Marketing, PR & Advertising and Technology

Advertising turns to $20 billion video game industry

‘Advergaming’ goes well beyond banner ads.

August 16, 2013
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Advertising turns to $20 million video game industry
Advertising in the gaming industry specifically, as with EA Sports games like the one above, taps into $20 billion a year in retail sales. Courtesy EA Sports

(As seen on WZZM TV 13) You might be surprised to learn who is logging in hours on the newest video games each month. Then again, odds are you may be among the growing demographic of adults sidelining as a gamer.

According to the Entertainment Software Alliance, 58 percent of Americans play videogames and the average gamer is 30 years old and has been playing for 13 years. Additionally, the average age of the most frequent game purchaser is 37.

Another surprise: It’s not just men who are playing videogames. The ESA reports that 45 percent of gamers are women.

It makes sense given that Atari 2600 came out in 1977, and Nintendo debuted in 1985 in the United States.

“The kids of the ’80s have grown up, but they haven’t given up games for the most part,” explained Matt Neilson, director of media at Domoregood|Hanon McKendry.

“It’s certainly a huge industry in terms of both the number of the population that plays the games as well as the dollars spent on the games.”

In fact, in 2010, “Call of Duty: Black Ops” surpassed $1 billion in sales within 45 days of its launch; sales reached $650 million worldwide in its first five days on the market. That puts it into competition with box office and book sales. Videogame launches now rival the biggest summer blockbusters in terms of revenue.

“Naturally, advertisers are going to follow what people are doing and certainly the amount of money they are spending on these items to try and advertise within these games to reach these people,” Neilson said.

He noted there are several avenues advertisers can use to advertise within videogames, known as advergaming. For example, advertisers can place a banner ad that pops up in between rounds, integrate their product into the game, or custom-develop a game around their brand.

The most popular form of advergaming today is probably the integration of brands into games.

Neilson said when he was previously employed by another company, he worked with automobile manufacturers such as General Motors to integrate their products into popular videogames.

“We worked on several campaigns where we would integrate the vehicles themselves into many games. An example would be “Need for Speed,” where different vehicles such as Cadillac and Chevrolet models were integrated into the game themselves so that people could try out the new vehicle and drive them in the game, instead of the vehicles that the game developer would typically have in there.

“We worked with brands like Pontiac … where they would integrate into a lot of sports games, the EA (Electronic Arts) sports titles for NCAA basketball and football, and (they would) sponsor the game just like they would do in traditional television. It would be the Pontiac Player of the Game or the Pontiac Play of the Game, and it would show a replay with a nice little visual of the car driving across the screen.”

As video games become more realistic, it allows for brands to replicate real world scenarios, like having a player drink a specific soda brand after finishing a race, or placing sponsor ads along the stadium walls just like fans would see at a real game.

Neilson said technology advancements are the primary reason advergaming is increasing in popularity.

“It’s become easier for game developers and marketers to get out ahead of that curve,” he said. “Back in the day, games would take so long to develop that it would be hard to work with marketers and brands to integrate those products into the games — it could take several years.

“As technology has ramped up in the last decade or two — the Internet connections — it becomes a lot easier for the game developers to almost real-time stream ads into these games. All these games aren’t necessarily hard coded, if you will. A game that you buy at Best Buy or Target, a lot of these now have Internet capabilities so the games themselves can be updated as content comes out and so can the advertising. It becomes a lot more real time for the ads to be updated, as well.”

Players aren’t limited to gaming consoles in their living rooms. Now games also can be played on smartphones and tablets, creating different types of gamers, from the extreme to the casual player.

Some brands venture into the world of creating videogames, which is actually not a new concept. According to eMarketer, Kool-Aid and Pepsi were among the first companies to develop custom games around their products for the Atari 2600. The 1980s and ’90s saw more national brands venture into game creation.

Today, consumers’ eager consumption of apps has continued to spark companies’ interest in creating their own games.

Amway Korea recently developed its own advergame around its Nutrilite product. According to the company’s blog, “The more than 5 million users of a popular mobile game called ‘Rule the Sky’ can purchase Nutrilite farms or crops, build Nutrilite structures, and visit other users’ islands.

It’s similar to Farmville, but in ‘Rule the Sky’ users are on their own floating island in the sky called Flotia.”

The company said of those 5 million ‘Rule the Sky’ players, an average of 800,000 play for 45-60 minutes more than once a day.

Engagement is a big plus when it comes to advergaming. Neilson points out that rather than being one of six or seven ads during a TV commercial break, gamers are highly engaged, and there is less advertising clutter within the videogame experience than there is during a half hour or hour of TV watching.

However, Neilson doesn’t think every company should run out and create its own videogame.

“In a lot of cases, that is not something that will usually bear a really positive return on investment, unless you are a pretty large brand out there,” he said. “I think to create custom content, advergames, I think you have to have content or entertainment value that already exists.”

Neilson does predict advergaming will continue to grow and sees it as a great market for advertisers to reach intended audiences, including audiences who often are less available through more traditional channels.

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