Advertisers will be offered another channel to target consumers, with this week’s video games industry event, E3, showcasing a new media network that may eventually challenge television advertising expenditure.
A new generation of advertising is being developed that exploits the growing networks of online gamers, providing a number of multi media forms that can be incorporated into computer games, offering advertisers a interactive form of product placement.
Israeli firm, Double Fusion, will announce at E3 the first roll out of this new technology, explaining how the rich-media formats of music, animation and video within games can benefit advertisers.
The company explains: “A character can pick up a can of coke in a game that is being played at 2pm. In the same scene when the game is being played at 5pm, the character might then be picking up a bottle of Budweiser, depending on which advertiser had bought particular times.”
Advertisers will be able to place products and advertisements in a game in specific geographic locations, so different drinks could be served in New York and London, for example.
Initially the target audience for these new services is serious gamers, exploiting their broadband connections to play online versions of their favourite games.
Continental Research’s Spring 2005 Internet Report showed that out of the 6.6 million UK homes connected to the internet via broadband, 24% played computer games online (see Multi-Use Of Broadband By Consumers).
The rise of this new technology is predicted to impact on television advertising revenues, with Darren Herman, chief commercial officer of IGA Partners in North America, claiming that television’s core audiences are falling off, with people spending more time on games.
Herman said: “Over 70% of the core 18-34 male demographic are gamers, they spend 30 billion eyeball hours playing games but only 0.07% of adspend is targeted there.”
According to Mitchell Davis, chief executive of the largest of the new ad networks, Massive, the ad rates set for the new medium will be very comparable to cable TV rates. He said: “This industry has all of a sudden crystallised and taken off, broadcast advertising dollars are moving out of TV and into game advertising.”
Research firm, the Yankee Group, predicts the new market to increase will $92 million in 2007, up from just $10 million in 2003. Although this is a high rate it is still well below television’s budget. Michael Goodman, a game analyst with the Yankee Group added: “From 2008, we should see more dynamic growth, with the biggest driver being the growth of connected devices.”
A recent report from Forrester Research shows marketers to be quickly losing confidence in the effectiveness of traditional advertising channels, with 53% predicting television advertising to become less effective over the following years, losing out to the online medium (see US Online Ad and Marketing Spend To Reach $14.7 Billion in 2005).
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