Get In The Game

Video Games: What was once considered strictly a hobby of teenage boys has evolved into an entertainment platform for a diverse audience -- young and old, men and women, and families. So, it follows that video games are now an important platform to advertise a remarkable array of products and services. In this month's feature, Deloitte Consulting LLP shares with us their incredibly indepth report on the topic of in-game advertising and it's application in modern video and web games.

Get in the Game: Using Advertising to Reach and Keep the Diverse Audience of Gamers

Advertisers are always on the quest for the best new venue to promote products and services to consumers. And, what has more potential for successful outreach than videogames? With videogames keeping more—and more diverse—consumers captive, advertisers who don’t enter this arena now risk missing out on viral results and losing contact with their consumers’ communities.

The benefits of this maturing advertising platform are eye-opening:

• The content is interactive at a time when consumers are losing interest in static entertainment.

• The demographics are often difficult to capture elsewhere.

• The platform has unique capabilities to create all-important mindshare by pushing an advertising message virally into a community.

Unlike traditional advertising platforms, gaming enables advertisers to form an interactive dialogue with consumers. With the right approach, this platform can enable advertisers to establish an interactive relationship with consumers and their peers, even after an advertisement ends. By tapping into the gamers’ community, marketers can create mindshare to an exponential degree.

But to reap the benefits, advertisers must be smart and they must be creative. They will need to know which advertising option to execute, how to avoid the risks of backlash and cost, and how best to utilize the creative and interactive sides of videogames to enjoy the free benefits found in the blogging and gaming community.

Already, the data shows a paradigm shift with 90% of polled advertising executives responding that they will place part of their advertising budgets in new media such as video games and viral communities. [1] Those companies slow to engage the in-game audience are at risk of losing out on building new long-term relationships with their target audience.

Advertisers hoping to create interactive experiences with gamers may adjust their value chains to work more directly with development studios who manage the interactive engagement of the gamer. Indeed, developing strong relationships with development studios will be critical as they will control the creation of the most imaginative and valuable inventory— interactive placement.

The Power Shift Towards Interaction From a Diverse Audience

Interaction

With consumers increasingly finding passive information “too boring [2],” advertisers must quickly embrace more interactive media. As shown in Figure 1, the consumer’s dissatisfaction with passive entertainment only increases with each successive generation. Consumers crave an interactive experience. This attitude is consistent with their increasing comfort level with and demand for more sophisticated technologies. A Deloitte research survey found that those born after 1980 prefer to learn in groups, using multimedia and while being entertained and excited [3]. To target these emerging demographics, advertisers need to look past static entertainment and approach consumers through interactive means.

A Diverse Audience

What was once considered strictly a hobby of teenage boys has evolved into an entertainment platform for a diverse audience. So, it follows that videogames are now an important platform to advertise a remarkable array of products and services beyond those attractive just to young males.

In fact, contrary to most assumptions, in some videogame communities, the teenage male actually is the minority, such as at a popular casual game portal, where females play 9.1 hours a week, with males only playing 6.1 hours.5 And, as a core activity for males with increasingly broadening demographics, video gaming is a medium advertisers cannot afford to overlook.

As shown in Figure 2, over 50% of all age groups are playing games. Let us review some statistics about today’s gaming audience:

• All age groups play: Users of entertainment software come from all age groups; the majority of consumers under 55 have played a videogame in the past two weeks. [7]

• Most popular activity for youth: A recent survey shows that 93% of young children are already playing electronic games. [8] This vastly outpaces traditional media, with the second most popular activity, listening to music.

• A preferred entertainment for older women: Thirty-seven percent of women over 40 would rather play a casual videogame on the computer than watch television. [9] Continuing to exclusively target women through traditional broadcasting and print platforms instead of also including dynamic entertainment will mean the loss of a potentially lucrative market.

• Video games are a family activity: Forty-four percent of adult gamers have a child that also plays games. 71% of those gaming parents say they play with their kids. [10]

Soon, target audiences will be of an age at which they will not know of a time without videogames.

How did gaming grow? The diversification of the gaming audience is driven by two key trends in the game industry: a move towards easier “pick up and play” casual games and technology which offer hardware for a wider audience like the Nintendo Wii and mobile phones.

How to Sell and Market in Games: A Primer

Currently existing ad-gaming networks now allow advertisers to sell to any range of demographics. These networks collect ad space from a library of PC (and increasingly mobile, web, and console) games, and subsequently fill that space with targeted ad creative. Recent activities in the space, such as eMarketer’s projection of $2 billion in revenue by 2011, and Google’s acquisition of Adscape, have increased the credibility of this platform.

