• by Justin Townsend , April 21, 2008

In-game ad networks are the new power up

While the entertainment world's bigwigs still break out in cold sweats at the mere thought of the writers' strike, the industry is grappling with digital media channels and how to monetize online content. But like that barrel-throwing monkey Donkey Kong, one sector stands tall above all the rest: video games.

Just ask the experts: your 12-year-old pimply brother. Fratboys. Your unemployed 30-something boyfriend. Your mom. Or simply crunch the numbers. According to eMarketer, sales of video-game software, consoles and accessories will pass the $21 billion mark by 2012.

Global in-game advertising market is expected to grow to a $403 million industry by the end of this year and reach $650 million by the end of 2012, according to eMarketer.

Previously, in-game ads were usually static ads hard-coded into games well after the real-world campaigns had run their course. But during the past year, leading in-game ad networks created technology that has transformed video games into a highly effective, measurable ad medium capable of dynamic content delivery and running targeted ad campaigns. Given the number of premium game titles that allow gamers to play online, advertisers can run integrated in-game ad campaigns just as they would via any other Web platform.

From a campaign-booking perspective, in-game advertising is highly flexible. Only want to reach males 25-34 in the Pacific Northwest, playing adventure games during the week from 10 p.m.-2 a.m. that are rated for teens and above? No problem.

The video-game experience is completely personal, contributing to its standing as the leisure activity of choice for so many people and its increased importance in the media mix. Major media platforms like primetime broadcast television have to broaden their appeal to a mass audience while video games present an ideal marketing channel because the consumer controls every aspect of his or her gaming experience. No longer beholden to the traditional media "deficit programming" model, consumers can enjoy their time immersed in the fantasy video games offer.

Video games offer awareness-building with digital measurability. In-game ads not only provide proof of delivery, but proof of viewership - IGA's technology enables us to measure an ad's size, as well as how long and at what angle it appeared on-screen. This methodology tosses out all the fractions of ad impressions and partially viewed ads, thus resulting in only highly qualified impressions. Advertisers only pay for what has been seen, and better yet, unlike other mediums, video games are immune to "media multitasking."

For consumers, in-game advertising brings realism. Any gamer will tell you how distracting it is to play games in replicated real-world environments and be surrounded by "fake" brands. By adding a few select ads that are contextual to the game and relevant to the audience, today's in-game ads can fortify realism, immersion and enjoyment for gamers. However, the line is pretty clear where a game becomes too cluttered with ads and becomes driven by business models.

Though not directly apparent to consumers, advertising also supports game development itself. Development costs are skyrocketing to the point where developing a typical AAA game costs publishers $10-20 million, despite average retail prices staying relatively flat. But in-game ad networks provide valuable ad revenue streams to publishers and developers, and help developers remain creative. Mindless violence and air guitar don't come cheap or easy.

Justin Townsend is CEO of IGA Worldwide.