Introduction

The first Advertising in Games West conference was held on Thursday, July 28th at 600 Townsend Street, near the Sega building in San Francisco, and consisted of six panels, a keynote, two breaks, and a lunch, all on the subject of how to intelligently twine the worlds of game development and consumer advertising. Each of the first four panels contained more or less the same points and information; the last two, which dealt with the design and publishing ends of the argument, were a little more varied and informative.

Market Overview

After a brief introduction from Game Initiative director and conference organizer Steve Farrer, United Talent Agency's Jonathan Epstein began the Market Overview panel by establishing the day's themes: that there are some superficial parallels between videogame advertising today and Internet advertising a decade ago; that one key argument for a shift to in-game ads is that the key advertising demographic of males aged 18-34 has been watching less and less TV over the past few years, while overall demographics for videogames keep inflating; that both casual gamers and wireless gamers are primed to override "hardcore" and "mainstream" gamers; that women constitute the largest demographic of online gamers; that there are a number of different approaches to advertising, all of which need to seamlessly fit the game in question; that not a lot of games really lend themselves to in-game ads; and that substantial market differences exist by region (New York prefers Ninja Gaiden and Metal Gear , while Los Angeles likes World Of Warcraft and Doom 3; they both like Resident Evil 4 about the same).

	A Sprite ad running in Anarchy Online.

Anita Frazier from the NPD Group followed with the expected numerical results, explaining the split in system install base (about equal for PlayStation 2 and Game Boy Advance, with Xbox, Gamecube, and the new handhelds trickling down from there) and pointing out how many game-compatible cell phones are rattling around today; that sales don't always match the install base (1/3 are for the PS2, the rest roughly split amongst PC, GBA, Xbox, and Gamecube); that PC software is becoming less and less relevant strictly from a sales tracking perspective; and that game sales spike ridiculously around Christmas and otherwise remain largely flat throughout the year.

She then offered a few pop quizzes on how many games had ever breached a million in sales (228), and on what the top games of the last year had been. She explained what the popular genres were last year, those being shooters, action, sports, FPS, RPG, and racing. She pointed out that it's "still a man's world" when the GBA has an unusually high female install base at 32%; that (for whatever reason), the South is the biggest market for games overall; and that most game sales go to middle-class households, with the demographics leveling out both above and below a certain income threshold.

Yankee Group representative Michael Goodman rounded off the panel by explaining that, although companies like Proctor & Gamble are starting to scout out videogame marketing, they have a lot of misconceptions about the market; he intended to counter that by emphasizing the diversity of gamers and illustrating the potential of game advertising compared to marketing in other media. Goodman established four different sub-demographics of gamers, each with its own dynamics - those being the console, handheld, PC, and mobile sectors. He showed that, strictly in terms of audience time spent on each medium, newspaper marketing is perhaps vastly overrepresented while radio is perhaps undermarketed; videogames, meanwhile, are barely represented at all. He explained the efficiency of advergaming, using as an example a game based on Radio Shack's "Zip Zaps" toy car line, which cost less than a single TV ad for several iterations of the game, and resulted in a fifty-percent purchase rate for those who played the game; likewise, over a quarter of all buyers cited the game as a significant influence on their purchasing decisions. Goodman also pointed out that different publishers have different strengths and tendencies: out of the three biggest supporters of in-game ads, Activision is the biggest in dynamic ads; Ubisoft strongly prefers product placement; while EA has slightly unusual takes on the issue.

A Massive Keynote

The keynote from Davis, an extremely effusive Australian, was the flashiest and most energetic presentation of the conference; reiterating Epstein's point, Goodman explained that over thirty years, prime-time TV viewers have steadily gone down from 53 to 30 million (particularly after the mid-'90s). He showed a picture of a couple of repugnant-looking twenty-something males sitting on a couch, and said "this is your audience". He then went on to establish his "four 'C's" that define the videogame industry, each depicted as one quarter of a big jigsaw puzzle: Content, Community, Cost, and Commerce. He showed some statistics projecting that videogame marketing would blossom from $118 million last year to $1.05 billion five years from now, claiming a "broad consensus" and citing Harris Nesbitt as his source.

To explain this, Davis made a parallel between videogame ads and cable TV ads, which as of 1995 spiked from $5 million after a decade of slow and steady growth to about $23 million today. He provided no explanation for the sudden spike in cable ad revenue in the mid-'90s, though suggested a similar spike is coming for videogames. The reason he cited is that although the key demographic - 17-to-34 males - is increasingly difficult to reach through other media, it is spending more time than ever with videogames, and are far more engaged with videogames than with other media, meaning they are far more likely to notice and remember ads in their personal gamespace.

Davis then hit the major thumping point of the day: that whatever the ads, they must not interfere with the player's experience. If possible, they should fundamentally enhance the game world or the gameplay in some way. At worst, they should not detract. Beyond not offending gamers, the other two points are that advertisers must not oversaturate and must not affect the game on a technical level. He said that Massive's software is easy to integrate and uses almost no memory footprint.