Today there are game-exclusive networks that allow ad buyers to specify a target audience and have their message pushed through a library of games, all while tracking how long the consumer is engaged by the ad and even at what angle the ad appears on the user’s screen. Targeting capabilities are also developing, such as:

• Geo-targeting (which uses IP address and other information).

• IP and domain exclusion lists.

• User account profiles for online communities or games.

The ads themselves often exist as static images, although they are increasingly available as 3D prop formats or as video.

Advertisements can appear in videogames in both online and offline formats. Offline advertisements have the added benefit of reaching game consoles that are not connected to the internet, while online advertisements can better serve advertisers by offering dynamic ad placement with enhanced targeting capabilities.

Each option for game advertising has an increasing level of interaction with the consumer.
 

Level 1: Around Game Environment Ads [11]

As the simplest form of ad-gaming, around game environment ads are popular among web-based games, and largely operate like standard web ads that support web articles. These advertisements exist outside of the actual game space, and often appear to users as banner ads that surround the game’s content on its web site.

As these are simple creatives that are placed on a browser-based game’s website, the level of interactivity and mindshare generated by these are minimal, but they are easy to execute and can be highly targeted by linking to and leveraging a user’s web history. These ads may also occur in repackaged offline games, where older titles are sometimes packaged with other products and the product’s ads are wrapped around the game experience.

Level 2: In-Game Environment Ads [12]

The next level in ad-gaming is in-game environment ads. This method allows advertisers to purchase access to a network of games and have their static ads pasted throughout virtual game worlds. These advertisements often occur as billboards or signs inside of a videogame world. While the gamer does not interact directly with these ads, they are clearly visible as the gamer navigates through an in-game world. The key here is that they must be relevant to the specific videogame world they inhabit.

Level 3: In-Game Immersive Ads [13]

The most sophisticated interaction is found in the third level of ad-gaming: in-game immersive ads. Under this arrangement, a brand or message is pushed to gamers with the help of a game’s developer, so that an advertiser’s message becomes a part of the game. These interactive placements generally merge the brand or message with that of the actual game experience — making the player’s contact with the messages active rather than passive.

Examples of this include making a popular automobile a key aspect of a virtual racetrack, or a manufacturer’s phone as a virtual spy tool, or placing a popular real-world restaurant into a dynamic videogame world.

This form of advertising allows the advertising message to become an actual part of the gaming experience and, as a part of the action, it has the ability to generate significant viral communication among gamers. Currently, in-game immersive ads are utilized heavily in advergames, which is a form of video game designed solely for a specific brand or advertising message. In addition, immersive ads have unique capabilities to merge a game with reality, by offering real-world coupons or merchandise opportunities outside of a videogame.

Endgame (Figure 3)

The right approach to advertising in games can bring remarkable results. Studies show that 60% of players on a popular ad network can recall an ad after three months, with 30 to 40% still recalling the ad after six months. [14] These numbers are far ahead of TV or Internet advertising, and dramatically highlight the advantages of interactive platforms.

In addition, purchase intent increases greatly through interactive advertising. A study by Massive Incorporated and Nielsen Entertainment found that average purchase consideration increased by 41% for those who played a game with ads versus the same game without ads. Other key metrics show an increase in average brand rating by 37%, and an increase in average brand familiarity by 64%. [15]

The Viral Benefits of Interactive Placement

Interaction is an inherent component of community, and with the assistance of game developers, advertisers can take advantage of the interactive characteristics of videogames, resulting in ads that spread virally through gamer communities. Just as media consumption moves towards interaction, so must the advertisement formats themselves. While a static advertisement in a videogame can capture a gamer’s mindshare during gameplay, more interactive advertisements have the potential to tap the mindshare of the gaming community even after a game is turned off.

As Figure 4 highlights, advertisers must understand where they want their advertising message to touch the consumer. Static advertisements in game worlds appear prominently on the screen and can receive great in-game exposure (e.g., a billboard on a virtual basketball court), but interactive product placement can create new contact points with the game community long after a game system is shut off.

An interactive advertisement that becomes a critical component of the gaming experience will be discussed in blogs, the game press, and even social discussions between friends in school yards and chat rooms. With such free viral benefits, advertisers wishing to make long-term relationships with their users should create interactive ad content that will break into their consumer’s community.

