Media: All about ... In-game advertising

Advertising in video games has become big business, Alasdair Reid writes.

In-game advertising? Well it must be serious if Google is interested.
And Microsoft for that matter. In May 2006, Microsoft acquired one of
the pioneers in this space, Massive Incorporated; and last week it was

Google's turn, showing it was interested in snapping up the

San-Francisco-based Adscape Media.

Not so long ago, the integration of brand images or ads into computer
games was a curiosity. This is an environment in which only minimal
levels of disruption will be tolerated, so advertisers have had to adopt
oblique strategies. You can't have commercial breaks or create onscreen
margins to accommodate banner ads.

In the earliest days - for instance, in two-dimensional labyrinth type
games - the solution was to incorporate brand or product images into the
game's backdrop. There was also a brief fad, in low functionality games
designed for PC play, to make the brand a participant in the game. A
round sweet, for instant, could become a game token.

But as games became more sophisticated and the virtual landscapes strove
more ambitiously to mimic the real world, naturalistic ad sites became
an inevitable feature. In some early instances, where, say, a poster
site was featured, a parody brand was featured (in the Grand Theft Auto
series, for instance, the fashion store is called "Gash").

This, in other words, used to be a medium that mocked advertising. No
longer.

1. The origins of in-game advertising are said to date back to 1978 and
the Adventureland game, which included a promotion for the next game in
the series, Pirate Adventure. Many cartoon-style games in the 80s and
90s had crude instances of product placements - for instance, Chupa
Chups featured liberally in the background artwork used in the 1992 game
Zool.

2. But it wasn't until the arrival of virtual reality games on
fifth-generation consoles such as PlayStation that the market began
aspiring towards new levels of sophistication. The Fifa International
Soccer version released in 1994 is often cited as the first game to
mimic real-world advertising formats in the pitch-side and stadium
perimeter billboards.

3. These early advertising opportunities were "static format" - the ads
shown on the earliest Fifa International Soccer are the same every time
you play. However, with new consoles such as Xbox 360, PlayStation3 and
Nintendo's Wii, which are internet- enabled, it is now possible to have
ad sites (for instance, poster sites in a virtual reality street scene)
that can be posted by remote servers.

4. This makes the medium flexible and more accurate in its demographic
targeting abilities. It also offers flexible scaling in terms of raw
audience size because ads can be served across many different games if
an advertiser wants to achieve as big a potential audience as
possible.

5. Adscape is the number three player. The top two are IGA Worldwide and
Massive Incorporated. IGA was founded in 2002 by Darren Herman, and is
now run by the chief executive, Justin Townsend. It raised $12
million of institutional funding in February 2006 to aid growth.
Massive, founded (also in 2002) by Mitch Davis, a former senior
vice-president of Encyclopaedia Britannica, was bought by Microsoft for
$400 million. Other players include Double Fusion and Extent
Technologies.

6. The industry is mainly US-based, though the leading players have
international networks of offices. They talk to game developers and
publishers on behalf of advertisers - directly in the majority of cases,
but ad agencies are often involved too.

7. The in-game ad market was worth in the region of $56 million
in 2005. Forecasts for the value by 2010 vary wildly - from $700
million to $1.8 billion - but there's a general consensus that
growth will be spectacular.

8. Nielsen Media Research plans to launch an audience ratings system for
video games this year in the US. It will report weekly figures of the
most-played games, breaking down behaviour patterns by time of day and
console type. The audience is significant, especially in low TV-viewing
age groups. It is estimated, for instance, that in December 2006 in the
US, the online game Counter-Strike racked up 7.6 billion viewer minutes.
During the same period, the top-rated TV show, NCIS, scored 4.2 billion
viewer minutes.

WHAT IT MEANS FOR ...

ADVERTISERS

- In-game advertising offers a compelling new route into a young
demographic that's watching less and less broadcast television. The
early indications are that this can be a very effective medium. Two
years ago, Nielsen Entertainment, in partnership with the games
publisher Activision, released research that attempted to measure the
persuasiveness of in-game advertising.

- It noted high-recall responses and significant shifts in attitudes
towards brands featured in games. These perception shifts are nearly
always positive - though, if you get it wrong, you can, on the flipside,
cause major alienation. This is especially the case with cult titles
with countercultural overtones. Electronic Arts was deluged by
complaints when it included advertising in Battlefield 2142, for
instance.

- But the opportunities in more socially oriented networked virtual
reality games such as Second Life (which already has a highly developed
virtual economy) are likely to be significant.

AGENCIES

- Media and advertising agencies have to be aware of the dangers of
getting left behind here. In-game advertising specialists such as IGA
Worldwide and Massive Incorporated say they're likely to make faster
progress on a proposition if they cut out the middle man and talk
directly to the advertiser. That perception should start triggering
alarm bells in the advertising community.