| 27 February 2006 |
Rated M for MadAve
Rated M for MadAve
February 27, 2006 BusinessWeek
Video games are white-hot now that Nielsens rate their ad impact
BY DAVID KILEY
Players of American Wasteland, pro skate¬boarder Tony Hawk's lat¬est video game, can't help but see that the undisput¬ed king of the ramps is a Jeep fan. As gamers joy¬stick their way around a digital likeness of Los Angeles, from Venice Beach to the Staples Center, they are bound to run across, or into, Jeep Wranglers, Grand Cherokees, and Liberties.
Of course, the vehicles and the Jeep billboards aren't there by happen¬stance: They're paid for. Plenty of advertisers, most prominently Coca-Cola, McDonald's, and Nike, have been putting their products in video games for several years now. But marketers and gamemakers successful¬ly pushed Nielsen Entertain¬ment last year to start meas¬uring the impact of in-game product placement, where there had been none before.
This in turn is drawing more ad dollars and making gamemakers as eager as TV networks, perhaps more so, to open up their stories to the highest bidders.
The video-game business, already bigger than movie-house box office, did $10 billion in sales last year. With 100 million gaming U.S. households, ac¬cording to Forrester Research Inc., and folks increasingly interacting with a video screen instead of passively watch¬ing TV, no wonder Nielsen forecasts that ad spending on brand placement in games will balloon from $75 million last year to as much as $1 billion by 2010. Pumping the num¬bers are the launches of Xbox 360 and Sony PlaySta¬tion 3, which connect console gaming to the Internet in a far richer way than previous versions. "This is a new world of interactivity that puts gaming on the same plane with advertisers as cable TV," says Tim Harris, who heads the gaming unit of media agency Starcom MediaVest Group.
Meanwhile, Nielsen's sys¬tem is generating a lot of compelling data for mar¬keters. In American Waste¬land, from gamemaker Ac-tivision Inc., for example, Jeep learned that all players were shown the 3-D vehicles an average of 23 times in 20 minutes. And 96% of those who recalled seeing the Jeep felt the vehicles fit well in the game. Feedback even more welcome to Jeep: 51% of American Wasteland players, including some not yet driv¬ing, said they would recom¬mend Jeep to a friend, and 65% would consider eventu¬ally buying one. "Gaming performs much better than TV" in turning brand awareness into an actual preference, says Bonita Stewart, DaimlerChrysler's director of interactive communications.
Advertisers like the extra control game producers allow them, compared with TV placements. Ford Motor Co. didn't know until episodes of Fox's 24 were in the can just how its vehicles came off looking on screen, but Chrysler and Activision exec¬utives have extensive back-and-forth discussions during the game’s development, "I understand that the TV and film writers in Hollywood see it as an in¬vasion of their space, but with gamers we are treated more like a private equity in¬vestor," says Stewart. Activision CEO Robert Kotick says the company took in $2 million in brand placement dollars from Chrysler, Nokia, and Motorola. That offset 10% of American Wastelands $20 million development costs.
Game cartridges that are bought and rented are attractive to advertisers, but the surge in
online gaming predicted to come as gamers replace old sets with Xbox 360 and PlayStation 3 has the marketers lining up. Rather than simply burn¬ing billboard ad images and inserting products into game scenes, adver¬tisers will be able to buy flights of ads and place¬ments that last a day, a week, or a month and help producers keep the games fresh by collaborat¬ing on sponsored Web content that ties into the story. The next Tony Hawk game, says Activision's Kotick, could involved not only brand portals that drew gamers into connected sites but also features such as Internet “phone calls”- by way of clicking on a branded cell phone-with changing messages from Hawk that alter the game ex¬perience. "Staying competitive in a new era absolutely depends on ad support, and we're not interested in ads that don't make sense or [that] annoy," says Kotick.
So far, gaming companies and mar¬keters are exhibiting good sense for what is "natural" product placement. Jeep ve¬hicles and Nokia phones are, after all, popular with young men. And Nike re¬cently inked its largest gaming deal ever, joining with Take-Two Interactive Software Inc. to put its brand into NBA2KSports basketball games. Some 200 athletes in the games wear the Nikes they wear on the court. But the new version integrates the company's Web-based Nike iD shoe customiza¬tion software, which en¬ables players to design and personalize shoes worn by the digitized pros.
"SEEDIER SIDE"
But as the placements proliferate, some advertisers are committing a few fouls. One recent flap involved Engage In-Game Advertising, a company that inserts ads into online games via a Net ad server. Engage modified the popular game Counter-Strike, created by Valve Corp., and dropped in ads from its client, the Subway sandwich chain, over three weeks in December. The problem: They changed the game without asking Valve for permission. Engage has drawn ire from the game creator—and brickbats on message boards and blogs. "Advertis¬ing within video games...does have its seedier side," writes arstechnica.com, a tech enthusiast Web site, about the En¬gage incident.
Now that Nielsen can quantify the au¬dience for advertisers, game producers would like to move toward a more stable system by which advertisers can buy ads, such as a cost-per-thousand formula, the same way they buy time on TV. That means stiffer competition for media al¬ready under pressure from youthful eyes deserting after school and prime-time TV for gaming. The cost of a 30-second spot for shows like The Simpsons and CSI can range from $250,000 to $400,000, but 18- to 34-year-old males represent only an average 37% of those audiences, while 65% of video-gamers fall into that valu¬able demographic. "If the goal is to reach [young] males, there is a lot of waste in buying network television," says Nielsen Entertainment Senior Vice-President Michael Dowling.
Why are consumers drifting away from TV for more gaming? Players see them¬selves in the games, something that5s diffi¬cult with TV shows. And far from rebelling against ads in their players, gamers seem to be telling advertisers they want to see more of the brands that help define who they are. No video-game TiVo or ad zapper needed, at least not yet.
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