Random Noise

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Blogs Merged

To make my life easier, I’ve merged my Game Ads Blog with my personal blog. From now on, everything I post will be hosted at: http://www.jeffcarnahan.com/blog/.

I’ve setup a set of URL rewrite rules so links to gameadsblog.com will continue working. I’ve also mapped the Game Ads Blog RSS feed to syndicate any future blog posts on in-game advertising. If you’re reading this in your Game Ads Blog RSS, then I’ve done everything correctly. =)

I’ve accidentally broken any existing links or your RSS reader, please drop me a line.

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Sony forms in-game advertising group

Yesterday Sony Computer Entertainment America (SCEA) announced that it was forming a new in-game advertising business unit. The unit is to be headed by Darlene Kindler who was previously VP of Publishing for Adscape Media.

The announcement did get some press – I saw it mentioned on Gamasutra & Kotaku – but I was expecting more in-depth coverage. What I found most interesting about the announcement was that the technology is solely focused on delivering dynamic in-game ads to PlayStation Home (at least for now).

Adding advertising to the Home environment is a no-brainier – Sony has been hinting at this possibility since the Home announcement @ GDC earlier this year. But constraining the new team by focusing solely on delivering Home may neglect opportunities to build a more attractive platform for PS3 publishers. To my knowledge, there is no in-game advertising technology serving dynamic ads to PlayStation 3 games.

Without building a large network of games (which provide a variety of content and experiences) they place a constraint on the reach and demographic of their customer base. You could make the analogy to the web by thinking of Home as a single web site. Selling ad opportunities on that site will be generally more difficult than selling a network of sites that provide customers with different experiences. A network size of one limits the potential set of advertisers interested in your product.

What was also interesting to me was the appointment of a former VP of Publishing for Adscape. I think this supports much of what I’ve blogged previously – that Adscape was acquired primarily for its technology (and possibly patent) portfolio – and not for its industry relationships.

On that topic – I’m interested in hearing more from Google about what’s going on with Adscape these days. http://www.adscapemedia.com/ no longer forwards to the Google acquisition FAQ and I haven’t heard any news since the July appearance at the Seattle Casual Connect games conference (link). Anyone know what’s going on over there?

Sources:

• Sony Creates In-Game Advertising Business Unit
• SCEA Creates In-Game Advertising Group

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In-Game Ads Really Work

Disclaimer: I work at Massive, but the opinions expressed here are solely my own views and do not necessarily reflect the views of my employer.

Today Massive released a study revealing that in-game advertising is surprisingly effective. It was conducted by Nielsen Entertainment and examined various ad campaigns that ran in games that use Massive. The study found:

• Average brand familiarity increased 64%
• Average brand rating increased 37%
• Average purchase consideration raised 41%
• Average ad recall increased 41%
• Average ad rating increased 69%

Before digging in further, here’s how the study was conducted. Over 600 North American gamers were recruited and divided into two groups – a control group and a test group. They both played the same game (Need for Speed, Carbon). The control group played the game but was NOT shown ads. The test group played the game (on Xbox 360 or PC) and was shown ads. Then the same questions were given to both groups. The questions asked gamers about the ads and brands included in the study. The difference between the two groups is what we considered “lift”. So when we say “brand familiarity increased x%” we mean that users in the test group were x% more familiar with the brand than users in the control group.

With that out of the way, here’s what some of our different types of advertisers saw:

• Automotive advertisers achieved a 69% increase in purchase consideration among likely car buyers.
• A consumer packaged goods (CPG) client saw a 71% increase among gamers who considered their snack food a “cool brand”. Among males 18-24 brand familiarity rose 63%.
• A fast-food restaurant ad saw its rating (those who liked it a lot vs. liked it a little) rise 39%.
• A technology tools client saw a 70% increase in brand rating.

I’m really glad our company is sharing data like this with the public and I’m glad the research was done by Nielsen – they’re getting increasingly involved with this market (see my recent post on their GamePlay metrics) and have a lot of experience conducting studies like this. While I would have liked to see the study conducted across more games, I’m impressed that there were so many participants – over 600 in total and over 300 in each group. This is a VERY large sample set for a study of this nature. I’m also excited that the study was conducted across both Xbox 360 and PC gamers.

