In-game Advertising

In-game advertising (IGA) is advertising in electronic games. IGA differs from advergames, which refers to games specifically made to advertise a product. The IGA industry is large and growing.

In-game advertising generated $34 million in 2004, $56 million in 2005, $80 million in 2006,
and $295 million in 2007.
In 2009, spending on IGA was estimated to reach $699 million USD, $1 billion by 2014Arif Durrani (2009-05-26). "Screen Digest forecasts $1bn boom for in-game advertising"
Brandrepublic
http://www.brandrepublic.com/News/908125/Screen-Digest-forecasts-1bn-boom-in-game-advertising/. Retrieved 2011-04-14. and according to ''Forbes'' is anticipated to grow to $7.2 billion by 2016.

The earliest known IGA was the 1978 computer game '' Adventureland'', which inserted a self-promotional advertisement for its next game, '' Pirate Adventure''."The Making of Adventureland". EDGE (162): 104–107. May 2006.

IGA can be integrated into the game either through a display in the background, such as an in-game billboard or a commercial during the pause created when a game loads, or highly integrated within the game so that the advertised product is necessary to complete part of the game or is featured prominently within cutscenes.Greg Boyd, Vejay Lalla (2010-02-11). "Emerging Issues in In-Game Advertising". Gamasutra

Retrieved 2011-04-17. Due to the custom programming required, dynamic advertising is usually presented in the background; static advertisements can appear as either.Helen Leggatt (2009-03-18). "Major in-game ad firm struggling"
BizReport
http://www.bizreport.com/2009/03/major_in-game_ad_firm_struggling.html . Retrieved 2011-04-17."In-Game Advertisting"
Entertainment Software Association
http://www.theesa.com/gamesindailylife/advertising.asp . Retrieved 2011-04-17. One of the advantages of IGA over traditional advertisements is that consumers are less likely to multitask with other media while playing a game, however, some attention is still divided between the gameplay, controls, and the advertisement.Moonhee Yang, David R. Roskos-Ewoldsen, Lucian Dinu, and Laura M. Arpan (Winter 2006). "The Effectiveness of In-Game Advertising: Comparing College Student's Explicit and Implicit Memory for Brand Names". ''Journal of Advertising''. http://business.nmsu.edu/~mhyman/M454_Articles/%28Product%20Placement%29%20Yang_JA_2006.pdf . Retrieved 2011-04-18.

Static in-game advertising

Similar to product placement in the film industry, static IGAs cannot be changed after they are programmed directly into the game (unless it's completely online). However, unlike product placement in traditional media, IGA allows gamers to interact with the virtual product. For example, ''Splinter Cell'' has required the use of in-game Sony Ericsson phones to catch terrorists.(2011-03-31). "Viral Video Features Inspired Product Placement of Dodge's Flagship Muscle Car"
PlaceVine
http://www.placevine.com/blog/2011/03/31/viral-video-features-inspired-product-placement-0f-dodge%E2%80%99s-flagship-muscle-car/ . Retrieved 2011-04-25.Ted Boyke (2004-03-23). "Tom Clancy's Splinter Cell: Pandora Tomorrow World Premiere"
The Next Level
http://www.the-nextlevel.com/features/events/pandora-tomorrow-world-premiere/. Retrieved 2011-04-25. Unlike static IGAs, dynamic IGAs are not limited to a developer and publisher determined pre-programmed size or location and allow the advertiser to customize the advertisement display.

