• by Ross Fadner , July 19, 2004

In only a few years, online gaming has grown to an 800 million dollar industry, according to new Yankee Group figures. The nascent industry already commands 450 to 550 million in advertising dollars, and industry professionals seem to think that the online gaming market is now fertile ground for advertising growth.

"The Internet has created a whole new marketplace for gaming," notes Yankee Group Analyst Michael Goodman. He says that the types of game players have evolved just as the online game offerings have evolved.

The average online gamer is no longer an adolescent male. So-called casual games, for example, which are simple card or puzzle games, attract a predominantly female audience over the age of 45.

The expansion of online gaming to a broader audience will result in new opportunities for marketers, says the Yankee Group's Goodman. With these platforms, he says, "you already have the critical component: connectivity," which he notes carries two significant benefits for advertisers.

One is feedback. "Advertisers can tell immediately if a user is interacting with an ad," Goodman says. "All the statistics are reportable."

The second is dynamic ad placement. "Right now, product placement in console games is a fixed cost." Advertisers pay for the placement well before the game is developed. Goodman notes that it's a one-time deal that takes months and months of lead time.

But with an ad buy for a massive multiplayer online game, for example, new opportunities arise because the gaming world is constantly there. Publishers can sell by virtually any time segment because these games are continuously updated.

Goodman says that advertisers benefit from the ability to target users in these games through registration information, user tags, and potentially, audience segmentation.

As in console-based games, sponsorship opportunities will also become readily available. GameSpot Editor Greg Kasavin notes that the most recent example is the U.S. Army's online game, America's Army. He says the game is "a freely available first-person shooter that's unabashedly a promotional tool for the U.S. Army."

Kasavin notes that "it's a solid game" that people download and play, with no strings attached. "But it's really a big ad, he says. "I'm not certain how successful of an ad campaign it was, considering it cost $7 million to produce--but it's a fascinating case, and I wouldn't be surprised if it worked to entice some new recruits into the fold."