Internet Firms Play Ad Games

People’s attention is seldom as focused as when they’re battling an imaginary adversary in a digital game of chess or wandering through a virtual world seeking enemies to blow away, so it’s not surprising that Internet marketing companies are beginning to place ads in front of those feverishly attentive eyeballs.

Why games? They’re a natural fit for advertising support, says Jeff Ready, co-founder and vice president of marketing for Radiate, a CMGI-funded company that’s putting ads in games and other software. And in the Internet age, ads in games can be more effective, because they can be updated and targeted when the user is connected.

“Games are interesting, because they are entertainment,” said Ready. “Entertainment in and of itself is a very traditional ad-supported medium.”

One of the companies on the cutting edge of this trend is Adaboy, a start-up firm that has developed a patented system for placing advertising in 3D environments, including games. The company’s “virtual billboards” appear in context inside the games, so someone driving in a race car game might see an ad on a billboard, just as you would along a highway in the real world.

“It is truly a revolutionary unique new way to reach a target market,” said Barbara Pearson, Adaboy’s director of marketing.

While other companies, like Games Advertising, have put ads in context in games, Adaboy is leveraging the power of the Internet to target and update ads so they’ll be current and tailored to the individual playing, rather than statically burned-in and generically targeted to the game’s presumed demographic.

And Adaboy and Radiate aren’t the only companies working to put Internet-enhanced advertisements in games. Other players like Conducent and Cydoor Technologies are working with a wide variety of software developers, offering them ways of bringing in ad revenue at a time when consumers are becoming accustomed to getting applications for free.

“The development costs have risen, and public expectations are that games be cheaper,” said Craig Campbell, president and chief executive officer of Adaboy. “That’s what I call the squeeze in the market.”

Most of the companies that are working on this type of advertising are starting with less-glamorous card games and board games, even though the high-action games are the ones with the well-known brand names.

“They are well known titles,” said Campbell, “but in terms of a business, they’re not the most played games.”

The form that these ads will take vary by the company and by the game. Adaboy is concentrating on virtual product placements, while Conducent, and Cydoor’s technology is more similar to traditional banner ads. Radiate, while offering banner ads, also offers an interstitial format that would appear, for example, when a user moves from one level of a game to another.

Another twist on the format, Jackpot.com, was recently launched by Internet incubator idealab! The company integrates ads into a virtual slot machine, so logos and messages spin before a user’s eyes before finally settling into place. If the logos across the game match, the user can be an instant winner.

“We couldn’t believe how enthusiastically users were calling for a third Petsmart.com logo,” says Tom McGovern, chief executive officer of Petsmart.com, which was an early advertiser on Jackpot.com.

“I think the real magic is how Jackpot.com has made the advertisers’ brand so integral to the experience, rather than just ancillary to the entertainment…where else on the Net can an advertiser connect like this with their target customers?”

While formats like that used by Jackpot.com and Adaboy may be cutting-edge, and may eventually be the best way to connect meaningfully with consumers, they have the drawback of requiring the development of specialized creative.

“With these newer formats, it becomes more and more difficult to get ad agencies — which are very traditional and want to go with what works — to get them to adopt new things,” said Radiate’s Ready.

“It takes a while to evolve, and then it catches.”

That’s may be one reason why Radiate and Conducent are more established currently with advertisers, but it might also be the fact that they’ve been around for longer. Adaboy says it’s lined up initial advertisers, although it won’t yet divulge any names until the system’s official launch on April 17.

“We represent an evolution of online advertising,” said Campbell.

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