Figure 5 shows how different advertising techniques can reach different downstream contact points with the consumer. Depending on the execution of the advertisement, an advertiser has the ability to be covered in the game press, blog community, or the gamer’s mindshare through direct gameplay with the advertiser’s message.

Placing an advertiser’s product as a prop in a game will increase mindshare through direct contact with the gamer during gameplay, but designing a high quality game around an advertiser’s message can also penetrate the blog community, game press, social discussions, and have direct transactional benefits by having gamers go to a store and make a purchase in order to play the title.

To capture a gamer’s mindshare advertisers need to be more creative in their execution. While the skills of traditional ad creative houses will still be necessary, they will have to work with game developers to execute on providing interactive experiences. Yes, a virtual racetrack billboard created by a traditional ad company will receive a high impression count from gamers, but the viral results would be far greater if gamers could access a special track by crashing into an advertiser’s ad at a specific angle. This type of exciting gameplay feature would excite the game community into discussion.

Videogame players love secrets, so why not use that to push a product message? By linking an innovative secret in a videogame with a brand, the brand will flourish in the enthusiast press, blogs, forums, and even real-world discussions between gaming friends. Now, an ad’s performance can be judged by more than impression counts: through tracking actual discussion found on the web. Success is not impressions per placement; success is mindshare per campaign.

A summer 2007 Deloitte analysis performed on 20 entertainment software advertising campaigns shows that the more interactive the advertisement, the more attention the advertisement receives in the online community. The lesson learned is advertisers should not duplicate static campaigns on interactive platforms; instead, they should embrace interaction in the ad itself.

By tracking a campaign’s popularity on YouTube, Google, and Technorati, we discovered that downstream coverage was strongest for advertisements that had in-game interactive placement. Be it an advergame (a game created to solely push a marketing message) or interactive product placement (such as making your product a key item in a game), these advertising methods received far larger discussion online than regular static environment placement (such as including an advertised movie poster inside a virtual world).

The best performing game advertisements in the web community include a popular toy company’s product placement in a virtual world, the release of Xbox games at a popular fast food chain, and the placement of cars in an online world. Each of these interactive advertisements resulted in significant community activity on YouTube, websites, and blogs. The more an advertisement merges with the gameplay, the more free publicity it receives downstream in the gaming community.

The Game Developer’s Critical New Role

With in-game immersive ads and advergaming generating the most viral results, advertisers and game developers must optimize their value chain so that advertisers have close contact with development studios. As the platform evolves, game development studios will play a critical role in the success of interactive ad placement. If interactive placement is going to be successful, it cannot be forced. The product placement has to match the game’s time, place, and audience, of which game developers have the greatest grasp.

Successful placement is more than an advertised soda can on a beach billboard; in the gaming world, it is developing a surprising advertising message that is so creative and innovative that gamers will talk about it long after they finish playing a game. To that end, good execution requires the creative talents of game development studios. Studios hoping to take advantage of this emerging advertising product should create a position on each project team to help develop and communicate upcoming inventory of  a title.

Because innovative and interactive inventory supply is by its nature limited since it only succeeds in the correct context of its placement, advertisers should maintain close relationships with the development studio’s creative leads. If they do not, they may lose their consumers’ mindshare. Even those late in the game to make contact with development studios can still stay involved by building close ties with a game publisher’s ad department or through niche ad-service providers. 
 
Taking Ad Gaming to Another Level

By using videogames to reach one’s community, advertisers are moving beyond traditional static messages and becoming a critical layer in the entertainment experience. If you consider that videogames consist of interactive gameplay, graphical images, and multi-player teamwork, advertisers have a multi-pronged opportunity to reach these consumers. As our research shows, the more contact advertising has with these dynamic attributes, the more free coverage the brands will receive downstream. Why just touch the consumer during an ad-view when the opportunity exists to meet the consumer through voluntary blog posts, social discussion, and user-generated content from the gamer community?

By searching the web for keywords of various in-game advertising campaigns, it was discovered that interactive placement advertisements generate the most traffic and discussions on the web. As shown in Figure 6, the top three most popular in-game advertisements on YouTube, Google, and Technorati are frequently interactive placement ads. Advergames are also popular in discussion on the web, but static advertisement placements are not shown anywhere on the list. Instead, in-game advertisements such as a car company’s placement in a virtual world, a videogame designed around a restaurant brand, and songs performed in game frequent the list.

