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‘Adver-Gaming' Is on the Rise

21 Oct, 2004 By: David Ward

After being on the horizon for nearly a decade, in-game advertising is finally getting a serious look. Activision and Nielsen Interactive Entertainment announced they are testing a new system to measure the effectiveness of brand messages in games.

The test, which will take place over the coming six months, will initially involve only the PC version of Tony Hawk's Underground 2, but an Activision spokesperson said, “Future tests will likely use consoles as well. It's all about having that online connection.” Chrysler has agreed to be the advertiser for the Activision-Nielsen Interactive test, which is significant in that the automaker is a major brand with broad demographic appeal.

Companies ranging from Electronic Arts to Microsoft have experimented with building ads into games in the past, but “adver-gaming,” as it's called, has never really taken off because it lacked a valid measurement tool. However, Nielsen and Activision promise that their new tool will enable advertisers in comparing the reach and frequency of in-game ads with traditional TV, print and radio spots.

“Many of the old rules of advertising don't work anymore, but we are still in the process of writing new rules,” said Activision CEO/chairman Robert Kotick. “We recognize that we have to establish metrics that, initially at least, resemble the kinds of metrics advertisers are already familiar with, like rate cards modeled after TV. But at some point, advertisers will have to learn to think outside the old models if they want to continue to reach their audiences.”

According to a recent survey from the Yankee Group research firm, advertisers spent only $79 million putting ads in games compared with $42.4 billion for television commercials. “Right now, it's really small, but it has the potential to grow tremendously,” said Yankee Group analyst Michael Goodman. “As long as it's not a ‘Brought to you by…' jarring experience, gamers will accept it.”

Part of what's driving this new interest in in-game ads is that the audience for console, PC and online titles is broadening to include far more 18- to 45-year-olds, many of whom have cut back on their television time to either play games or watch DVDs. That trend is likely to accelerate as the U.S. gaming audience expands from 108 million today to 143 million by 2008, Goodman noted.

At the same time, the escalating costs of making games, which are expected to rise to the $10 million range for the new generation of consoles expected in 2005-2006, has publishers looking for new ways to defray some of those up-front expenses. Electronic Arts received a total of $2 million from advertisers, including McDonald's and Intel, for in-game product placement in The Sims Online, Goodman said.

“The connectivity is the key. So, you'll not only be getting measurability but the ability to change ads, and that opens up new possibilities for advertisers,” Goodman added. “The studios would love to advertise within video games, but they can't do it right now because their key period is two weeks before the movie opens, not six months after it launched.”

The big question is whether the audience will accept ads during game play. So far, the results are promising. A recent Nielsen survey found that 87 percent of gamers recalled brands that were well integrated into the titles they played. “A solid two-thirds majority of active gamers reported that in-game advertising made a game more realistic,” noted the Activision spokesperson.

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