Gaming Uncovered: The state of play

advertising options. Why then have brands and agencies been so slow to
take advantage?

The truth is there have been plenty of barriers that have put brands off
the medium. It was impossible to buy local markets, so only global
brands could get involved. Once a campaign was on a game, there was no
way to remove or change it. The lead times were huge - up to a year in
many cases. And advertising in games was expensive - $10
million-$15 million for a single campaign in a successful
title.

Once again, though, it is the internet that is making a big difference
to the market. The rise of PC gaming and consoles that allow users to
connect to the web to download extra content means advertisers can now
run campaigns that are cheaper, more targeted and increasingly
flexible.

But,why should they want to? Aren't gamers all spotty teenagers with no
cash? Not according to a recent BBC study, which showed that 59 per cent
of the UK population (26.5 million people) are gamers and 45 per cent of
those are women. Gaming, it seems, is no longer just for geeks and
kids.

"The killer benefit of gaming is attention," Jean-Paul Edwards, the head
of media futures at Manning Gottlieb OMD, says. "We live in a multimedia
world and you can't guarantee people will take any notice of your TV ad,
but gamers have to concentrate on what they're doing, or their character
dies. Your message is much more likely to get through."

Potential numbers are impressive. Gaming is the fastest-growing form of
entertainment in the world and young people rank it above TV as their
medium of choice. The games market is worth more than £30 billion
worldwide, making it nearly as big as the music industry. And unlike any
other new advertising medium, it already has the infrastructure in
place.

This creates its own challenges, according to Edwards. "Advertisers need
to look at how they can add value to the experience," he says. "It's not
like TV, where people tolerate ads as a way to get free content. Gaming
has developed without the support of advertising, so you can't just come
in now with whatever you want - badly thought-out ads that don't give
anything back to the gamers will just affect sales of the games and have
a negative effect on the brand."

The in-game advertising market, particularly in the UK, languishes way
behind the games market itself - brands spend less than £10
million in games a year. According to Edwards, that figure is set to
change. "I expect that figure to be 50 times bigger in five years -
hundreds of millions of pounds will be invested by 2010 and it should
hit £1 billion in the next decade," he says.

The fact that most gamers are now connected to the internet while they
play - and that proportion will only increase once the next generation
of consoles, such as PlayStation3, hits the market - means opportunities
for advertisers are now more interesting than ever.

Rather than ads being static entities that are fixed on a game disk and
appear in the same way for the life of the game, they can now be added,
removed or even be made interactive via an internet connection.

Most advertising within games appears on billboards placed in
appropriate locations - around racing tracks or on city streets - and,
in much the same way as outdoor campaigns in real life, advertisers can
now decide in what market and for how long they want their ads to
appear.

"Billboards started off as basic 2D posters but now they can be
electronic or appear on plasma screens," Nicholas Longano, the president
of new media at the in-game advertising company Massive, says. "The only
rule is that the ads have to appear in places where they enhance the
environment and reflect real life - you won't see billboards in Middle
Earth."

Massive has just launched a more interactive form of billboard, which
enables users to click on the ad to access information, and has signed
Toyota as its first advertiser. "The click rates we're seeing are
already much higher than the average click-through rates for banner
ads," Longano says.

However, advertisers can go further than poster ads by making their
brand part of the gaming experience. The clothing brand Ben Sherman, for
example, ran a campaign in the PC and Xbox 360 racing game Test Drive
Unlimited, which involved both product placement and advertising.

The brand built an in-game, fully interactive store, where players could
buy clothes from Ben Sherman's summer range in which to dress their
characters. Ads for the store also appeared on posters within the game.
The campaign also linked through to promotions in real Ben Sherman shops
and had a presence at events such as Max Power Live.

According to Ed Bartlett, the vice-president, Europe at IGA Worldwide,
which negotiated the Ben Sherman deal, this kind of campaign works in
different ways.

"The virtual store built brand awareness," he explains. "It enabled Ben
Sherman to show off its current range by letting people try on its
clothes without having to go into a store. It also associated the brand
with an upmarket product - the game is set in a glamorous Hawaiian
location and is full of expensive cars such as Lamborghinis and Aston
Martins.

"The in-game billboards had similar advantages to a traditional outdoor
ad campaign, except that we could tell you exactly who saw your ad and
how long they saw it for."

This ability to measure response is another big change brought about by
connection to the internet. It is now possible to use the web to track
exactly who is playing a game, how long they are playing for and where
they are in the world. "We try to be unobtrusive - we wouldn't want to
make gamers fill in forms to provide exact information on individuals,
but we can collect impressions and tell who is playing and where they
are," Bartlett says.

The lack of an industry-wide standard for measurement has often been
cited as a barrier to growth. Massive now plans to launch its own system
in the first quarter of 2007 and other specialists are working on their
own measurement tools.