That means that interaction can be taken to many levels. Videogame players can be rewarded in game with codes for real-world coupons or discounts. Or in the alternative: real world soda bottles can include unique codes for different upgrades in a videogame, which can later be traded with users in the real world for other upgrades. By increasing a videogame’s scope into reality, the gaming community can be driven to the web and to brick-and-mortar stores to further compete in their games. Other examples include codes for buying real-world video game merchandise online, and introducing new clothing or sneaker lines in games. If a gamer completes a racing videogame with a manufacturer’s car, the manufacturer should use in-game advertising to bring the gamer into a sales agency for a test-drive of that car, in exchange for free additional tracks and cars for the videogame.

Second Life and other virtual worlds pose unique opportunities to advertisers. Since virtual worlds often mimic reality, they provide unique opportunities to engage the gamer with interactive placements that mirror the real world. Figure 6 shows that interactive placement in virtual worlds are often most discussed on the web, noting the viral benefits of virtual world advertisements.

Further, Deloitte research shows that almost a quarter of those surveyed ages 13 - 34 state that of online advertising, product placement in virtual worlds and online videogames influences them the most. [16] Further, the influence of virtual worlds may continue to grow as media companies invest in worlds designed for younger audiences. Despite only focusing on children, the online world Club Penguin already attracts seven times the traffic of the global, all-ages, Second Life. [17]

The Benefits to Traditional Media

The advantages of this craving for interactivity are not strictly for advertisers or game publishers. Traditional media can also benefit by offering free branded online games to create their own gaming community and subsequent advertising and viral marketing opportunities. Two leading magazines recently signed a multi-year agreement to release free online games on their website, with goals of driving readers of the print publications online and creating a new community around the publication. At a time when the print media is so concerned about losing readership, building novel interactive opportunities online is a strategic play that could mitigate that concern.

The ability for online games to form communities should be harnessed by traditional companies hoping to increase brand loyalty and interest. Using games to build online communities can keep fans excited about television shows between new episodes, can drive recurring purchases for syndicated content such as comics, and can help build a fan base for movies before their release.

Reality Check: The Challenges of Getting in the Game

Still, each advertising or branding option demands different levels of effort, dollar spend, and risk assumption. Similar to traditional media, an advertiser must approach ad-gaming by understanding an ad portfolio’s goal. If a goal is to merely build awareness, static environment ads in games may be an inexpensive solution. Aligning a brand with a specific game or theme may suggest a need for truly interactive in-game advertisements, but such benefits may be outweighed by the costs of working with a game’s development team. Similarly, to engage the user outside of the game, an advertiser will have to intelligently use interactive advertising in a game to capture the downstream community of gamers through viral means.

But, here is the challenge: while the majority of gamers do not mind advertising in games, some may view ads as intrusive, especially if poorly executed. [18] That means that each campaign also has a unique level of risk. Ads may be viewed favorably if they add to the reality of a situation, such as including the real billboards in ballparks, but if the advertisements do not fit, such as when advertising cars in a virtual ancient Chinese world, gamers will reject the advertising message and potentially create a negative viral stream.

In addition, advertisers should also be selective with which game genres or franchises they work with. Family-friendly advertisers may warm to genres that fit their image, such as adventure games, while they may feel uncomfortable with advertising in bloody death-matches. Understanding which options to use for which campaigns and products will maximize the value of in-game advertising pursuits.

And, here is another challenge. Because interactive in-game immersive ads are more expensive than static ads and increased investment is needed for this type of creative approach, upfront planning will be more important. And with increased early investment, proper customer segmentation and targeting will be required, so benchmarks for success, be it increased web traffic, user-generated content, or direct sales, must be addressed at the campaign’s inception.

Finally, even though games are one of the fastest-growing advertising platforms in digital media today, there are still many components that could benefit from further standardization. In particular performance metrics, including impression measurement and audience metrics, are hindered by a lack of common language that allows advertisers to understand the value of in-game advertisements.

In order to add third-party objectivity to the burgeoning segment of in-game advertising media research firms like Nielsen Media Research and Interpret have recently launched services aimed at establishing standard metrics across multiple gaming platforms.19 While these two firms have broken ground in defining performance metrics, further standardization will be required before many advertisers will feel as comfortable with the medium as they do more traditional advertising mediums such as online and broadcast.

