By Ben Macklin - Senior Analyst
Microsoft‘s decision in May to purchase in-game advertising company, Massive Inc., signals that product placement in games and other game-based advertising is likely to emerge as an important advertising channel.
Joanne Bradford, corporate VP of Global Sales and Marketing at Microsoft had this to say about Microsoft‘s reason for the acquisition:
"Advertisers are having a tough time connecting with the elusive 18 to 34 year-old male demographic because this group continues to spend less time watching TV and more time playing video games. Massive and Microsoft can help lead with our shared vision of delivering more targeted, measurable and effective opportunities for advertisers to reach today‘s youth audience in a largely untapped market."
The challenge for game designers is to incorporate ads without alienating the gamer. A new report from Parks Associates shows that there is far from universal acceptance among US male online gamers of in-game advertising.
The survey from Parks Associates indicated that US gamers felt product placement was the least intrusive approach to in-game advertising, as opposed to pre-game ads or in-game bulletin boards.
The Yankee Group estimates that revenues from advergaming (custom-made games specifically designed around a product or service)and in-game advertising (product placement in video games) in the US will grow to nearly $875 million in 2009, up from $186 million in 2005.
"As marketers experiment with how to best reach gamers, advergames, in-game ads and game sponsorship will be among the models that survive," notes James Belcher, a Senior Analyst at eMarketer. "Now the question is how to standardize in-game ad viewing measurement across platforms--including PCs--and to figure out what works best where. When those issues are resolved, placements will take off."
One of the significant barriers to in-game advertising in the past has been its lack of measurability and its static nature. You might be able to put a virtual billboard in a racing game but how do you know gamers are noticing it? The potential for in-game advertising exponentially expands with online video games where ads can be changed in real-time and measured more easily.
But, online video games are still a small slice of the overall video game market. Currently online console subscribers (for both Microsoft‘s X-Box Live and Sony‘s Playstation 2) number about 5 million or 13% of US console users. Online video gamers using a PC (massively multi-player online gamers) number a similar amount in the US but the most popular games played by this group are fantasy role playing games, which do not lend themselves well to "real life" product placement.
So while in-game advertising has the potential to capture the attention of a valuable demographic segment, advertisers need to carefully pick the game brand that provides a positive association with their product or service and be mindful of the difficulty in measuring the effectiveness of the format.
