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April 16, 2008

Gamer Nation: Exploring Advertising Effectiveness in the Gaming Ecosystem

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Two sessions left. Seated in front of me are moderator Mark Friedler and panelists Chuck Frizelle (Xbox New Media), Dave Williams (AddictingGames/Shockwave-MTVN), Adam Naide (Gametap/Turner), Jim Nichols (Catalyst San Francisco) and Julie Shumacher (DoubleFusion). I hope we get to play the games they’re going to be talking about. More demo, less typing please!

Mark welcomes us to the panel. Thanks, Mark.

We’ve come a long way since the 90s when it was arcade games and console games. (Is he talking about the 90s or the 80s. I remember having proper games.)

He just called The Sims “not a game”. Um, Mark? Oh, and now he says that sales of it were driven mostly by young girls. Ebay is an online strategy game in his mind. Hee.

He’s going to toss out some statistics very quickly. I’m going to skip it because he’s spending like half a second on each very dense slide. We take a little quiz on how often we game. I? Am a geek. Hush, Lisa. [I said nothing. – Lisa]

Why is the gaming audience valuable to advertisers?

Dave: Games have gone from being a product to being a part of culture. It defines kids much in the way music does. It’s important to understand that they’ve transcended being a product. They’ve crossed out of the 20-something male demographic as well. You can treat it like any other media in terms of segmenting it.

Julie: Games were really the first digital community. Games are always about community. You played your Sega Dreamcast [Am I the only one who just yelled SEGA? – Lisa] with your friends. You had LAN parties at work…after hours (Hee). We’re just now helping marketers leverage those communities. 37% of gamers consider that the most significant form of social interaction in their world.

Jim: Engagement is at the core of gaming.

Chuck: Why are gamers the medium? It’s a mainstream media. 75-85% of people game today. Everyone’s a gamer these days. Who are those 15% that aren’t gaming? [Hi. My name is Lisa and I am not a gamer. – Lisa] They’re probably not on the Internet. [What? – Lisa] If you’re trying to reach them, what are you doing in media buys anyway?

Mark: How are audiences responding to paid vs free models?

Adam: We started as a paid subscription service. We moved to an ad supported model about a year ago. There are a core group of people out there who are willing to pay for premium content but scale-wise, offering ones that are a little older 6 to 9 months, that’s a good reach. They find that people playing the free games are also gaming elsewhere, on console, on PC, on WoW.

Chuck: There is a place for everyone to pay. Xbox live is an entertainment vessel. What happens if you give away a free movie? The consumers loved it. The chatter was very positive, which is surprising from gamers who are usually critical. [hee again.] They haven’t had any real negative backlash to their advertising.

Julie: It’s really about gamer currency. I think advertisers sat on the sidelines for a long time because they didn’t know if they belonged there. We try to put the lens on ad deals that says are you part of the gamer’s currency? We launched four ad-supported Ubisoft games host by McDonalds and we had a huge response.

Mark says that Julie’s brought in more money single-handedly to the industry than anyone else back when she was at EA. She goes over a deal they cut with T-Mobile and some basketball game tournament.

Dave: There’s a shift. Console games are integrating online games now and it’s interesting to see where it’s going.

Mark: What is the consumer response to advertising in this instance? How much is too much? What’s over the line?

Dave: From an online perspective, a couple years ago games around the brand were very popular. Recently what we’ve been doing is integrating brands into already popular games instead. They used imagery, added functionality that was related to the brand.

Adam: Users are willing to deal with a 15-20 second pre-roll and some adjacent advertising. The difference is that they’re offering games that are full, previously released games and so people are willing to sit through an ad for the opportunity to play Tomb Raider for example.

Julie: There is definitely a too far. We did the Burger King deal in fight night and that was too far. You have to have that lens of currency and why are you there. 40% of gamers strongly agree they’ll watch an ad for free content. Why is the advertiser there? How much did the consumer pay? In terms of what Turner’s doing, these are $60 games that you’re getting for the price of watching an ad.

Jim: The casual gaming industry has done a good job of making it obvious that the game has value. It’s amazing that on the core gamer side, these are the toughest critics on the web and they’re not really complaining that much.

Julie: City of Heroes: They’re communicating with their users first, and offering an opt-in. and the response was ‘sure but what do I get out of it?’

Dave: Even if they don’t like the advertising they agree it needs to be there so their free games don’t go away.

Adam: The ones who are playing for free aren’t playing quite as long or as frequently.

Chuck: We need to make sure a user experience metric is part of our strategy. I think we’ve done a good job of pushing it back on the agency to ask ‘what would I want as a gamer myself?’

Mark: Are there any new innovations in the console market that you’re seeing? What is the number of the console market in terms of revenue?

Chuck: I should have them but I can’t divulge. Not an innovation but an advancement. In December, we integrated ad expert onto Xbox live. Those banners and things on Xbox live are all on Ad Expert. On micro-transactions, it’s that there are all sort of things that Dad wants, then Mom wants something else, and the kids want everything labeled Halo…

Julie: It’s about more than the console. It’s about the game, it’s about the engagement. It’s a disservice to the industry to have to buy one game on multiple platforms. The next big shift is the Wii. If I sell 50% of my revenue on Xbox, then 30% is going to be on Wii because mothers are in the living rooms and they’re connecting to their DS. It’s about taking your gaming experience 360 and thus the marketing goes 360 as well. You can be a part after the release down with those downloads.

Mark: What’s makes a game execution exciting?

Jim: You’re fighting for dollars with a buyer who is buying a wide range of properties. The idea that the person is going to have time to learn the top 80 titles is unrealistic. So you need to give them the opportunity to buy a demo. They want flexibility. Speed to market with the download stuff is much much better now too. They can buy by ESRB level now too.

Mark directs the conversation toward how do you introduce buyer to these new platforms.

Adam: It’s the same sales team that’s selling Adult Swim and Cartoon Network and yeah, they’re going to sell Gametap too.

Dave: We’re absolutely selling across platform. If we’re selling one thing, we’re selling all the way across.

Julie: They did something with ADIDAS that promoted different aspects of shoes in a game and promoted it in other games and culminated all of it in a tournament in Spain. It had product placement and targeting and a live event so it was covering everything.

Mark brings up virtual worlds like Gaia Online. Where do the gaming world and the virtual world meet?

Julie: It is the place where Web is meeting games. Virtual worlds might be the fastest path for marketers getting into games because it’s an easy enter.

Dave: Neopets, average time onsite is 2 hours 40 minutes. [Good heavens! – Lisa] It’s about socialization and it gives them a shared experience.

How do you measure the effectiveness of in-game advertising without the possibility of clickthrough?

Julie: Most of the ads are clickable except on a console. I’m hopeful they’ll look at it differently because the engagement is different. The rest is based on CPM. It’s also share of voice.

Adam: We can provide impression as well as clickthroughs.

Chuck: we have panels, we work with Nielsen. It’s really impressive the response.

Chuck asks the audience how many people have been to this sort of panel before. It’s about half. He’s excited by that and plugs the industry as being really exciting and growing and awesome.

We’re about done. They’re talking about Facebook as an exciting place for games. Dave says they’re investing heavily in that.

Key Takeaway: Engagement. You need to define the engagement. Learn which sites you should be placing your money on. [Really, though, isn’t “engagement” the answer for everything these days? – Lisa]

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