How Advergaming Works

There are three general groupings for advergames. First, games may be placed on a company Web site (or even a special gaming site owned or sponsored by the company) in order to attract Web visitors and entice them to remain on the site longer. The longer a visitor is on the site, the longer the company’'s message is in front of them. The games may or may not be related to the product.

­The second type is closer to the traditional, commercial video game developed and sold to be played on computers or game consoles, but the primary difference is that the games are developed with a specific purpose in mind. For example, the United States Army sponsored an extremely successful game called "America's Army" in an effort to increase recruitment.

The third grouping of advergame is what we typically call product placement, or in-game advertising, where the product or an ad for the product is part of the game. For example, you might see a Ford Mustang cruising the game's virtual streets.

So, the games can be completely free and played online, or you might find ads as part of a commercial game that you've bought to play on a game console or computer. More specific methods for advergaming include:

Signage Within an Existing Game

This is more passive advertising that places product ads within the game scene. You might see billboards, ads on buses, or a drink machine with brands of soda emblazoned on its side. The Red Bull energy drink Web site has a game called Red Bull Flugtag Baltimore, which is an airspeed game that has the player launch a small airplane down a runway over the Baltimore harbor to see how far they can make it fly. Flapping Red Bull banners line the runway.

Integrating the Product into the Game Itself

With this type of game you will interact with the product (or something that represents it) as part of the game. At Postopia.com, for example, Factory Frenzy takes you through the Honeycomb factory where you gather pieces of Honeycomb cereal, Mario fashion, by bonking your head against boxes of Post Honeycombs. Other games on the site have you gobbling up spoonfuls of cereal as you ride a bobsled or answering trivia questions about the Flintstones while boxes of Fruity Pebbles are displayed on the screen.

Ads During Transitions

In this scenario, you might see ads for a product when the game loads or when you go to a new level.

Ads Around the Game Screen

Like the transitional ads, the product and its message aren'’t part of the game itself. In this case, the ad might be part of the scoreboard, or even part of the playing field (if there is one). Or, ads may just sit around the screen. At makaimedia.com, for example, a banner ad sits at the top of the screen just above the game. At MSN games, you can play Bunco, sponsored by Prilosec OTC. While you're playing, the Prilosec logo is both at the top of the screen and faded on the playing surface where the dice are rolled. Honda Racing sponsors games on its UK website. The games are very simple in design and function, having only a Honda Racing banner across the top.

Dynamic Ads

With broadband Internet access becoming more widespread, dynamic advertising within games has become much more practical. Internet connectivity makes it possible to display in-game advertisements in real time, allowing content to be updated. Billboard ads can change, video commercials can be displayed on the outside of building in a virtual city, and even interactive game kiosks can be incorporated within another game.

In fact, in December 2006, Adweek reported that Mochi Media, (a company that tracks Web gaming traffic) had developed the first advertising network that offers dynamically inserted ads in free online games. This type of service will enable advertisers to reach specific demographics through virally distributed Flash games.

Another company, Adscape Media, also offers dynamic advertising in the form of ads on billboards or vending machines that appear in videogames. Adscape offers a product called AdverPlay™ that gives advertisers the ability to remotely and dynamically activate and deactivate each paid ad spot within the game—, even after it’'s distributed. This eliminates the need to update a game in order to change ad spot placement.

Many marketers have been hard pressed to find a way to promote their products to younger target markets. Technology-savvy teenagers have Tivo to skip past commercials and faster mouse hands to close those ad-flaunting pop-up windows. Banner ads, which have rarely produced the impact advertisers need, are often ignored. When advergaming entered the arena, it offered a way to get to those hard-to-reach younger markets by entering their worlds through the games they play. Gaming was one of the last frontiers in advertising spaces. When asked, many gamers say they don'’t mind the ads, particularly product placement within a game, because it adds realism. You would expect to see a Pepsi logo rather than some generic product name (or nothing at all).

So advergaming might work if you market your products to video game-playing teenagers, but what about products that don'’t target that demographic? Well, that'’s where the surprising (to some) market research comes in. According to New York-based Nielsen//NetRatings, it’s not just a bunch of teenagers that are playing the video games these days. Its research shows that 30.5 percent of the online games audience is between 35 and 49 years of age, compared with 16.6 percent between 25 and 34, and 14.3 percent between 12 and 17, according to February 2004 measurements.

And, more women are participating than you might think -- many of them professionals. Numbers, also from Nielsen//NetRatings, show that 41 percent of players at online game sites like GameSpot, Candystand, and Pogo are women.

Reston, VA-based ScoreNetworks, a firm that measures online game use, confirms similar findings adding that online game players are falling in line with the general population. On average, 8.9 percent of players at the Top 10 gaming sites are African American, 4.2 percent are Asian and 79.3 percent are white. Also of importance to marketers, they'’ve found that about 35 percent of players on those sites earn $50,000 to $100,000 annually, while 16.2 percent earn more than $100,000. Being able to target those with higher levels of discretionary income (i.e., money left over from disposable income that is often used for "luxuries") enables marketers to sell more higher dollar items such as cars and electronics.

