Weekend Read: The State Of In-Game Advertising

Authored by Jay Baage on July 27, 2007 - 3:07am.

In the “duh” category, senior analyst Paul Verna predicts in an eMarketer report, "Video Game Advertising: Getting to the Next Level," that “in-game advertising will evolve in scope and sophistication, offering new platforms for marketers, new business opportunities for technology providers and vital revenue for game developers, who have struggled with the escalating production costs of increasingly complex games."

Then Verna goes on and gives the figures: "over the next five years video game advertising will grow at a compound annual growth rate of nearly 23%, reaching nearly $2 billion by 2011." The growth will be caused by the widening demographics of gamers - young and old, men and women, casual and hardcore.

The blogosphere was quick to react. Alex Eperjessy at the Business and Games Blog:

“In-game ads make for good business? And an analyst said that? Well slap me with a fish an' call me your cousin, who woulda thawght!”

Serving up platitudes like "in-game advertising is good business" is not enough anymore, especially for the hard-to-impress games press. The question is - what works and what doesn't? At the same time, gamers call for innovative ways of serving ads in games that are non-intrusive and perhaps even useful.

Along those lines, Nielsen just released some stats from its new service that is expected to boost the in-game advertising medium: GamePlay Metrics. It shows that Sony's PlayStation2 accounted for 42% of video game console usage during June, followed by Xbox (17%), Xbox 360 (8%), GameCube (5.8%) and Nintendo's Wii (4%). The PS3 accounted for only 1.5% of total minutes used. In total, Nielsen reported that 68.1 million gamers used a console in June, playing an average of 7.5 days for the month.

The market research firm NPD Group also released new figures, showing that U.S. video game sales rose 31% in June from a year ago, to $1.1 billion, buoyed by strong sales of next-generation consoles from all three major players, Reuters reported. The Nintendo Wii continued its several-months-long run in the top spot, selling 381,000 units, an increase of 13% from May, while Microsoft's Xbox 360 sold 198,400 units (up 28%) and Sony's PlayStation 3 sold 98,500 units (up 20%).

While we are on the subject of numbers and in-games advertising, let's not get too carried away just yet. Not everything works. Far from it. There is for example an interesting feature in the most recent issue of Wired that questions the wisdom of buying ads in virtual worlds called "How Madison Avenue is Wasting Millions on a Deserted Second Life".

Examining Linden Lab's "resident" statistics, Wired claims Second Life's current 7 million+ residents only translate to 4 million unique users as many visitors create more than one avatar. What's more, 85% of the avatars created have been abandoned. Much of the traffic to Second Life is from Europe and Asia, according to the article, with little more than 100,000 Americans per week visiting the site (via Cynopsis Digital).

Speaking of games and hard-to-impress games press, many bloggers are still discussing Disney Interactive’s press conference at E3. I think it is safe to just say that it didn't really work out the way it was indended to. It even won an award for being “Most painful press conference” at E3 by Joystiq. There was video up from it just yesterday at gametrailers.com, but this morning it was down. However, the High School Musical franchise is an unstoppable juggernaut it seems, this presentation won't change anything, although I think that Disney will do things differently the next time around at E3.

Joakim Baage

Flickr photo credit: raldo52

Published in DMW Daily, July 27, 2007

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Comments

Future of Advertising?

Submitted by Miami Ad School Gamer (not verified) on June 25, 2008 - 8:05am.

Videogames as an ad platform probably has limitless opportunities, but never underestimate a few focused (and upset) gamers organizing on forums across the net. We all saw what happened with Battlefield 2142; I think video game advertisers are testing the waters by seeing how much games will put up with. It can certainly work in say, a eerily realistic cityscape with digitized coke machines and fast food restaurants, but when you start seeing Gap ads in middle earth, there can be issues.