In an effort to build a TV-like advertising business around the still-growing video-gaming industry, TV ad-technology company Simulmedia has hired Electronic Arts’ Dave Madden as executive vice president of games and OTT.
At the same time, Simulmedia has been working with Nielsen to come up with a measurement system to calculate TV-like ratings for video game users -- as well as working with publishers when it comes to incorporating TV commercials into video games.
Dave Morgan, founder/chief executive officer of Simulmedia, says the effort is intended to use Nielsen’s smart TV viewership data as a way to help advertisers and publishers better understand how video game audiences compare to TV audiences.
It would be “like a CTV [connected TV] ad,” which would incorporate data from Nielsen’s Gracenote entertainment metadata business.
Simulmedia has been running pilot tests in which rewards are delivered for permission/opt-in video ads in premium video games.
Madden, who for nine years had been head of in-game advertising and brand partnerships at EA, tells Television News Daily the key is around 18-34 audiences -- long a goal for TV marketers. To date, efforts for advertising in video games have been only on a limited sponsorship basis.
Video game audiences are “significantly larger than TV networks who reach that [18-34] audience -- especially with the advent of the free- to-play games,” says Madden. “You have really large player bases that are engaged two to four hour a day in games. And they are not multitasking.”
Madden says it's an audience where players have “two hands on the controllers at all times.” He adds: “The challenge has always been how do you integrate ads that are player friendly.”
Current sponsorship deals in video games involve a somewhat long process when it comes to including messaging in a video game. Simulmedia wants to make it more fluid and quicker, like the process of buying TV commercial time.
In current efforts, sponsorship/advertising in games give gamers “rewards” for viewing messaging with “virtual” money -- for example, to buy video-game accessories.
Mobile free-to-play gaming is a model that Simulmedia looks to build on in which advertising is more widespread and acceptable with gamers. But it is limited mostly to direct-response advertisers with mostly digital display advertising.
In adapting a model for big-screen console games -- which include TV-like commercials -- the goal is to pull in bigger consumer brand advertising money from large TV budgets.
Simulmedia points to LEK Consulting, which follows the video game industry, who estimates the advertising-supported video-game business could grow into a $3 billion to $5 billion market in five years.
Morgan adds a handful of advertisers, studios, publishers and hardware manufacturers have been working with Simulmedia for a few months. “We are talking to every major company; Everyone's a little afraid to be first.”
In addition to measurement and availability for big brand marketers, Morgan says Simulmedia wants to do this as it continues to protect gamer privacy and publisher data.
The rough plan says Morgan would run seven TV commercials in a period of one-and-a half to two hours of video-game play. Commercials would run on a permission-basis.
What would be the draw for those gamers? More rewards and virtual money where gamers can buy video-game digital accessories -- something that has worked well in the past.
Sports video games and other formats have natural TV-like breaks that lend themselves to more traditional TV 30-second or 60-second commercials, says Morgan.
What are the major issues? “The biggest complaint in the OTT world is advertising frequency.” Too much frequency of specific TV messaging “will not work in video gaming.”
He says the idea is to create “super-scarce” levels of inventory. It also means not subjecting TV-commercial inventory for video games to be available on bidding/auction inventory systems.