So why is advergaming becoming such a booming industry? Perhaps it’'s the immersive effect it has on players. Rather than being exposed to a 30-second ad, your attention is captured in a much more significant manner for several minutes and potentially hours. You may be interacting with the product, the product’s mascots, seeing the product’s ads in a virtual world, or simply seeing the product’s ads surrounding the game screen itself.

Boosting Brand Awareness

This interaction leads to much better retention of the product or message the product advertising is trying to get across to you. As an additional bonus, games that are especially entertaining, clever or challenging get passed on to friends, creating the viral marketing that all companies desire for their products.

Fuel Industries, along with advertising agency Crispin Porter + Bogusky, developed a game for Gap stores that allowed users to create their own avatar (or virtual representation of themselves), select clothing from the Gap, and then try on the clothes in the Gap dressing room. Trying on the clothing was designed as a “strip tease,” in which the player’s avatar danced around wildly while removing his old clothes before stepping into the dressing room, emerging a moment later in his new Gap outfit. A prominent “e-mail this to a friend” button allowed the user to send their performing avatar to friends and family, where they too could create their virtual selves and try on virtual clothes.

BrandGames created Turbo-Ice.com for Dunkin' Donuts to boost awareness of the chain's TV campaign that was promoting the new Turbo-Ice coffee drink. The game plays off the classic race between the tortoise and the hare, and of course the tortoise wins by drinking Turbo-Ice. The campaign has ended, but the game is still on the site. The company claims the game was a big success.

Selling Products

Many advergames include an element of competition. There might be a tournament, for example, and the winner gets the promoting company’s product for free. Or, maybe several winners get a coupon for a discount on the product when they buy it online or in a store.

For example, Johnson & Johnson launched an online game called Buddies Scrubbies to promote its shampoos and soaps for children, where the goal was to bathe as many toddlers as you could in a set time —using all Johnson & Johnson products. By including a downloadable coupon at the end of the game it could be tied directly to sales.

Market Research

Other companies have used the virtual world of advergames to get valuable feedback from potential customers about products they have not yet released. Car companies, for example, sometimes have virtual representations of car prototypes that players can interact with in the game and then elaborate on what they like and don'’t like. (Certainly a better way of finding out what’'s not going to sell than waiting until the car is coming off the assembly line.)

Toyota Motor Corporation, for example, promoted its new Scion to young buyers by hiring digital design company, Millions of Us, to create Scion City in the virtual world, Second Life. Scion City is a futuristic urban island within the Second Life world that has a Toyota dealership that sells the Scion cars. Second Life avatars (your virtual self) can test-drive the virtual cars on a racetrack and also log into kiosks in Scion City and buy a Scion for 300 Linden dollars, or a real one-dollar bill. Then they can customize it with real-world and fantasy accessories.

Training and Education

Businesses and other organizations are even turning to advergaming (or in this case edugaming) for new and fun ways to train employees, educate the public, or even campaign for public office. A recent article in "The Economist" explains how companies like IBM and Nokia are using games to test workers' knowledge of rules and regulations. The governor of Massachusetts has an online game that lets citizens have their turn at balancing the budget.

Cost Sharing

Another benefit of adding commercials to video games is the same benefit we experienced with television -- at least prior to cable. When advertisers get to promote their products, players can often get to play for free. The proliferation of free online game sites couldn'’t exist if someone (advertisers) wasn't footing the bill.

If you’'re selling a product and have been relying on traditional advertising vehicles to make sales, you may have noticed that some things that used to work just aren'’t producing the leads and/or revenue they used to. Take, for example, banner ads on Web sites. While they may have been effective in the beginning, many Web users simply ignore them now. The effectiveness of pop-ups is also taking a hit with the advent of pop-up blockers and folks that are quick with the “close window” button. Even with traditional TV advertising, the viewer is usually multitasking during the commercial break — such as reading a magazine or getting a snack. DVR owners can start watching a show 15 minutes after it starts so they can skip the commercials.

Depending on the type of advergame (online vs CD-based), how effective the campaign is can be difficult to track—but not always. The sale of more than 1,000 Jeep Wrangler Rubicons has been attributed to Jeep’s 2001 online advergame “EVO.” The Army’'s advergame, “America’'s Army,” (sold commercially) is said to be the most effective recruiting tool they have ever used.

Like banner ads, tracking how often a game is played is simply a case of gathering the numbers. But sometimes that doesn'’t give advertisers enough information. What’'s become very attractive about some types of advergames (primarily custom games) is that now advertisers can actually track effectiveness throughout the game’s campaign and tweak aspects throughout the runtime to gain the best response.

The tracking tools (only available from certain developers) allow marketers to record user behavior within the game. For example, Pepsi developed an interactive microsite with an online contest and found that 78 percent of site visitors joined the contest, and each visitor returned an average of four times. By having access to instant results, Pepsi could tweak the campaign throughout its run. For example, the site offered downloads, and because music videos were favored four-to-one, more were added, and daily user stats grew by 100 percent.

General Motors also had an interactive campaign that challenged users to design a custom car and then race it. They could also enter their car in a car show and invite friends to participate by voting on their favorite car designs (or creating their own car).

