First videogame makers stole some of TV's core viewers. Now they are borrowing television's age-old tactics for selling advertisements.
In the latest twist on the trend, top makers are beginning to ship PC videogames with blank spaces in them for virtual ads to be inserted.
They are letting advertisers change those ads on the fly and charging them based on how many game players actually see them and how often. It is a big departure from current practice, where advertisers generally pay flat fees for in-game placements that are locked in once the games begin shipping.
Game makers are betting that new in-game advertising formats such as the changeable billboards and data on how often game players see them will let them sell ads to the mass of advertisers who have been wary to date. They are hoping to capitalize on corporate interest in videogames as a way to reach the 18-to-34-year-old male audience, amid advertiser concern that young males are spending less time watching TV and more time online and playing videogames.
A key element of that strategy is to sell ads the way TV networks sell 30-second spots, offering a measurable demographic reach and pricing them based on that. So far, real-life examples are limited, however. There's also the possibility that game players rebel against more ads appearing in games carrying price tags of as much as $50.
But, for the first time, some of the new ad techniques are included in games making their way into consumers' hands. Take-Two Interactive Software Inc.'s "Mall Tycoon 2 Deluxe" game for PCs began shipping this month with the virtual billboard technology created by Massive Inc., a closely held New York start-up business.
Under a test program, Massive will today begin feeding advertisements from RealNetworks Inc. into it. People who play the game on Internet-connected computers will see those ads sprinkled through the virtual landscape of the game, which challenges players to create and manage three-dimensional shopping malls.
Massive's system allows it to change the billboards at the advertisers' request and collects detailed data on how often a player sees the ads. Massive then uses that data for pricing the ad placements, charge per user "impression." It has signed deals to provide in-game ads to top publishers, including Infogrames Entertainment SA subsidiary Atari Inc., Vivendi Universal Games Inc., Ubisoft Inc., and Konami Corp. Ubisoft, for one, plans to place Massive-generated billboards in its "Tom Clancy Splinter Cell 3: Chaos Theory" title to be released in March.
RealNetworks, which hasn't advertised in videogames before, says the ability to change its ads and measure their reach were essential for it to get involved. "What's important to us is to be able to test, measure and optimize," says Adam Selipsky, vice president of consumer and Web marketing at the Seattle-based digital music company. As a result, the Massive billboards are "a much more attractive starting point" for RealNetworks to begin advertising in games, he adds.
Game publisher Activision Inc. and Nielsen Entertainment, a unit of VNU NV that tracks entertainment data, separately plan to announce today further developments in their joint effort to develop systems for measuring the reach of videogame advertisements. They have signed up DaimlerChrysler AG's Chrysler Group unit as part of a test involving several hundred game players to measure how often they view and how they interact with in-game ads.
An inaudible audio signal coded into Activision's "Tony Hawk's Underground 2" skating game on PCs will alert a Nielsen monitoring system each time the test game players view product placements related to Chrysler Group's Jeep brand within the game. The Nielsen box will send that data over the Internet to Nielsen Entertainment, which will use it as part of its continuing effort to develop reach and frequency measurements for videogame ads that mirror those used by TV.
"You'll be able to compare on an apple-to-apples basis what you might receive in terms of reach if you're to buy placement in a 'Madden 2005' or a 'Tony Hawk's Underground 2' compared to if you're going to buy spots on MTV or on NBC or ads in a magazine," says Michael Dowling, general manager of Nielsen Interactive Entertainment, a unit of Nielsen Entertainment.
Chrysler Group had doubts about ads it purchased in an earlier game in the Tony Hawk series because it had little concrete way to measure how effective they were. But Nielsen's measurement technology, and the new ability to link to its Web sites from within the latest game, won Chrysler back. Jeff Bell, vice president of the division's Chrysler and Jeep brands, says they are considering advertising through Massive's network of virtual billboards as well.
Kevin J. Delaney, The Wall Street Journal. October 18, 2004.
Copyright © 2004 Dow Jones & Company, Inc.. All rights reserved.