A number of games utilize billboard-like advertisements or product placement to create a realistic gaming environment.Gene Emery, "What's in a Name: Product Placement in Games," Reuters. January 30, 2002.(2010-02-10). "In-Game Advertising Maximizes Marketing Dollars In Sports Category; New Mobile Advertising Opportunity for the Sports Industry"
Business Trends
http://businesstrends.wordpress.com/2010/02/10/study-shows-in-game-advertising-maximizes-marketing-dollars-in-sports-category/. Retrieved 2011-04-14. For example, many sports games incorporate these advertisements to simulate the heavy advertising within professional sports.David Radd (2007-02-22). "Sports and In-Game Advertising". BusinessWeek

Retrieved 2011-04-14.James Brightman (2010-02-10). "Sports Games Proving Effective for In-Game Advertisers, Study Finds"
Industry Gamers
. http://www.industrygamers.com/news/sports-games-proving-effective-for-in-game-advertisers-study-finds/. Retrieved 2011-04-14. Similarly, many games employ brand-name products such as guns and cars as in-game status symbols. DMA Design. Grand Theft Auto III. ( Rockstar Games). PlayStation 2, (v1.1). (2001-10-22). These brand references may not be advertisements and are instead placed in the game purely for plot or design reasons. However, trademark owners sometimes object to unlicensed references to their trademarks. See, e.g., ''E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc.''''E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc.'', 547 F.3d 1095 (9th Cir. Cal. 2008). https://caselaw.findlaw.com/us-9th-circuit/1485435.html. Retrieved 2011-04-17.

Dynamic in-game advertising

Increasing Internet connectivity and bandwidth has increased the use of dynamic IGA, which allows the game manufacturer or its advertisement vendor to deliver advertisements remotely, update advertisements after the game is launched, and target advertisements based on time or geography.Reena Jana (2006-01-25). "Is That a Video Game - or an Ad?". Business Week

Retrieved 2011-04-14.Enid Burns (2008-04-07). "In-Game Ad Network Taps Into Virtual Worlds"
ClickZ
http://www.clickz.com/clickz/news/1694387/in-game-ad-network-taps-into-virtual-worlds. Retrieved 2011-04-13. This approach combines the customization of banner advertisements, web banners with the functionality of traditional billboards and posters as most in-game advertisements do not link to a website outside the game. Dynamic IGAs allow the game manufacturer or its advertisement delivery service to track advertisements in real time and capture viewing data such as screen time, type of advertisement, and viewing angle. This information may be used to improve future advertisement campaigns and to correct copy problems or make a current advertisement more appealing to players.Simon Carless (2006-10-17). "IGA's Townsend On BF2142 In-Game Ads". Gamasutra

Retrieved 2006-10-22.

Dynamic advertising campaigns allow IGA to be part of a time-sensitive advertisement campaign because they do not need to be designed months or years before the game is finished.Paul Hyman (2006-01-26). "Advertisers await game measurement". http://www.frankwbaker.com/videogameads.htm . Retrieved 2011-04-14. Dynamic advertisements can be purchased after a game is released to the general public are featured in a developer determined in-game location. For example, in October 2008, billboard advertisements were purchased in 10 swing states by then- US Democratic presidential candidate Barack Obama in numerous Xbox games.Walter Alarkon (2008-10-14). "Obama Runs Ads in ‘Madden'"
The Hill
https://thehill.com/blogs/blog-briefing-room/news/campaigns/37922-obama-runs-ads-in-madden/. Retrieved 2011-04-05.

