A recent article in The Wall Street Journal titled “Marketers Cut Back on Digital Media” claimed that the economic crisis will “likely derail the growth of a slew of advertising technologies that until recently were being hailed as the next big thing.” The article stated that many brands set aside “experimental” budgets for marketing tools that include mobile, Web video, virtual worlds and gaming.

A number of technology providers that offer what the article refers to as “experimental” were surprised by this assertion. Although mobile marketing and user-generated media are still working out how best to monetize their platforms, games and virtual worlds have proven to be solid ROI generators and are, more than ever, becoming an integral communication element in the marketer’s toolbox. In fact, PG Media Research reported that spend on branded entertainment efforts will surpass $25 billion this year and Yankee Group predicts that advergames will generate nearly $260 million in revenues by 2010.

More than ever major brands and publishing houses are utilizing advergames to enhance consumer experience online and subtly introduce potential customers to key messages. Hearst Magazines Digital Media for example, works with its advertisers in the development of innovative online advertising campaigns that go well beyond the traditional banner ad. Recent advertiser campaigns across their properties included branded games for Clearasil, Tampax and Coty, a leader in beauty and fragrance brands.

Over the last year at Arkadium, a developer of casual games and advergames, we have also seen many of our clients add game communities to help drive traffic, increase repeat visits and time spent. The end result has been an increase in CPMs by creating more valuable ad and sponsorship inventory.

AARP, for example, launched its game Arena in February 2008 as part of an overall redesign of the site and since then traffic has soared. After the launch of games, traffic shot up to an average of 4.5 million page views, an increase of 294%. Even more telling of the success is that games climbed to about 52% of overall traffic to the site. In another example, myYearbook.com created a games Arena integrated with their “lunch money” currency. Initially anticipated to attract one million game plays per month, the game Arena blew away expectations by generating three million game plays per day.

Wide Range of Benefits Enhance Demand

Although advergames will never replace traditional media, their benefits far outweigh their costs, which are often much lower than the development of national print and broadcast campaigns. As marketers continue to trim their budgets, the demand for advergames continues to rise. Benefits include:

• Accountability – Online games and the awareness they drive are easily measurable. Statistics such as time spent playing, number of players, number of times played, etc., can be measured in real time and delivered to clients regularly.
• Viral Elements – The addition of viral marketing and social media tools helps to expand the value of the game and gives players the power to participate in the delivery of these messages. Viral features such as send to friend and peer-to-peer challenges can also be measured and reported.
• Lower Costs – Whereas media buys have a set CPM and beginning and end, a game can live on indefinitely and continue to promote a product or service. And with the added inclusion of viral aspects, the game can continue to promote itself with no additional investment in advertising costs.
• Increased Revenue – With the addition of a gaming community or something as simple as the addition of a game on your site, publishers and marketers are able to instantly increase the amount of valuable advertising and sponsorship inventory for sale.
• Entertainment Value – Onlines games are primarily free entertainment. A NPD Group study found that in tough economic times, consumers still want to be entertained. They cut spending on dining and clothing first, and lastly on entertainment including movies and video games. In fact, comScore found that sales of games grew most in Q3, up 60% from last year.

As you evaluate your 2009 budget and ask what is appropriate for your brand, remember that it’s not all gloom and doom. It is possible to find a little fun in these tough economic times. You just have to look in the right place.