Wednesday, January 02, 2008

importance and implementation of in-game and around-game advertising

In-Game Advertising 101

Alex St. John, co-founder and CEO of WildTangent, talks about the importance and implementation of in-game and around-game advertising in the growing gaming landscape.

As developers consider how or if to implement an advertising strategy for their games, it's important to understand the distinction between "around-game advertising" and "in-game advertising"—because gamers certainly do.

As the CEO of a leading game network, I talk to developers almost every day who are interested in game advertising to boost revenues, but cautious about the impact it might have on the gaming experience. With all the media hype around the topic, it's no wonder there is both excitement and caution.

Despite being a pioneer of the in-game advertising industry and a patent holder of the technology that drives it, I am not a fan. Seemingly incessant news reports citing grossly exaggerated revenue projections from some analysts have triggered such euphoria that otherwise sane individuals would have you believe that gamers actually like ads in games and that these ads enhance the gameplay experience. But if you carefully look at the research, this euphoria is unjustified.
Around-game advertising can take the form of anything from traditional banner ads you might see on some of the more popular portal sites to full-fledged pre-roll video ads. In-game advertising is advertising in the actual gameplay experience such as billboards in a racing game.

The Parks Group did a survey recently which said approximately 20 percent of gamers would not buy a game that had advertising built into it. Much ado was made about the other 80 percent who either didn't care or had no opinion. But can you imagine what would happen to game revenues if 20 percent of gamers stopped buying ad-stuffed games? It's safe to say the revenue generated from it would be dwarfed by the revenue lost not to mention the immeasurable damage to brand loyalty.

To be clear, in-game advertising does have a place. It's something we and many other companies have offered and will continue to successfully sell, but only in a limited fashion in a handful of appropriate game genres like sports and simulation games.

What we've seen to be most popular for developers, publishers, advertisers and gamers alike is making downloadable games free to the customer through around-game advertising. While the benefits of free gameplay are obvious to the consumer, they aren't necessarily as obvious to the game developer. The biggest question I get from developers considering this model is "How do I protect and even grow my existing game revenues if I'm giving the game away for free?" A fair question from any developer, particularly those held accountable by the public markets.

In order to remove doubt, and understand the opportunities at hand, a developer must first have an understanding of the following two items:

1. The audience your game will draw if it is given away for free
2. The lifespan of a game (i.e. how many times it gets played) before a gamer moves on to another game

continued...

Jason Kiwaluk

Mower & Shoveller,

Ideation | Ecommerce | Fintech | Innovation | Strategy | Opinionated Agitator RevenueWire,FuturePay+PayMotion

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