Related: Massive In-Game Ad Effectiveness Study (Aug-8)

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Nielsen GamePlay Metrics Out

Nielsen has released its first set of “GamePlay” metrics [pdf]. Here’s a quick summary of what they included:

Console Usage Report Trend – June 2007

Console Usage Report Trend – May 2007

At first, these numbers were really surprising to me. I didn’t expect to see PS2 and Xbox so far ahead of the 360. But a quick check of console sales records at VG Chartz shows this is probably to be expected. PS2 has such a mammoth install base, that it’s only natural for that platform to have so many minutes.

But, let’s look at the other consoles as well. The most recent data on VG Chartz is from March, so it’s not ideal to compare the two, but it’s the best we can do for now. Here’s the American sales data from March next to the Nielsen data from May:

LTD percentages are calculated against only the five consoles listed.

The Xbox 360 and GameCube differences are interesting. Why is the comparatively small install base of Xbox 360 responsible for twice as many gaming minutes? Does Nielsen monitor too few GameCube households? Was there a surge of 360 sales in April/May? Are Xbox 360 games more engaging? Did GameCube owners transition to the Wii during April/May? These and other explanations are plausible… It’s impossible to know exactly why this is.

What I’d like to see are console #’s in the Nielsen report. This would help us understand if oddities like this are a result of a skewed console distribution.

Sources:

• “Nielsen GamePlay Metrics Launched by Nielsen…” – news release from Nielsen (Jul 26 2007).
• Worldwide Hardware Shipments as of Mar-2007 from VG Chartz.

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Numbers Game

Predicting the growth of the in-game market seems to be a popular activity these days. Over the past three months four large reports have been released. Let’s take a look at what they’ve got.

In April, eMarketer released a 14 page report that examined video-game related advertising from a number of angles. Disclosure: I’ve read the report, but I’m going to avoid quoting from it directly (since it is a paid download). Overall they paint a rosy market picture. They cite positive comments last year from Joanne Bradford (Microsoft) and from Google on their acquisition of Adscape Media. They also claim the continued strength of the gaming market as a whole (and recently the increasing appeal to casual gamers) will also fuel advertising growth.

So let’s get to the numbers – their press release predicts that worldwide spending will rise from $692M today to $1,938M in 2011. They believe the US market contributes 50% of that figure.

Wowza! That’s a 22.9% CAGR (compound annual growth rate).

Parks Associates has more optimistic numbers. In June they released a 190 page report (I haven’t read all of this one =) that predicts market growth from $370M in US generated revenue in 2006 to $2,051M in US generated revenue in 2012.

Double wowza! That’s a 33% CAGR.

What I find most interesting here is that one of the authors of the report dismisses the idea of advertising in casual games. Speaking about the report to GamesIndustry.biz, Yuanzhe Cai says “I think the casual game genre is not very appopriate for in-game advertising.” Personally I disagree with him, so by his assessment $2B may be an underestimate.

Up next, PricewaterhouseCoopers. In their June “Global Entertainment and Media Outlook” report (which I haven’t seen), they expect a 9.1% CAGR for the games market overall, but much faster growth in in-game advertising. They expect US revenue growth from $80M in 2006 to $950M by 2011, which works out to a 51% CAGR. Triple wowza!

Finally, the Yankee Group. This month they released a report (which I haven’t seen) that predicts growth from $77M worldwide in 2006 to $971.3M in 2011. These are the most conservative numbers of the bunch, but I can only assume that’s due to the scope of the report. It’s titled “Advertising and Games: 2007 In-Game Advertising Forecast.” So I presume it doesn’t include estimates for advergaming (which others typically break out separately).

Even though these numbers seem much lower than the other reports, the growth rate is through the roof. $77M to $971.3M in 6 years represents a 52.6% CAGR. Wowzatacular!

By all accounts we have a bright future ahead of us.