"The things you can track are much more advanced than in traditional
media," Longano adds. "It's a great way to measure outdoor creative
because the gamer decides whether to look at a billboard and we can tell
who is stopping to watch your ad."

As with all internet-related media, the ability to target niche groups
and analyse their responses exactly is something that observers expect
to have a real impact on future growth. "In theory, you could take it
down to looking at which players always choose to play as Arsenal in
football games," Edwards says. "The Arsenal sponsor could then target
those fans with a customised campaign and track who responds."

The more you customise a campaign, the more expensive it is to produce,
although the media space itself is no longer a barrier to entry: buying
simple billboard ads is no more difficult than buying internet banners.
At the moment, most ads within games tend to be repurposed from
traditional outdoor campaigns, but the real opportunity lies in thinking
of new ways to target people in what is becoming a very different
environment.

"Advertisers should be wary of trying to fit a traditional square peg
into this new round hole," Edwards advises. "This is not a place to run
your traditional 30-second television commercial. Agencies will need to
come up with new solutions."

The key to better future campaigns will lie in giving something back to
gamers. For example, advertisers could get their brands scripted into
games by giving characters brand- related tools that help them progress
further within the game.

Localised campaigns could be another growth area: advertisers could use
information on where gamers are playing from to offer them voucher
rewards for local restaurants if they complete a level in the game.

"Targeting smaller advertisers is a real opportunity," Edwards says.
"Look at how Google has tapped into that market by offering an ad tool
to plumbers and builders.

"Google might even get involved in gaming so that, if you're playing The
Sims (a virtual-reality game in which players create characters, build
homes and control their lives) and you need a plumber, you could book
someone who is a real-life plumber based near where you live."

Some brands in the US are already going beyond brand-building by using
online games as retail channels. Pizza Hut has developed a partnership
with Everquest (www.everquest.com), a 3D virtual reality game that
enables users to play each other online.

The restaurant chain wanted to target people who were so hooked on
playing the game that they would not want to stop to cook dinner. Pizza
Hut struck a deal with Sony, the game's publisher. Gamers who typed
"/pizza" while playing brought up a screen within the game that enabled
them to order pizzas. Many gamers wear headphones when playing, so
Everquest even created a system to tell gamers their food had arrived if
they could not hear the doorbell.

Players in these online worlds, known as MMOGs (massively multiplayer
online games), spend a lot of time creating their characters (or
avatars), dressing them, creating places for them to live and work and
doing things in the game that they might do in real life.

The MMOG Second Life (www. secondlife.com) may only have 400,000
subscribers, but brands are beginning to get involved, perhaps attracted
by the minimal media cost and the massive opportunity for
engagement.

The clothing retailer American Apparel opened a virtual store in Second
Life based on its real Tokyo showroom, enabling players to buy clothes
with which to dress their avatars. The BBC has its own "island" on
Second Life, which is uses to broadcast live footage of events.

In both cases the brands had to pay the game's creator, Linden Lab, for
the virtual piece of land on which they built the shop or venue. But, as
David Fleck, the vice-president of marketing at Linden Lab says: "Brands
can get involved without paying a penny."

"What usually happens is that a brand owner calls and tells us what it
wants to do and we say 'great, there's nothing to stop you doing it -
and we have a developer network that can help you,'" Fleck says. "There
is a cost if they want to buy real estate but, if they don't, a brand
could easily get involved on its own and we would not stop it."

This could involve a brand creating things and putting them into the
game for players to use. A car manufacturer, for example, could create
virtual cars that exactly replicate their real-life counterparts and
allow users to walk around them, play with the dashboard and even drive
them.

Alternatively, an advertiser could create tools that enable players to
do things they cannot do in real life. A beverage brand could make cans
of drink that give users special powers when they consume them - so the
value of a virtual reality world is that it is one in which Red Bull
really could give you wings.

"At the moment, audiences for MMOGs are quite small, but they will grow
and the boundaries between the real and virtual worlds will become
increasingly blurred," Edwards says.

"The opportunities for brands are immense. In a virtual world, you can
do anything - such as fly or travel through time - and brands have the
budgets to create tools that excite people and allow them to do things
they cannot do on their own."

Next week: Mobile Uncovered

WHAT IN-GAME ADS MEAN FOR ...

Agencies

- A huge, untapped market with a broader profile than you might
think

- The ability to target specific sectors, from Arsenal fans to young
women living in Leeds

- More accurate measurement than any traditional medium

- A new creative opportunity - the freedom to create something outside
the confines of traditional ad formats

Advertisers

- The chance to develop tools that add value to a gamer's experience -
brands are much more accepted in games than they are in an interruptive
environment

- The ability to test your agency's creative by tracking exactly how
many gamers stop to look at your in-game poster ad

- Product placement without the regulation

- A relatively low (or even non-existent) media cost.