June 18th, 2007

Beyond in-Game Ads: Nissan Takes Growing Market to Different Level

By Laurie Sullivan
Advertising Age

Gamers Rewarded With Add-ons and Accoutrements While Marketers Gain Entry to Titles That Might Not Be a Natural Fit

When gamers head to Best Buy, GameStop or Circuit City, this summer to shell out $60 for the “Forza Motorsport 2” Xbox game, they’ll have the opportunity to get a little something extra, compliments of Nissan USA. Starting next month, the automaker is sponsoring free add-ons for the game—players can download a Nissan Sentra SE-R and participate in a high-performance race that will take place on Xbox Live in August.

It’s the latest trend in a burgeoning in-video-game advertising market: Don’t just put ads in the game; instead, reward gamers with extra levels, aftermarket add-ons and accoutrements, which drive not just awareness but affinity among a hard-to-reach, often fleeting demo.

Aftermarket game levels and game pieces, such as Cadillacs or Nike running shoes, could end up generating significant returns on investment because game developers create these extras with relatively small development teams. They also give marketers an entrance into games that might not have natural commercial placement opportunities, such as violent war or futuristic sci-fi titles.

The difference

“People are a bit too optimistic about revenue benefits from in-game ads, but add-ons are different,” IDC analyst Billy Pidgeon said. “They’re a great profit generator because development costs are relatively low. You’ve already developed your assets, and now you’re charging advertisers for the extra levels and pieces.” He said publishing additional levels after a game goes to market could cost as little as $2,000.

Research firm eMarketer estimates worldwide spending on video-game-related advertising will reach $1.9 billion in 2011, up from $692 million in 2006. That accounts for static and dynamic in-game ads, product placement and advergames, which are intended to promote products and brands.

The best—and first—example of extra-level marketing is an ambitious sponsorship of the shooter game “Gears of War” for the Xbox 360, which launched in November 2006. In January, Microsoft published two new maps sponsored by Discovery Channel, which was promoting its “Future Weapons” program. For gamers, it was a way to extend the play of the wildly popular game gratis. For Discovery, the venture helped boost its profile among the gamer demo: Posts on message boards and blogs overtly thanked the network for the extra levels, with some even adding they’d tune in because of it. (One zealous post on Xbox-enthusiast site Major Nelson: “A big thanks to The Discovery Channel for the free content! Just a few questions to the ‘Future Weapons’ guys: When are we going to see guns with chainsaws?")

“It was like gamer quid pro quo,” said Craig Daitch, VP-director of interactive strategy for PHD, which executed the deal for Discovery. “It’s not just an impression but experiential.”

Big boost

Nearly 3 million gamers in the first three months downloaded both maps that grant access to previously unreleased levels, an unexpected perk for the 4 million who bought “Gears of War.” Microsoft’s in-game advertising arm, Massive, managed the campaign. “The show continued to grow viewer share,” said Cory Van Arsdale, CEO at Massive, which has deals in place to insert ads in 90 titles this year, including Activision, UbiSoft Entertainment and Vivendi Universal. “There was a huge jump in 13- to 17-year-olds who watched.”

Kevin Browne, general manager for Xbox new media, said consumers can expect Microsoft to release between 60 and 70 aftermarket add-ons in 2007, which accounts for about one-third of the company’s projected ad-sales strategy this year.

“The internet and massive multiplayer online games are fertile ground for free ad-supported video games and downloadable content like skateboards and cars or additional playing levels in the game,” said Brandon Berger, director of digital innovation at consulting firm MDC Partners. “The trend we’re seeing extends the life of a game from one into a series.”

Indeed, letting gamers download new levels and pieces for free helps keep consumers buzzing about brands long after games hit retail shelves and websites. On the flip side, game makers are buoyed by the uptake of such extra offerings and are also weighing what they could charge gamers for those bonus levels and add-ons. What’s worth more—the ad revenue or the potential to reap e-commerce sales?


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