Adding Value

It's been two years since in-game advertising firm Double Fusion was established, but just a few months since Jonathan Epstein, formerly of the United Talent Agency and IGN Entertainment, joined the company as CEO.

Here, he discusses why there's a need for in-game advertising, how to ensure it doesn't damage the gamer's experience, and what impact the arrival of the next-gen consoles is likely to have.

There is a sea change in the worlds of media and advertising right now. Videogames and the Internet are taking time away from traditional media. Audiences are becoming fragmented. Consumers are using multiple forms of media concurrently. They're using their Tivos and their remotes to avoid advertising altogether.

It's time to accept that the age of mass media is over. The mass market no longer exists, and the movement is towards reaching more focused, higher value audiences. Advertisers are tired of wasting their reach. The numbers that matter now are how many engaged consumers actually saw or interacted with your content. These impressions are, very simply, worth more than other impressions. And the game consumer is an influential consumer - so the word of mouth will spread.

That's why, for advertisers, in-game marketing is an absolute necessity. Engagement, coupled with the ability to serve ads dynamically into games, makes games the best place to catch the eyes of the most important advertising demographics.

But what's in it for game developers and publishers? Well, consider that the cost of producing a full version game is $5 to $10 million for current generation, and $15-25 million for next-generation consoles. In-game advertising provides a much needed revenue source. Looking down the line, this can enable lower priced titles, more innovative titles, and the wide availability of free, high quality gaming - which also, of course, benefits gamers.

Keeping track

Another benefit thatâs not getting the same media attention as revenue, but is invaluable, is this: publishers now have a way to track the behaviour of gamers inside the game itself. To be clear, this isnât to track individuals at all, but to be able to monitor aggregate or average behaviour - how many take a left at the turn, how many a right and so on. Thereâs a huge amount of development value that comes from understanding how gamers navigate gameworlds.

Then there is the need within the medium itself; the need to create media in a way that you can't with the Internet or on television. To achieve the full advertising revenue potential of a game, you not only have to offer capabilities not available in any other medium, but widest range of programs and options within your medium.

This is why, as more games open up for advertising, 2D graphics will become a commodity. The supply of inventory may grow faster than the demand. The future of the medium is 3D - bringing technology to the forefront.

3D, rich media, targeting and response capabilities are what increase the value of the in-game advertising placements for advertisers. Research from Nielsen and others has shown the superior recall and purchase preference results 3D programs deliver. 3D does more, and is worth more, than other formats.

Think of a phone you can pick up and interact with and that offers you some kind of benefit in the game, versus a phone you see in a billboard. Products you handle in real life work the best - mobile phones, cars, clothing, MP3 players - but the possibilities are endless.

3D ads can be environmental - in the game world and movable - and they can also be integrated more directly in the gameplay, combining the product placement and media paradigms.

For example, all the cars you see parked on the street in a game could be served as ads, and changed with every scene (as, in fact, you might expect the cars to change in real life) to other models or makes. The mobile phone in the protagonist's hands - which, if sold currently, is fixed for the life of the game - this phone can now be a different phone, from country to country, or the model can change when the manufacturer releases their new models. 3D ad serving allows inventory items to be advertisements; really, the creative potential is unlimited.

High value media is essential for publishers to generate the highest revenues from advertisers per unit of ad space in their game. But the baseline is always is that the ads work well within the game design, the gameplay, and the game environment.

Staying on target

Of course, it's essential to ensure that in-game ads don't damage the gamers' experience - and it's perfectly possible to do so.

We know from the research we conducted with Nielsen that gamers are receptive to ads in games. However, the types of ads they are receptive to is entirely dependent on the game. Consumers are surrounded by brands and advertising in their every day lives, so reflecting that in a game can add to the reality and immersion of the game world, with new campaigns actually keeping the game up-to-date.

During the gameâs development, our integration teams work closely with each publisher to determine the appropriate mix of advertising - not just how many ads, but what kind of ads.

There are four steps to this process. First, we look at the game's design, and help determine placement locations, the types of placements, and how the placement will be integrated into the story line.

The next task is to define what the actual ad objects are, and to then start integrating the ad objects into the game's code. Then comes the testing phase, which goes far beyond simple Q&A. Most of our major partners utilise focus group testing before deploying games. Review of the ad placements is becoming part of that process, and is essential to ensure that the gamer stays fully engaged with the game.

Engagement is central to the value in-game advertising offers marketers, so weâre incredibly careful about protecting it. Ease of integration is equally paramount, both not to delay the game launch and to give the game publisher control to ensure advertising never interferes with the gaming experience.

The publisher is able to define up front the categories of ads they do NOT want in the game. Then, before any ads are served into the game, the publisher approves the actual ad creative.

By progressing through all of these stages, we can ensure that both advertisers and publishers are getting what they need, and that gamers are still able to enjoy their playing experience to the full.

Looking ahead

The arrival of the next-gen consoles means more connected platforms with huge installed bases, and that means massive potential to expand the reach of in-game advertising. The different styles of gameplay - the personality of the platforms - will offer a wider range of possibilities as well.

But we also need to look beyond the consoles, to the even larger picture of integrated campaigns across all interactive entertainment platforms. This will involve harnessing the unique qualities of each - console, PC, handheld and mobile. Weâll see programs that leverage games but go well beyond, combining mobile marketing and event marketing programs for our largest customers.

Every brand and every advertising campaign is unique. The most exciting part is being able to tailor a program and audience reach to our clientsâ goals. Some of our advertisers will benefit from a single game title approach, and some will want a wider scope campaign spanning multiple platforms and titles. What's important is that the in-game advertising market is ready to grow and change with its clients, so that advertisers, publishers and gamers can all reap the benefits.