Either you love or hate Farmville. And that's why Farmville, and games like it, are good bets for advertisers - because the users who love social games are also often engaged with the games. And engagement is the magic word these days, because engaged consumers make for good marketing prospects. Brands know this and have taken note of the quick rise in time spent with social games in the last few years.
Social gaming revenues should rise to $1.09 billion this year, up from $856 million last year. The revenue consists of both money from ads and money from the purchase of virtual goods, research firm eMarketer reports. For now, virtual goods comprise the bulk of the revenue in social gaming, but advertising is picking up steam. Ad spending in social games will grow this year by 60 percent to $192 million, and rise another 41 percent next year to $271 million, because brands and marketers are recognizing the opportunity to promote their goods through social games, says eMarketer senior analyst Paul Verna.
The type of ads in social games is shifting, too. So far, most of the ads in social-game environments have consisted of lead-generation type offers, such as a "sign up for Netflix to receive 10 percent off" deal. But dollars from those offers will make way for more branded ad buys in 2011 and 2012, Verna says. That includes product placement, in-game advertising and branded games. Already big brands such as McDonald's, Old Navy, American Express, 7-Eleven, Dreamworks, Sprint and State Farm have advertised in social games and look for more to sign on.
"There's the potential for some really sophisticated marketing with in-game ads," Verna says. "Up until now, social games have been simple and lightweight and now they are getting more complex and marketers are catching on to this."
Almost 62 million U.S. Internet users, or 27 percent of the online audience, will play at least one game monthly on a social network this year, up from 53 million last year.
The size of the audience and the creative potential is attracting advertisers who have grown more comfortable executing branded promotions, such as the one that 7-Eleven and Zynga's Farmville ran last year. That campaign called for the store to promote Farmville-branded goods that unlocked virtual items in the social game. Another benefit to marketing through social games is brands can easily find a demographic alignment because of the wide cross-section of consumers that such games attract. But more importantly, the audiences are often passionate. And while $1 billion may be a small piece of the overall online ad pie, it's an attractive piece because the audience tends to be receptive to brand messages, Verna explains. They're used to seeing ads in gaming environments and many of the ads aren't interruptive - they're integrated.
"When you go after this audience there are a lot of touch points and reasons why you know it's a good fit - because of the potential for engagement."
Like iAds, the cost of this type on engagment is way out of most brands taste, but I think you are right on Daisey that this is going to be a serious part of the consideration set as the opportunity opens up to a larger selection of games, or, like iAds, the cost of entry by Zynga becomes more realistic (I remember Hulu being as cocky as Apple/iAds, and i'm sure Zynga will be the same eventually)