FIVE YEARS AGO, advertising in video games was largely out of reach if you were a Canadian business. Marketers coveting virtual billboards on Gran Turismo’s latest race tracks had to get in early, during the game’s development years ahead of launch. The static ads needed to be hard-coded into the game itself and with those games selling to a global audience, only the biggest international brands could afford to play. In 2011, fast-evolving technology has dramatically changed the playing fi eld. With most home consoles (XBoxes, Playstations and Wiis) now connected to the internet, ads can exist on networks just like web ads; they are dynamic, targeted and therefore ideal for local businesses. And consoles aren’t the only game in town. Mobile and social games are exploding, and since they are internet-based by nature, they too are opening new doors.
There has never been more opportunity for Canadian companies to market in games, able to reach a large, diverse and growing community of gamers, industry experts say. That may not seem the case to those reading recent gaming headlines. Last year Microsoft shuttered Massive, its in-game ad development agency. The CEO of Activision, one of the largest game
publishers in the world, stated publicly that he felt in-game ads often damaged the value of gaming’s immersive experience. Even Electronic Arts (EA), the publisher of giant franchises such as Mass Effect, Battlefield and industry-leading sports titles, appeared less than enthused about in-game advertising’s prospects when Ben Cousins, general manager of the company’s free-to-play games, alluded that EA wasn’t making much from ad revenue at all.
Don’t be fooled. Each of these companies sees in-game advertising (which is but one way to reach gamers) as a major growth area. While Massive was closed, its ad-selling capabilities were kept in Microsoft’s family, tucked under Microsoft Advertising’s larger, better-integrated umbrella. And as for EA’s supposedly failing ad prospects? “We brought our dynamic in-game advertising [sales] in-house from Massive and [game ad network] IGA Worldwide because there was such demand from our marketing partners to have holistic relationships and be able to invest across platforms,” explains Elizabeth Harz, senior vice-president for EA’s newly formed global media sales division. The Cousins statement, she said, was pulled from a panel discussion and referred to one specific EA game that had ad sales outsourced. EA has since formed Harz’s global sales team and is seeing promising results in the investment.
“It’s actually a huge area of growth for the company,” she says. “We only launched our direct efforts around dynamic in-game advertising with the launch of Madden NFL 11 in August. We’ve still had only a small slate of games since then, but revenue has outpaced expectations for that window of time,” driven by partnerships with advertisers like T-Mobile, Nike and McDonald’s. And it’s not like the big guys are having all the fun, Harz adds.
“There is enough scale out there to buy zip-code buys, for example. You can focus on mobile, social or dynamic in-game ads and just buy one region in Canada. Several of our investors in our NHL franchise games do that.” Harz couldn’t provide hard financial data on EA’s success, but industry figures prove there is money to be made yet in this business. In 2005, advertising tied to video games pulled in about $115 million (US) in North America, according to PricewaterhouseCoopers. That figure hit $1 billion in 2010 and is projected to eclipse $1.5 billion by 2014. Console games—those played on the XBox, Playstation and Wii systems—present the best opportunity for companies looking to advertise because the model is the most established and reaches the most users. With about 172 million current-generation consoles worldwide, the segment accounts for about 70% of the video game industry’s revenue and most of its eyeballs.
Manufacturers don’t break down numbers for Canada, but estimates generally peg the number of consoles in this country at between four and five million. Globally, the console segment’s revenue is expected to continue growing by 6.1% on a compound annual basis over the next three years, according to PwC. Jason Dailey, head of solution sales for Microsoft Advertising Canada, says advertisers have a number of ways to market in and around consoles. The first is the integrated experience, where a company’s brand is hard-coded and actually part of the game. Car companies placing their latest models into racing games such as Gran Turismo or bands including songs in Guitar Hero are examples. Unfortunately, just like the games of five years ago,
this avenue is still only open to the biggest ad budgets because of the expense and requisite co-ordination with designers.