Advertising in online-only games

Freemium and free-to-play

Freemium and free-to-play games are typically playable online and provide a free basic game with options for players to purchase advanced features or additional items.Dean Takahashi (2011-02-26) "Will Microsoft conquer free-to-play games with Age of Empires Online?
GamesBeat
https://venturebeat.com/2011/02/26/will-microsoft-conquer-free-to-play-games-with-age-of-empires-online-video/. Retrieved 2011-04-14. They operate under the theory that a gamer will pay for additional in-game features after investing enough time in the game.Danc (2009-07-05). "Flash Love Letter (2009) Part 1". Lostgarden. http://www.lostgarden.com/2009/07/flash-love-letter-2009-part-1.html . Retrieved 2011-04-01. In freemium games like '' Farmville'', these transactions are typically one-time payments for specific in-game goods ( micro-transactions).Samuel Asher Rivello (2011-03). "How to make money with online games"
Adobe Edge
http://www.adobe.com/newsletters/edge/march2011/articles/article1/index.html?trackingid=IJQLF. Retrieved 2011-04-02. Free-to-play games like '' Age of Conan'' instead try to induce players to enter into a pay-to-play relationship for premium content.John Callaham (2011-02-01). "Company of Heroes Online to shut down March 31"
Big Download
. http://news.bigdownload.com/2011/02/01/company-of-heroes-online-to-shut-down-march-31/ . Retrieved 2011-04-14. While typically generating income though these other revenue sources, freemium and free-to-play games often feature advertisements as well via splash advertisements or advertiser sponsorships of virtual-good giveaways as additional income.Jason Katz (2011-03-10) "In-Game Advertising: A Waning Star?"
The Marketing Arm
http://www.themarketingarm.com/index.php?id=24768. Retrieved 2011-03-15.

Pay-to-play

Pay-to-play games charge players to access the game content. Depending on the game environment, some pay-to-play games feature IGA. For example, '' City of Heroes'' and '' Anarchy Online'' both use dynamic IGA in an urban game setting to mimic real world stimuli.(2008-04-03). "City of Heroes – In-Game Advertising"
MMORPG
http://www.mmorpg.com/gamelist.cfm/gameId/3/setView/features/loadFeature/1866. Retrieved 2011-04-14.Dan Fortier (2006-08-26). "Debate: In-Game Advertisements"
MMORPG
http://www.mmorpg.com/showFeature.cfm/loadFeature/828 . Retrieved 2011-04-14. In contrast, fantasy games such as '' EverQuest II'' and ''World of Warcraft'' may not include IGA when real-world advertisements do not fit contextually. Blizzard has previously remarked that it would not consider using IGA within World of Warcraft; conversely, SOE experimented briefly with an in-game command-line function allowing players to order food delivery from Pizza Hut in ''EverQuest II''.Andrew Edgecliffe-Johnson (2008-1-30). "Questions Raised Over Revenue Growth From Modern Advertising"
Financial Times
http://www.ft.com/cms/s/0/e7c50fce-ced6-11dc-877a-000077b07658.html#ixzz1G4iNCknW. Retrieved 2011-03-07.Ben Zackheim (2005-02-18). "Pizza and Everquest 2 – two great tastes that clog arteries together"
joystiq
. http://www.joystiq.com/2005/02/18/pizza-and-everquest-2-two-great-tastes-that-clog-arteries/. Retrieved 2011-04-14.

Virtual worlds and MMORPGs may host persistent online advertisements by allowing marketers to purchase virtual real estate. Aside from establishing a brand presence, companies can use it to test future real-world locations. For example, the Aloft Hotels brand was established within Second Life prior to the completion of its real-world counterpart.

Advertising industry reaction to IGA

The advertising industry has generally embraced IGA and advergaming as effective ways to reach 16 to 34-year-old males.Robin Wauters (2009-03-24). "Study: In-Game Video Advertising Trumps TV Advertising In Effectiveness". TechCrunch. https://techcrunch.com/2009/03/24/study-in-game-video-advertising-trumps-tv-advertising-in-effectiveness/. Retrieved 2011-03-08."Reach Your Target Audience – Men". Microsoft Advertising. http://advertising.microsoft.com/ad-network/audience/men . Retrieved 2011-04-12.Ian Burrell (2011-02-18). "Is it game over for the virtual ad?". The Independent. https://www.independent.co.uk/news/media/advertising/is-it-game-over-for-the-virtual-ad-2218305.html. Retrieved 2011-03-09. IGA is seen as an important means of gaining access to a generation of young males who use gaming as their relaxation activity instead of watching television.(2011-01-15). "iPad Taking Viewers Eyeballs Off The TV During Primetime". WorldTVPC.com. http://www.worldtvpc.com/blog/ipad-viewers-eyeballs-tv-primetime/ . Retrieved 2011-04-14.Kristin Kaining (2006-11-15). "Games: they're not just for kids anymore"
News.msn.com/ NBC News
. https://www.nbcnews.com/id/wbna15702318. Retrieved 2011-04-14. Advertisers may also appreciate IGA's economic returns; a 2010 Nielsen Company study showed that IGA had a return on investment of $3.11 per dollar spent.Gerardo Guzman (2010-09-14). "Video Game Advertising: Playing to Win… and Sell"
Nielsenwire
http://blog.nielsen.com/nielsenwire/consumer/video-game-advertising-playing-to-win%E2%80%A6-and-sell/. Retrieved 2011-03-08. In 2007, Nielsen Media Research branched out into the IGA space by announcing a video games ratings service, GamePlay Metrics, to serve in-game advertisers and measure IGA effectiveness.John Gaudiosi (2006-10-19). "Nielsen's GamePlay Metrics"
Businessweek
Retrieved 2011-04-14.

