and terms is agreed to be a worthy objective. “Hopefully it will keep my competition from obfuscating the definitions of things, because I think that’s not helping the medium,” Van Arsdale said.

Van Arsdale wants to see a designation between different media. “People will call it in-game when it’s not in-game, it’s around-game or a Web site,” he said. This includes banners and interstitials in Web-based games, and sponsorship of tournaments and contests. While these are viable options for advertisers who want to reach a particular audience, or be associated with a specific game, there is a distinction. “People really need to understand the medium, and that’s what this year’s been about,” he said.

Momentum built in casual and Web-based games in much the same way as console and PC games. “Instead of this being an experimental year, we’ve seen the transition in 2007 from experimental to a must have for advertisers,” Houtzer said.

Casual games paralleled console titles in terms of advertising. “In general across the industry we saw a lot of adoption of advertising as a significant way to monetize games,” said Houtzer. “Developers made a great leap in supporting advertising, instead of 2006 questioning the legitimacy. What’s really helped them do that this year is initiatives that Real has, as well as others, the aspect of sharing revenues.”

Casual game sites including RealNetworks and Microsoft began offering developers a share of ad revenues. Many publishers earned stronger revenues from advertising than sales.

In the coming year new opportunities for casual games will emerge. EA is bringing the casual game experience of its property Pogo.com to the console. “We are focusing on different types of products on the console that are much more suited for advertising,” said Cox. “Like our Pogo model, there’s going to be products out there where advertising is the root business model.”

The console manufacturers have already realized the value of such products. An IDC report identified additional revenue streams the current generation of consoles bring in. “The installed base growth and connectivity growth helped,” Cox said.

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