Sources:

• “Video Game Advertising: Getting to the Next Level” – report by eMarketer (Apr 6 2007)
• “Electronic Gaming in the Digital Home: Game Advertising” – report by Parks Associates (Jun 29 2007)
• “Global Entertainment and Media Outlook: 2007-2001” – report by PricewaterhouseCoopers (Jun 23 2007)
• “Advertising and Games: 2007 In-Game Advertising Forecast” – report by Yankee Group (Jul 6 2007) (paid membership required)

Related:

• On the strength of the game industry: “This year, people will spend more money on games than they will on music.” – Peter Moore @ E3 2007 (skip to 14:38)
• Jun 7 – Got game – Economist.com
• Jun 18 – Beyond in-Game Ads: Nissan Takes Growing Market to Different Level – AdAge.com
• Jun 21 – Video Game Industry Growth Still Strong – HollywoodReporter.com on the report by PricewaterhouseCoopers.
• Jun 22 – Analyst: Games Industry To Reach $49 Billion by 2001 – Gamasutra.com
• Jun 28 – Parks Associates: Game Advertising to Pass $2 Billion by 2012 – GameDaily.biz
• Jun 28 – Game advertising to exceed $2 billion by 2012 – report – GamesIndustry.biz
• Jun 29 – In-game ads can be “double-edged sword”, says analyst – GamesIndustry.biz
• Jun 29 – In-Game Advertising To Top $800 Million by 2012 – Slashdot
• Jul 7 – Analyst: In-Game Ads Grow To $971 Million By 2011 – Gamasutra.com

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The Ads of Rapture

The underwater city of Rapture (from the upcoming game Bioshock) is a wonderful and mysterious place. Originally built for a utopian society, it had a wonderful art deco theme and beautiful architecture. But once Adam was discovered, the city suffered. Today it lies in a state of disrepair. Some areas are flooded, others scarred by war and biological weapons.

Few people live in Rapture today. But those that remain (and those brave enough to explore what remains) will see many advertisements would have been common during better times.

This and other examples of poster advertisements in Rapture can be found on The Cult of Rapture blog.

PS: If you haven’t seen the X06 trailer for Bioshock, I highly recommend it.

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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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Google has acquired Adscape

Today Google confirmed that indeed it has acquired Adscape Media. As posted by Bernie Stolar on the Google Blog:

… we are so stoked to join Google — because these guys get it, and are committed to helping us continue our mission. [Source]

A FAQ has been posted, but doesn’t offer financial details.

But, there are two interesting items:

Q. Do you already have deals signed with game developers?

A. We have been in discussions with many in the game development community and hope to partner with both large and small game publishing companies.

… This seems to be a step backwards from June 6, 2006 when CEO Chris Gilbert claimed “though we have several deals signed, we can’t discuss them publicly until they are formally announced.” [Source] — Note how “deals signed” has turned into “discussions with”. I’m not going to keep holding my breath.

Also, this caught my eye:

Q. Given the dramatic growth of the gaming market in recent years, how much advertising market share does Google hope to gain from this acquisition, both immediately and over time?

A. We don’t release specific projections but we think there is great value in video game advertising. As more and more people spend time playing video games, we think we can create opportunities for advertisers to reach their target audiences while maintaining a high quality, engaging user experience. That said, we will test ways of successfully implementing this form of advertising and Infinity’s technology will be instrumental in those tests.

Q. Where does Google see in-game advertising going in the future, in terms of both revenue and the technology itself?

[exact same answer as above] …

… What is this “Infinity” technology? Is this an internal codename for Adscape? I don’t know of any announced Google technology or in-game advertiser named Infinity. Anybody know if this is more than just a simple mistake?

My previous posts about Google:

• Jan-11: Google to Do In-Game Ads?
• Jan-22: Rumor: Google to buy Adscape
• Feb-17: Confirmed: Google buys Adscape

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Nielsen says: Consoles are Popular

Today Nielsen released a report on the recent rise in console gaming. Their findings, titled “The State of the Console“, list the key takeaways:

• The console household universe has grown 18.5% since fourth quarter 2004, compared to a 1.6% growth in the total universe of television households.
• Two-thirds of all Men aged 18-34 have access to a video game console in their home.
• The universe of connected console households (households subscribing to a service to connect their console to the internet) has grown to more then 4.4 million households, even before the
  newest Playstation 3 and Wii consoles are considered.
• In the NTI (Nielsen Television Index) fourth quarter of 2006 (9/18/06-12/31/06), 93.8 million US Persons aged two and older used a video game console for at least one minute.
• In any given minute, approximately 1.6 million US Persons aged two and older are using a video game console.
• The heaviest console users accounted for 74.4% of all console usage and averaged 345 minutes (5 hours and 45 minutes) of usage per usage day during the fourth quarter of 2006.