Several advertising agencies or ad networks specialize in IGA, and even more traditional advertising agencies have experimented with IGA. However, many advertisers do not embrace video games as a viable advertising medium because of the continuing difficulties in measuring IGA's effectiveness despite the implementation of GamePlay Metrics, uncertainty about how many viewers the game will reach, and the long development cycle inherent in video games.Duane Kuroda (2010-10-11)
"Massive's Failure Proof Of In-game Advertising's Success"
. ReveNews. Retrieved 2011-04-14.Zachary Glass (Fall 2007). "The Effectiveness of Product Placement in Video Games"

ournal of Interactive Advertising. Vol 8 No 1. http://jiad.org/article96 . Retrieved 2011-04-18.

Reducing advertiser risk

Viewer numbers are hard to estimate because it is difficult to gauge the popularity of a game before its release; however, advertiser risk can be partially mitigated through benchmark-based advertisement payments on game units sold or a refund agreement if a certain number of game sales are not reached. This may not, however, protect the advertiser from an unwanted association with a poorly performing game or advertisement.

It is also difficult to plan in-game advertisements because game development generally takes longer than the development and implementation of an advertising campaign; typically, most static advertisements must be disclosed to the developers at least eighteen months before a game is released. This timing discrepancy can be solved though use of dynamic advertisements, which are available for purchase at any time in-game space is available, but this choice constrains the advertisement to the in-game predetermined spaces and sizes and does not allow for highly integrated static ads.

Game industry reaction

Game publishers have mixed feelings about IGA. IGA can create new revenue streams; in some cases publishers' profits have increased by an extra $1–2 per game unit sold (in addition to the typical $5–6 profit per unit). Some mobile phone games have replaced charging fees to gamers with IGA, and it is an important source of income for browser-based and other Internet games that do not feature micro-transactions or pay-to-play."Kalador's FreePlay in-game advertising technology for mobile phone games powers MobileRated". 2007-03-19. http://www.mobilerated.com/news/20070319.html . Retrieved 2011-04-14.Owen Good (2009-05-21). "Indie Devs Turn To In-Game Ads After Piracy Strike"
Kotaku
http://kotaku.com/#!5264139/indie-devs-turn-to-in+game-ads-after-piracy-strike. Retrieved 2011-04-17. Some publishers see IGA as a way to offset growing game development costs, while others believe IGA will allow them to experiment with gameplay by reducing the financial risks associated with game development.Bobbie Johnson (2006-05-19). "Advertisers get young gamers in their sights". The Guardian. http://technology.guardian.co.uk/games/story/0,,1778693,00.html. Retrieved 2006-10-20.William Vitka (2005-07-16). "In-Game Advertising - IGA Worldgroup Leads The Pack And They Might Be Getting It Just Right". CBS News

Retrieved 2006-11-03.

