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Second Life, Statistics, Secret Sauce & IGA

A roundup of some of the interesting items I’ve seen over the past week or so:

Marketing in Second Life doesn’t work… here is why!
From GigaOm, this is a really insightful post. Although the survey referenced is quite small (only 200 respondents), and I find the survey’s assertion a bit odd (“72% disappointed with the activities of companies in Second Life”) – the results are to be expected.

Wait… what? Results are to be expected?

Right. Wagner makes some great points – seeing an advertiser’s presence, or interacting with them is an extremely opt-in experience. In SL you have to go out of your way to interact with many advertiser presences. And because many advertisers choose to set up shop on virtual islands, there’s little incentive to pay them a visit. Users are more likely to check out where everyone else is hanging out, and go there to join the party. As a result, many advertiser presences have been abandoned, leaving users with the impression that the advertiser is uninterested. For a world that values shared experiences and personal interaction so highly, this approach is doomed to failure.

In-Game Immersion: IGA and Massive execs sound off on the ad strategy’s evolution
Wow that’s a long title. Justin Townsend (CEO IGA), and Alison Lange (VP Marketing, Massive) contribute a lot of information – especially if you’re just getting up to speed on our industry thinks. However, for me it wasn’t the background that was most interesting, it was the statistics referenced:

• 400 million eyeball hours are attributed to gaming, while only 143 million hours go towards watching television (unknown source).
• 12% of “the male demographic” is watching less TV and have dedicated 20% more of their time to playing video games (“A Nielsen report”).
• 40% of the gaming population is female, retirees and seniors are a growing demographic. And the late teen to 20-year-old age range is playing the same games as the 18-34 male demographic (Justin Townsend).

One request – if you’re going to spout off statistics like this, please give us some proper sources! Some of these claims are pretty amazing. Like – gaming accounts for 280% more eyeball time than TV?! Riiight. I’ll believe that when I can analyze the underlying study thank-you-very-much.

On a positive note – the gamer in me appreciates that everyone agrees in-game advertising can be most effective when it’s complimentary to the game experience and unobtrusive. In fact, Eric over at Marketing.fm posted about this in detail:

The Right Formula For In Game Advertising
According to Eric, the right formula for in-game advertising is:

(Information + Authenticity) + (Entertainment + Engagement) – Intrusiveness = Effectiveness

This is a really useful way to think about things and rings true to both the gamer and the professional in me. The example that Eric provides is also a good one. The Red Bull logo on the sides of creates isn’t disruptive to the gameplay experience – it dovetails with the game setting and seems like something you might naturally see piled up in a warehouse. The screenshot he uses isn’t from a Massive game, but certainly could be. The shot Eric uses is from an older game, Judge Dredd: Dredd vs Death. It was integrated by Hive Partners who were later acquired by IGA.

Speaking about IGA, they recently announced (pinky to mouth):

One Billion Ad Impressions Per Week…

In a press release released 3/20, IGA announced that it expects to hit several milestones in March:

• 50 titles and 150+ countries in the IGA ad serving network.
• 200 million impressions generated per week by end of March.
• 10 millionth consumer expected to receive ad content by end of March.
• CPM’s are higher than broadcast network primetime – reinforce premium of in-game advertising medium.
• “This supports the general expectation that the market will grow by between 40 and 50 percent in 2007, with the latest market-size estimates for 2010 averaging $1.3 billion.” – Justin Townsend (CEO)

Wow! These are all great milestones! Congratulations.

Other reading:

• Massive poised to make large portion of “$700 Million Market” (GigaGamez.com)
• Massive Gains Momentum on In-Game Ads (TheStreet.com)
• Home is Where the Ads Are (GameDaily.com)

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MTV: Gamers like in-game ads…

A friend pointed me to an article from MTV News titled “Multiplayer: Is In-Game Advertising Really Such A Bad Thing” (it’s buried in the middle of the page).

The author Stephen Totilo talks about a recent demo he saw of the upcoming PC game, “Hellgate: London“. Hellgate: London is a MMO style game that blends FPS and RPG characteristics. It takes place in a futuristic post-apocalyptic world. In the game, ads are integrated into places where you would expect them in real life:

Flagship CEO Bill Roper was running the demo and kept bringing his character to a grimy section of the London Underground subway system, which is nicknamed “the tube.” The walls had ads posted all over them, as they do in real life. I saw an iPod ad and one for Guinness…

The demo also included an ad for Children of Men, a movie that is also set in futuristic London.

This article is interesting to me because the author (and Flagship CEO) clearly understand how ads can enhance the gaming experience. They bring realism to the London Underground. They connect gamers with other subjects that might be interesting (like Children of Men) and other areas in the game that don’t have ads were noticeably “barren”. This is especially interesting because this is a game set in the future, not the present. Advertising in future worlds has been a hot topic ever since Battlefield 2142 announced IGA would provide in-game advertisements. But, if Hellgate: London does ship with in-game ads (the article points out the ads in the demo were just placeholders), it could change public perception.

Hellgate: London is expected to ship Summer 2007, there has been no announcement yet about in-game ads in the final version.

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Google to do in-game ads?

From Andre @ Ozymandias:

As promised, here are my game industry predictions for 2007 … Google will show significant public interest in the gaming sector for the first time, including interest in acquisitions to bolster their Ad-sense business. The most likely target will be IGA Worldwide (to combat Microsoft’s acquisition of Massive). If unsuccessful, Google will seek to acquire one of the larger game publishers on the market to gain a foothold in the in-game advertising market. Likely targets include Electronic Arts (though it would be extremely expensive), Activision, or THQ. (Source)

I don’t think we’ll see Google get into the in-game advertising space this year, and I certainly don’t think they’ll become a publisher. It just doesn’t square with their mission and their strengths. Google’s mission is to organize the worlds information and make it universally accessible and useful. They fund this by selling advertising that’s contextually relevant to its surroundings. Ads are placed alongside a set of search results, next to an email, within a 3rd party webpage, or even in a newspaper. In each case Google uses the surrounding context to determine the interests of the viewer.

Within a videogame this doesn’t make much sense. Imagine if advertising in a game like Rainbow Six Vegas promoted various Las Vegas shows or a local Las Vegas restaurant. To make the ads relevant to the gamer, an entirely different approach needs to be taken. Ads can’t be targeted based on in-game surroundings, but rather to what the gamer is interested in outside of the game world. A more effective advertising campaign might promote a show that’s in the same city as the gamer, or perhaps a certain beverage or type of car that the gamer might find appealing.

As for becoming a publisher? Forget it. When you think of Google do you think fun? I sure don’t.

Frag on.

– Fry