These are certainly important findings, but what do they mean for in-game advertisers? Well, let’s look a bit deeper. On the demographic side, console gaming is a very powerful way to reach the elusive young male demographic. 66% of all Men 18-34 have access a console. 80% of all Men and Women 12-17 have access to a console. This bolsters earlier estimates of similarly high penetration levels.

But what about connected units? – Being online is a key requirement for many in-game advertisers… Well, this is growing as well. In Q4 2003, there were 2.5 million households subscribed to a service to connect their consoles to the internet (10.6% of those who owned a connectable system). Today 4.4 million households are connected (16% of those who own a connectable system). The important factoid here is that an increasing percentage of connectable systems are actually connecting. This is good news, users are seeing the benefits of connecting their consoles and as a result are expanding the reach of in-game ads.

Other interesting observations:

• When comparing when gamers play against when people watch TV, we find that TV watching tends to take place earlier in the evening. TV watching peaks around 9 PM, gaming peaks around 10 PM.
• TV watchers tune in en-masse during primetime hours (notice the pronounced spike in TV watchers on page 6 of the report). By contrast, gamers spread out their gaming, slowly ramping up over the afternoon. I can only presume that as the gaming experience improves, these users will not bother to switch over to TV as primetime hits.
• So who plays games? The same people that watch Nicktoons, Adult Swim, Toon Disney, Cartoon Network, Noggin, Nickelodeon, etc… Some surprising results: G4 trails VH1 Classic and Spike trails the Animal channel… Who would have thunk it?

Nielsen says this is the first paper in a series on the video game industry. I can’t wait to see what’s next.

Reading:

• The State of the Console [pdf]

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Viewpoint releases in-game ad product

Earlier this week, I noticed the following press release: Unicast by Viewpoint Releases InGame Advertising Product.

Viewpoint is a technology company that has traditionally provided Internet ad technology. They provide both standard and rich ad formats (from banners, to floating ads, expandable ads, interactive ads, even full screen and AIM based advertisements). They work with publishers to provide inventory, and work with advertisers who want to run campaigns. They also gather a lot of data on how users interact with ads and have a system they call “FUSE” for managing running campaigns and obtaining reports on user engagement and ad effectiveness.

However, the news here is that they are now offering in-game advertising as one of their offerings. What’s interesting to me are a few of the features they tout:

• … seamless integration of “swivel” ad placements into the game. Such placements enable dynamic ad rotation based on the priority of the ad unit, without disrupting the game play experience.
• … [the product] tracks a combination of metrics that define billable impressions even when the user is offline.
• … [the product] has a proprietary feature that allows for the delivery of ad units incorporated into “Ad Packs.” These Ad Packs can continually be exchanged for new Ad Packs so that the content is always timely and relevant.

The offline and “ad packs” support are the technologies that interest me the most. Advertising to offline users is a complicated problem. While a game is online it’s possible to download new ads and upload statistics about what ads have been seen (which is incredibly important because advertisers don’t like paying when their ads aren’t seen).

Offline games make gathering statistics impossible. Perhaps the “Ad Packs” technology allows the system to download a series of ads in advance (so when the user goes offline, they can be shown). But there’s no way to upload view statistics so long as the game remains offline. This presents many interesting challenges. For example, if you’re an advertiser, how much should you pay if your ads might have been seen by an offline gamer? How do you keep the ads relevant and up to date if the user has been offline for some time? What about interactive ads – would these even work offline?

Viewpoint is only just getting started in this space, so it may take some time before we know more about how their technology works. Clearly they’re a new player to keep an eye on.

More reading:

• Unicast Dynamic InGame Advertising Product