In-game advertising advantage goes to early movers, MIT grad student asserts

Massachusetts Institute of Technology grad student Ilya Vedrashko examined in-game advertising as part of his thesis. In the excerpt below, he concludes that the in-game advertising market is immature at present, but offers opportunities for early adopters. The full paper can be downloaded from www.gamesbrandsplay.com. In general, game advertising remains a hard sell despite several high-profile deals that have attracted media attention. A Forrester survey of 253 interactive marketers showed that 72% of them would not use games as an ad medium in 2007. They attribute this reluctance to the growing complexity of the digital media space, limited resources and lack of knowledge, but another reason is that games aren’t seen as being able to deliver the mass sufficiently interesting to mass advertisers. With the advent of advertising networks such as Massive and IGA that spread advertising inventory across many titles and lower transaction costs, this particular concern might disappear, but it is still hard to argue with skeptics who claim that the numbers are still not there to make in-game advertising an attractive proposition on a wide scale in the short term. Moving in into the game space early, however, gives an advertiser several distinct, cost-efficient and unique advantages that will compensate for the medium’s currently limited reach and a high learning curve. The vast virtual lands will not remain unspoiled forever. Even a year ago, the game space was very much like what the Web was in 1994 – with some individual commercial activity, a few banners here and there, but largely unfamiliar with advertising. Today, it’s 1996: first ad networks are being established, investors are rushing to grab the best land, a lot of experimentation is going on and standards are yet to be set. Tomorrow, it may be the dotcom boom all over again, with every single inch filled with ads and game publishers relying on advertising to bring in a large part of their revenue, especially if the game sales will remain as flat as they have over the past few years. However high the recall rates for in-game ads might be today, they are bound to drop when the landscape becomes peppered with competing messages and users learn to ignore the ad noise that will have lost its novelty. By moving in now, you can count on a fairly exclusive high-impact position for your brand at the prices that are likely to inflate in the future. Games are also a great natural sandbox to try new product and marketing ideas. With many worlds now featuring commercial infrastructures for exchanging goods and money, however fictional, the advertisers can test their campaigns against the ultimate benchmark – paid transactions. Launch a campaign for a fictional product through in-game billboards, put this fictional product on the play shelves, and watch the fictional cash register ringing…. Finally, treat your game experiments not as a marketing expense but as an R&D investment. Many media are already incorporating game-like elements either in the type of content they offer or the way they structure interactive experiences. Google is offering free access to its 3-D modeling software and now everyone with a computer and an Internet access can upload models of buildings and objects into its Google Earth application that already begins to look like Second Life. Some observers of the game space are cautiously saying that games offer a glimpse of what the next iteration of web is likely to become -- even more social than now because of the real-time nature of interactions, three-dimensional, and mediated through avatars. If their predictions turn out correct, then by experimenting with games today you will acquire skills necessary to respond to the inevitable changes in the future.

In-game advertising advantage goes to early movers, MIT grad student asserts

Broadcast | November 15, 2006

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