The idea behind Massive is in selling in-game ads in much the same way that blocks of advertising are reserved for TV. Massive's team spends a good deal of effort in matching the ads to the gameworld, both thematically and in terms of texture, lighting, color choice, and other atmospheric concerns. The typical Massive ad might be a lit Sprite logo on a soda machine (that can be blown up, as with any other in-game element); on later plays, the logo might change to a Dr. Pepper or a Jolt one. Davis claimed that most gamers embraced the idea of ads like this, as they would enhance the "reality" of the gameworld. That's another major argument of the day: that we see ads everywhere in life, so if anything it's actually distracting not to see them in videogames. Davis showed some statistics to prove that about 93% of gamers surveyed (though under what conditions he did not specify) had a positive response. It would actually be more accurate, going by those figures, to say that 30% were enthusiastic while the majority, at 43%, were merely apathetic about seeing a Sprite machine in their first-person shooters.

Davis showed a bunch of publishers who had signed on to Massive, and showed the different kinds of ads Massive would run (general branding; time-critical ads like upcoming movie premieres; and research-based ads, intended to gauge user response). As an example, he used the Adam Sandler vehicle The Longest Yard, asking who in the audience had seen it. (Not a single hand went up; Davis laughed, emptily.) He said that Massive had trailed the movie heavily, and that (at $60 million) it had wound up with the largest box office weekend ever for a sports movie. He then cited recent Intel ads, and a 90% user approval rate, where 80% said that the ads enhanced the game's realism. Massive can measure player response by how long the player hovers by an ad, how much of the screen real estate it takes up, and at what angle the player is viewing it. When Massive showed some flashy Intel trailers, Anarchy Online players crowded around the viewscreens out of curiosity. Davis took this as a sign of success.

From ROI To Advergaming

The next several panels were relatively uneventful. In the Campaign Tracking and ROI (Return On Investment) segment, Mike Vorhaus of Frank N. Magid Associates again hit on the idea that there is no one "gamer" demographic. He and other panelists cautioned against rampant optimism, emphasizing that despite the impression one might get, software like Massive's can't measure everything. The topic of DVR (digital video recording) came up, and that in other media and in life in general, people are constantly going out of their way to avoid ads. It was actually kind of hard to keep the panel on-topic, as audience members kept wanting to discuss their experiences in ad avoidance, wondering how this factored into in-game ads. No one had an answer - though the general consensus was that ads in general are almost universally irritating.

The Advergaming panel was, arguably, a little bizarre. Bill Clifford of WildTangent went off on... a wild tangent about his company's game Mojo Master, asking who had heard of it. A few hands went up, none of which belonged to this writer. An Internet search brings up the following description: "Countless hours have been logged observing social encounters, attempting to better understand the female species, and determining what makes a playa a playa. These laborious studies have given birth to seduction theories that have been applied to a virtual construct, a game that lets you let loose in a fantasy world populated by 100 totally hot 3D girls." Okay then. Clifford beamed that the game, which advertises Axe deodorant, was reviewed in magazines like Maxim on the same level as Playboy: The Mansion, and taken just as seriously.

	Mojo Master brought to you by Axe Unlimited, developed by WildTangent.

On the other end of the scale, Dan Ferguson of BlockDot later said "We don't build games for hardcore gamers; we build games for humans." He also talked about how his games were "a brand experience" -- "but [they] play like game[s] !"; and how when he plays a game, he is "willing to put up with" a few ads if it means saving money. On this note, all the panelists agreed that as soon as someone pays for a game, ads should go off. There's no reason to advertise in a game that someone paid good money for; ads are meant to support free content. One panelist described the Anarchy Online billboard behavior as "rubbernecking". On advergaming itself, the general consensus was that although it's nice to incorporate a product into a design in a meaningful way, the priority is in making a good game, which in most cases means superficially icing an unrelated game with the brand in question.

Publishers, Developers Weigh In

Josh Lawson of GameSpot ("the ESPN of games; our business is advertising around games, though obviously we have a keen eye for advertising in games") moderated the final two panels of the day. Mark Long of Seattle-based Zombie Studios lamented that he wished there were a way to show brand owners how much fun it is to "fuck with" their brand - to blow up their cars or use their products in non-constructive ways; instead, brand owners look on in horror. They have no sense of humor about the situation, and no understanding of what it means to play a videogame.