GM tracked design preferences such as models, colors and tires and also discovered the importance of integrating viral components into the site. They found that 80 percent of users were brought to the site by responding to e-mail postcards from friends challenging them to score higher. A whopping 90 percent of all viral game challenges were accepted; 98 percent of the users who designed cars entered them into the "Hut or Nut" car show; and 28.8 percent were 40 or older. GM was able to track preferences for each demographic.

­ While advergames can be hugely successful, they sometimes come at a high cost. Large game developers may charge as much as $500,000 for a game. Many smaller developers, however, may charge in the neighborhood of $10,000 to $100,000, depending on the level of customization and whether or not the game is based on an existing game.

Games developed at the lower end of the cost spectrum may be traditional games that are simply customized with a client’'s product or message. For example, a game like Frogger might have chickens crossing the highway rather than frogs to promote a chicken brand. Or games similar to Tetris might have colored candies falling rather than the traditional block shapes.

Development time also varies greatly based on both the complexity and customization level of the game. A completely customized game that requires a unique and complex storyline can take 12 to 18 months to develop, while the simpler advergames can be completed in only a few months, depending on the developer.

One of the keys to developing an effective advergame is to select developers based on their experience within the product area as well as the type of game environment that needs to be created. In fact, having both a team of game developers and a team of advertisers working on the advergame can help ensure that you end up with a game that is not only compelling and entertaining to play but also very effectively incorporates your product and advertising message -- and that these two elements are appropriately reaching the target market for your product.

Selecting game developers that have no advertising experience might result in a game that is highly entertaining but doesn’'t get the advertising message across (and doesn'’t result in a significant increase in sales). By the same token, having your game developed by an ad firm with little gaming experience, can result in a game that is too heavily focused on the product and, as a result, isn't as entertaining and will ultimately not be as successful -- particularly with viral marketing.

Once you have selected the development team and they’'ve completed the game, distribution can be a minimal cost in the online world. Adding the game to your existing Web site will not only help increase traffic to your site and encourage longer visits, it also provides a very low-cost vehicle for distribution. Increases in bandwidth charges, and potential back-end upgrades for your Web site may be your only expenses.

If the game will be distributed via CD or DVD, as in a cereal box promotion, your distribution costs will be higher.

On the next page, see where advergaming could be going in the future.

­ Predictions for the future of advergaming are scattered. The Yankee Group, a Boston-based business technology consulting group, predicts that advergaming and in-game ads will be a $260 million market by 2008. Market researcher David Cole at DFC Intelligence expects revenue from online-game advertising to rise from $120 million in 2004 to $500 million in 2009.

The impressive growth of advergaming shows no signs of slowing down as more companies are discovering its effectiveness at creating brand awareness and achieving their product goals. Even business-to-business companies are getting in on advergames to reach their clients and gain footing in new and competitive markets.

Second Life is a virtual world where you recreate yourself in any form you want (your avatar) and roam around doing much of what we do here in our real lives. American Apparel even opened a store there where Second Life citizens can buy virtual clothes with virtual money.

This money, called Linden Dollars, can both be purchased with real dollars (with an exchange rate of around $268 LD to $1 US as of January 2007) or your avatar can earn it. Yes, get a job in this virtual world and earn your keep. According to Fortune magazine's David Kirkpatrick, Second Life creator Linden Lab reported that in December 2006, "17,000 [Second Life] residents had positive cash flow in Linden dollars, with about 450 generating monthly income in excess of $1,000" in U.S. dollars.

It goes far beyond clothing for your avatar, however. In Second Life you can buy virtual land, build virtual houses, create virtual art, go to virtual parties, and anything else you can imagine. So, naturally, it’'s the next logical step for advergaming. In fact, there are already games you can play within this “game.” The next step for product sales is to have the ability to shop in Second Life stores, buying merchandise with Linden dollars and have the product arrive at your doorstep in the real world.

Second Life is also being marketed for business and education for collaboration, training, distance learning, new media studies, market research and even marketing new products. They suggest holding virtual meetings with staff located around the world. On the Second Life Web site, they even recommend that companies building their own world (like Scion City) where Second Life citizens can interact with products, enabling the company to test new designs before going to production in the real world. Second Life can also accommodate events to promote products, like concerts, classes, parties or contests. Not only that, virtual products can actually be sold in Second Life. As they say with Second Life, "you are only limited by your imagination."

Sony announced recently its plans for the new PlayStation Home at the Game Developers Conference (GDC) in San Francisco. Expected to launch in the fall of 2007, PlayStation Home is a 3D-avatar-based communication, community and commerce online site. Like Second Life, players can dress, house, decorate and socialize within the game. Also like Second Life, the in-game advertising is rampant throughout. Home users can fill their apartments with all kinds of electronics -- all with the Sony brand. All public spaces and lobbies in Home will have large, dynamic video monitors, banners and billboards advertising various products. Home areas can also be branded by any company willing to pay for their logo. For example, one home area had numerous EA Sports games. Avatars could hit balls on the branded "driving range," shoot hoops with layered with basketball game logos, or beat up on a boxing-game-themed foam dummy.

For lots more information about advergaming and related topics, check out the links on the following page.