“The costs and lead time are high and you have to have someone on your team who’s going to lead the integration,” he says. Another more recent option is dynamic in-game ads. While a few years ago, an NBA basketball game may have displayed court-side billboards for global brands such as Gillette or Coca- Cola, local brands can now be shown off for a few weeks at a time. Telus, Bell, Showcase and TD have deployed such billboard ads in recent games, including Guitar Hero 5, Tom Clancy’s Splinter Cell: Conviction and Tony Hawk: Ride. Advertisers who have tried billboards have reported positive results. The Canadian Armed Forces, which ran spots in several games including the 2008 firstperson shooter Rainbow Six: Las Vegas 2, reported a nearly 200% increase in likeliness to consider a career in the military from people who played the game and saw the ads.
And following a more comprehensive integration into a number of sports games, Gatorade enjoyed a 24% sales bump, according to a Nielsen Company study conducted for EA Sports. For every dollar invested to put the Gatorade brand on arena signs, player bottles and score updates in games like NHL 10, and NBA LIVE 09, Gatorade got $3 back in sales, according to Nielsen. In Canada, Kraft recently ran a campaign for Oreo Cakesters— a spongy version of the iconic cookie—in games for Microsoft’s
new Kinect motion sensor system for the XBox 360. The six-week campaign, which began in early November, netted the company 5 million impressions, 120,000 click-throughs and 92,000 downloads of screensavers.
The company is still digesting the results but likes the outlook so far. The effort cost more than a print campaign but less than a television production and it reached the right audience, says Chris Bell, vicepresident of snacks. “In a fragmented media space it’s harder and harder to get to teens, so it felt like a relatively targeted audience that we could really leverage and get the money more into working dollars than into production and up-front stuff,” he says. “These numbers are impressive against the benchmarks we’ve set, so we certainly want to look at the program again.” The third option for console-based advertising is to market around the games themselves. Some brands are difficult to fit into a game and in some cases the advertiser wouldn’t want to even try, but with some creativity there is usually a way.
Take last year’s Electronic Arts partnership with Dr. Pepper in a campaign where the soft drink brand provided extra content for releases such as Mass Effect 2—a science-fiction role-playing game—on bottle caps. The campaign was extremely successful, says EA’s senior director of media sales Joshua Graff, in that the caps were highly treasured by gamers and even traded on eBay. “It was really one of the first times where I’ve seen a brand that was so forward thinking that they realized Dr. Pepper isn’t necessarily an appropriate brand to force into a video game,” he says, adding that it’s also an option that is very much open to smaller local advertisers. Outside of consoles, social and mobile games are another area rife with opportunities for smaller Canadian companies. The field has exploded over the past year with Facebook’s emergence as one of the biggest gaming platforms in the world. The social-networking site recently announced that 200 million of its 500 million members access Facebook specifically to play games each month.
Amazingly, but perhaps not surprisingly, PwC sees overall North American revenue for wireless and online games climbing from $3.1 billion in 2010 to $4.1 billion in 2014. As is typically the case when it comes to new technology, Canadian companies are taking it slow, letting their larger American counterparts test the waters. That’s not necessarily a bad thing, says Microsoft’s Dailey, because vital benchmarks like ad pricing and effectiveness measurement are still being worked out . “It’s such an emerging area that it’s kind of like the wild, wild west. There’s not a lot of norms that have been established in terms of standards or how campaigns can work,” he says.
Others are more excited, however, and see huge potential in social and mobile gaming, both on the design and advertising sides. In 2009, EA paid about $400 million (US) to acquire Playfish, maker of popular Facebook games such as Restaurant City and Pet Society, in an effort to keep pace with the explosion. Integrating marketing into social and mobile games is likely to mirror console integration, EA’s Graff says, although the ads may need to be even more creative because of the increased personalization involved. That factor also increases the value of the ad, which means the field could shake out to be more effective—and ultimately more expensive for advertisers. “The beauty of social games is that not only are you engaging each individual consumer, but those consumers are then sharing that piece of content with their network of friends,” he says. “That makes the planned value even more powerful.”