However, not all publishers have found IGA successful. In 2008, Sony Corporation expressed doubts about advertisement-funded games because of limited advertiser dollars and gamers' skepticism of IGA, although Sony completed an IGA deal 5 months later.Brian Ashcraft (2009-06-04). "Sony Make In-Game Ad Deal Official". Kotaku. http://kotaku.com/#!5012940/sony-make-in+game-ad-deal-official. Retrieved 2011-03-08. However, in 2010, an Electronic Arts representative remarked, "We actually aren't getting much from ad revenue at all. The in-game advertisement business hasn't grown as fast as people expected it to."Kris Pigna (2010-12-22). "EA: In-Game Ads Business Hasn't Grown as Fast as Expected"
1Up.com
http://www.1up.com/news/in-game-ads-business-hasnt-grown . Retrieved 2011-03-09.

Another issue publishers and developers must deal with is integrating IGA into games without alienating or frustrating players. The general goal of IGA is to insert advertising that gets noticed while not interrupting the player's enjoyment of the game. Developers need some creative control of the IGA to ensure it fits the virtual setting, which can be an issue because advertisers usually want to project a certain image and protect their brand image.(2009). "Most Despicable Use of In-Game Advertising". GameSpot. http://www.gamespot.com/best-of-2009/dubious-honors/index.html?page=2. Retrieved 2011-04-16. Game companies worry that they may be forced to change the game as requested by advertisers if IGA becomes a common revenue source, and face a possible backlash from consumers.Quang Hong (2005-11-30). "Question of the Week Responses: In-Game Advertising?". Gamasutra

Retrieved 2011-04-16. In some games it may be easier to rely on revenue from sales of virtual goods, as they may provide a more reliable and greater stream of income than advertising while having the advantage of being directly incorporated into the game experience and being under the complete creative control of the developer.

Gamer reaction

Gamer reaction to IGA has also been mixed. A 2009 study by an advertising company found that 80% of consumers correctly recalled an advertiser and 56% had a more favorable impression of the advertiser because it allowed them to play a free game. However, companies have found that gamers do not want distracting advertisements when they have already paid the retail price and/or a monthly subscription fee. Gamers have shown a distaste for advertisements that distract them while they are trying to enjoy themselves. A small, 100 participant, 2010 study suggested that gamers may be more likely to favorably respond to advertisements and products which are congruent with the game environment.Ben Lewis, Lance Porter (Spring 2010). "In-Game Advertising Effects: Examining Player Perceptions of Advertising Schema Congruity in a Massively Multiplayer Online Role-Playing Game"
Journal of Interactive Advertising
Vol 10 No 2.brown http://jiad.org/article131 . Retrieved 2011-03-09.

Gamers may feel that IGA is invasive and in some cases have dubbed IGA-supported software as spyware.J.P. "Agon Thalia" Sherman (2009-01-05). "In Game Advertising Could Be the Next Best Thing to Gaming"
Ten Ton Hammer
http://www.tentonhammer.com/node/60433. Retrieved 2011-04-12 Some gamers choose to remove advertisements from the game experience, either by paying more for an advertisement-free copy or disabling the advertisements through exploits.

In-game advertising can also lead to negative reviews for a video game, as occurred in 2013 with Maxis' promotion of a heavily branded Nissan Leaf charging station as downloadable content in SimCity. Maxis claimed "Plopping down the station will add happiness to nearby buildings. It will not take power, water, or workers away from your city."

Effectiveness

Several academic researchers have attempted to understand how effective IGA is. The effectiveness of such advertising is debated by several scholars. Yang et al. found some types of recognition were low among college students, although players did retain word fragments in sports games. Grace and Coyle found that 35% of players could recall advertised brands in a controlled study of car racing games. Lee and Faber found that the primary factors for player-retention of IGA are location of brand messages in the game, game involvement, and prior game-playing experience.

See also

* Interactive advertising
* Advergaming

References

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Advertising by medium
Advertising techniques
Advergaming
Marketing techniques
Promotion and marketing communications
Video game development
Revenue models