Let the Games Begin: Online games becoming a winning play for advertisers

Internet.com (June 6, 2001)

When kids log on to the games page of Nick.com, the web site of the Nickelodeon television network, one of the first things they are likely to encounter is banner ad that reads: “You’re a player? Choose a game.”

Their choices include the Honeycomb Craver Course, Lunchables Scooter Challenge, Climb Mt. Mac & Cheese, and KOOL-AID Wakeboarding.

A click of the mouse takes them not to Nick.com’s games page, but to a site run by — you guessed it, Kraft Food.

The banner is a byproduct of the new emphasis among consumer marketers on branded online games as a tool to raise product awareness (see Turboads, May 23, 2001).

After all, just because you build a game — which can cost upwards of $100,000 — it doesn’t mean they will come. Internet content sites have enough trouble harnessing visitors, imagine the challenge of an overtly product-oriented site.

Which is why, along with those banners and Interstitials driving gamers to advertiser-hosted sites, Nick.com also offers an entire section of its own site devoted to advertising-oriented games, which it calls “advertoys.”

“It is being actively sold as an integrated opportunity on the site,” says Stacy Nathan, vice president of advertising sales for Nick.com. “We made an area on the site that was clearly different. When kids come in, they know they’re coming to an advertising area.”

Even Nathan adds, though, that when it comes to advertising and editorial, “I will admit that on the Web, things are blurred.”

It’s a confession not likely to drive away too many advertisers.

It’s all part of the game

But driving traffic to branded games isn’t the only use being found for online games sites. Far from it. RealArcade, the games hub recently launched by RealNetworks sees advertising as one of its primary revenue streams.

“For advertisers, gaming provides a highly desirable demographic,” according to Michael Diranko, an advertising manager with RealArcade. “People that are engaged in this tend to be on the site longer and more actively engaged. The ability to integrate your brand or message is an outstanding opportunity that might not be available in other environments.”

And we’re not just talking banners here. RealArcade is exploiting every available moment to expose its advertisers: In an “info-window” as the games are being downloaded, in “branded messages” that appear during the game, and in email newsletters after they log off.

“It’s the same idea as a product placement in a movie,” adds Tony Learner, RealArcade’s product manager. “While the customer is experiencing the entertainment, they are being shown contextual branding messages.”

Such advertising is nothing new to most hardcore gamers.

“Until very recently, all of the online gaming media have been advertising supported,” says Brian Clair, publisher of the Adrenaline Vault, a site devoted to reporting about online gaming. “Interestingly, none of that makes money for the gaming sites, or not very much [because] most of them are bad businesspeople.”

More bang for your buck?

“Advertising is also very much a part of the online rental opportunity,” explains Steig Westerberg, CEO of Streamtheory, a company that handles the technical side of streaming games to users. “It gives our rental partners the opportunity to upsell additional products or sell products coming in the future.”

Traditional advertisers have included movie companies, game producers and others interested in the particular demographic of hardcore gamers.

Westerberg, whose company streams ads while the game is buffering, uses the example of Quake III, a hugely popular “deathmatch-style” game that advertises itself as, “The final word in online multiplayer mayhem.”

“On Quake III, you could have advertising for a similar title or an ad for a gun — something that would be specifically tied to that title,” he explains.

According to a Forrester Research study, three quarters of the $1 billion expected to be spend on games-related advertising in 2005 will come from in-game product placements, in which game sites weave products into the fabric of their offerings.

“It’s a switch from publishers asking advertisers if they can use the products to make the game more realistic to advertisers paying for product placement in a much more active sense than in movies,” says Bill Pidgeon of Jupiter Media Matrix. “And it will be much more effective than the movies.”

In fact, Forrester analyst Jeremy Schwartz goes so far as to predict that TV shows will eventually become loss leaders that drive games.

But can they ever replace “I Love Lucy?”

“Games will overshadow their TV show ‘parents’ as TV networks produce programs whose sole purpose is to divert viewers to a revenue-producing game,” according to a study produced by Schwartz. “Product placement and commerce revenues derived from playing the game will make up for consumers’ growing ad-skipping behaviour.”

Others doubt that such a paradigm-shifting change is on the cards, but few question the basic premise that games are fast becoming a critical piece in the online branding puzzle.

“A lot of companies are beginning to recognize the appeal and power of gaming as a medium,” says Jane Chen, co-author of a study on gaming released by KPE Interactive. “And whether they choose to do an advergaming approach, product placement or advertising, gaming will be a powerful force.”

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