When You Get it Right, It’s All About Mindshare

The potential of this exciting new advertising platform will only be discovered if advertisers are creative and measure success by mindshare, not impressions. A large group of consumers today are craving interaction at all levels: online, in media, and through communities. The videogame platform can be the link that makes an advertising campaign meet the consumer in all of these places.

When building advertising portfolios, it is important to select the platforms your consumer is most receptive to. Static advertising on passive programming is no longer enough to sell your product when young adults are eager to learn messages through interactive, exciting, and entertaining means. Advertisers who are determined to stay in the mind of their audience must communicate with game development studios to make engaging and memorable interactive ad experiences. Leading advertisers will use the videogame platform not only to capture eyeballs, but also to tap into the full community of the gamer, causing voluntary downstream promotion and viral results.

Contacts

Bryan Cashman

Senior Consultant

Deloitte Consulting LLP

212-618-4893

bcashman [at] deloitte.com

Matt Garland

Senior Manager

Deloitte Consulting LLP

212-618-4895

mgarland [at] deloitte.com

Notes

1.  “Most U.S. advertisers now spending on new media: survey”, Reuters, 7 February 2007, http://www.reuters.com/article/technologyNews/idUSN0743418920070207 (27 November 2007).

2.  Dr. Jim Taylor, Entertainment Today: 10 Trends, “In the Drivers Seat”, Slide 11, presented at The Next Big Idea – Wes 2006, 17 January 2006.

3.  IFTF and Deloitte & Touche USA, Institute for the Future/Deloitte Youth Survey, 2003.

4.  Dr. Jim Taylor, Entertainment Today: 10 Trends, “In the Drivers Seat”, Slide 11, presented at The Next Big Idea – Wes 2006, 17 January 2006.

5.  IGDA, IGDA 2005 Casual Games White Paper, 2005, http://www.igda.org/casual/IGDA_CasualGames_Whitepaper_2005.pdf (27 November 2007).

6.  Dr. Jim Taylor, Entertainment Today: 10 Trends, “Technotainment”, Slide 44, presented at The Next Big Idea – Wes 2006,17 January 2006.

7.  Dr. Jim Taylor, Entertainment Today: 10 Trends, “Technotainment”, Slide 44, presented at The Next Big Idea – Wes 2006,17 January 2006.

8.  Dr. Jim Taylor, Entertainment Today: 10 Trends, presented at The Next Big Idea – West 2006, 17 January 2006.

9.  Nathan Eddy, “Women Prefer Casual Games to TV”, FierceGamesBiz.com, June 2006, http://www.fiercegamebiz.com/story/us-women-replacing-tv-with-casual-gaming/2006-08-15(15 August 2007).

10.  Deloitte & Touche USA LLP/The Harrison Group, The State of the Media Democracy Survey, “Familial Gaming”, January 2008.

11.  Interactive Advertising Bureau, Game Advertising Platform Status Report, October 2007, http://www.iab.net/media/file/games-reportv4.pdf (27 November 2007).

12. Interactive Advertising Bureau, Game Advertising Platform Status Report, October 2007, http://www.iab.net/media/file/games-reportv4.pdf (27 November 2007).

13.  Interactive Advertising Bureau, Game Advertising Platform Status Report, October 2007,http://www.iab.net/media/file/games-reportv4.pdf (27 November 2007).

14.  Nathan Eddy, “Interview: IGA CEO Justin Townsend”, FierceGameBiz.com, 26 August 2006, http://www.fiercegamebiz.com/story/interview-iga-ceo-justin-townsend/2006-08-21 (27 November 2007).

15.  “How Gamers Feel About Advertising in Games”, Massiveincorporated.com, http://www.massiveincorporated.com/site_advert/gamerreaction.htm (27 November 2007).

16.  Deloitte & Touche USA LLP/The Harrison Group, The State of the Media Democracy Survey, “New Ad Platforms: Social Networks & Communities”, January 2008.

17.  Brook Barnes, “Web Playgrounds of the Very Young”, New York Times, 31 December 2007, http://www.nytimes.com/2007/12/31/business/31virtual.html?_r=2&oref=slogin&oref=slogin(1 January 2008).

18.  “90% of core gamers do not mind in-game advertisements”, Massiveincorporated.com, http://www.massiveincorporated.com/site_advert/gamerreaction.htm (27 November 2007).

19.  Katy Bachman, “Nielsen Launches GamePlay Metrics”, MediaWeek, 26 July 2007, http://www.mediaweek.com/mw/news/media_agencies/article_display.jsp?vnu_content_id=1003617379 (27 November 2007).