A representative from Konami gave an anecdote about one team member, a vegan, who left a project after learning what kinds of ads Konami intended to run in the Xbox version of the game. A woman from Activision described the circumstances where ads might be appropriate; she concluded that the best place will naturally be in games that strive for some kind of photo-realism, and only in a context that makes sense. "If it's set in Times Square, then fine." She pointed out again that "people are paying for this product." She also described a game she worked on recently, based on one of the Shrek movies; asked to incorporate a license from a national pizza chain, her team developed a whole extra level that involved collecting pizza. The idea was that players could find a code to access the level whenever they ordered pizza from this establishment. Although this takes a lot of forethought, she saw it has having a little more integrity to the product in question and to inherently add more to the game, for the player's benefit. In contrast, the advantage of online ads is shorter or virtually no lead time on the ads themselves (as long as the infrastructure and design is in place).

"How will we know when advertising has gone overboard?" Lawson asked the panel. "What will be the indicators that the experience has been adversely affected?" The answers ranged from when reviews see fit to comment on them, to when the developers feel their creative vision is being threatened, to when gamers rebel. "Gamers are very savvy," one panelist said. "They understand when they're being bombarded with marketing." The panel then went on to discuss how "finicky" gamers are; that they will "turn on you on the drop of a dime", and never forget your perceived transgressions. So the lesson is never do anything to piss them off. "No Coke on the loading screens", for instance. Stay away from loading screens, period. The Konami representative described how in the newest Karaoke Revolution, his team chose to mix the real ads in with a bunch of fake ones, to keep them from becoming too distracting.

About pleasing the sponsors, the advice was just to make sure everyone understands the expectations from the start. If a car maker doesn't want its vehicles damaged at all, then maybe that's a problem. About Massive's massively positive survey data, the publishers all grunted and advised to "take it with a grain of salt", pointing out that there is no real litmus test and that although the response is 90% not-negative, half of that is merely neutral and anyway, this is only a study of PC gamers.

Other odds and ends include discussion of the Lego Star Wars game (described as a commercial advergame), the America's Army game and the frightening number of statistics the Army records from the game's players, and how one of the panelists would love to produce a Pepsi Half-Life mod, and wondered why no one was doing this kind of thing yet, as it seemed a viable market. Someone also pointed out that when selecting games to advertise in, companies don't care so much about developers or publishers as about what has sold well in the past. If it's a sequel to a popular game, it's a potential target.

The publisher panel was similar, though (understandably) a bit different in tone. When asked how the GTA: San Andreas Hot Coffee mod had affected game publishing and the immediate climate for ad placement, all of the panelists shrugged it off. Julie Shumaker of EA said that the main issue is just to know your product, as advertisers. You have to ask yourself: "Can you chop off someone's leg and hit him over the head with it? Do you want to be a part of that?" She later explained that as far as EA was concerned, advertising was not a way to offset development costs. EA isn't in the business of offsetting costs; EA is in the business of increasing revenue. And as far as she was concerned, in-game marketing isn't close to "real" yet. "A $30 million business is not a real business in 2005."

The panel spoke of potential conflicts between licensees, citing the upcoming game based on 50 Cent, and 50's personal sponsorship deal with Reebok; that license will affect every other potential advertiser for the game. Likewise, the only advertisers allowed in an EA Sports game are sponsors and partners of the league in question (NFL, say). Shumaker referred to videogames as "a hit-driven industry", and said that as a result, ads will be important in the future, to help make up the difference when a game doesn't hit as it's supposed to.

Someone in the audience asked if the panel foresaw genres and content adapting in the future, to better facilitate advertising - whether some genres, like fantasy, that don't support ads very easily, will begin to disappear. The answer: "No." After some prodding, they elaborated that the consumer's payment structure might change, depending on cost. Shumaker cited a recent add-on for one of the Madden games; EA allowed people to go to the left and pay $20.00 for the extra content, or go to the right and sign up for a year of ads from Chrysler. Almost everyone went to the right.

On the question of when ads have gone too far, a panelist cited a recent game where a screen that the player had to consult frequently had a certain branding on it; although they thought it was relatively minor, they got a lot of complaints from users, probably as a result of frequency. On the other end of the scale, Shumaker cited a recent SSX game that included a Honda Element car. All Honda really wanted was for the car to be presented as a prize in one of the races; the designers, though, thought it would be fun to incorporate it into the game and allow the player to do tricks with it. She thought this was completely over the top; it turned out that players loved it, though, because it gave them something else fun to do with the game.

Conclusion

In general, the Advertising in Games West conference was down-to-earth and surprisingly innocuous compared to the 'horror stories' sometimes trumpeted about the negative thrust of ads into games. Most of the presenters seemed aware of the dangers of advertising in an intimate space, and had a good grasp of the absolute limitations of in-game marketing.

The speakers were largely sincere in their desire, and oddly unified in their ideas about how to approach the issue of in-game advertising - to the point where after a couple of hours, it seemed like the entire conference would consist of the same three or four points repeated interminably. Then again, that is the nature of advertising.

The only real unanswered question is what future there can be for marketing in an unusually personal space, patently not designed with marketing in mind. The growth statistics cited are tenuous, as are advance audience studies - especially given the general consensus at how darned annoying ads are. It seems like there's a lot of research to do before this field can make much progress.

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