Spot On: Advertising in Games

Declining television ratings are prompting advertisers to reach the coveted young male demographic through games.

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Last week, many-a-television executive choked on his or her latte when reading the first ratings for the fall season. According to Nielsen Media Research, the primary TV ratings company, viewership among males aged 18 to 34 was down seven percent from a year ago. Among males 18 to 24, the drop was even steeper at a whopping 20 percent.

Where have all the young male viewers gone? "We've got a pretty good idea," said Jeff Brown, vice president of corporate communications for Electronic Arts. While Brown may be a tad biased, many media analysts have come to the same conclusion. In increasing numbers, young men are tuning out TV, and turning on games. "There were a lot of smiles in the video game industry last week," Brown told GameSpot, "when network executives lamented the loss of young males from the TV demographic."

To reach that coveted, notoriously spendthrift demographic, more and more companies are looking to games to push their products. As discussed in a current GameSpotting, the advertiser's most common method of attack is product placement.

While games have been prominently featured real-world products for years--as sponsorship plays a major role in sports titles, and many car-racing games feel like advertisements for the ultrarealistic autos they feature--what is new is the fact that game publishers increasingly see product placement as a revenue source. "It's definitely a growing trend," said David Anderson, Activision's director of business development and licensing. "I think brand marketers and advertisers are realizing that they need to be more creative in their marketing initiatives, and the 'in-game option' is fast becoming another tool for them to utilize."

Anderson should know. He helped Activision negotiate one of the higher-profile product placement deals this year. Under the terms of the agreement, Nick Kang, the hero of True Crime: Streets of LA, is decked out in outfits by athletic clothier Puma. The game will also feature Puma billboards and will even include a heist involving a truckful of Puma clothing. In return, Puma is promoting the game in its retail stores and is paying Activision an undisclosed amount.

Activision isn't the only company promoting apparel in its games. There, the self-styled "online getaway" MMORPG, which recently went live, has a deal with Levi's and Nike that lets players buy virtual outfits for their avatars with real money. That's one step beyond the 2002 deal struck between McDonald's, Intel, and EA to let The Sims Online gamers eat at the fast-food chain and buy computers equipped with the chip maker's processors.

So how far will product placement in games go? Anderson thinks the current spate is only the beginning, saying, "I think it will be as significant for video game publishers as it's become for Hollywood studios." Brown was less enthusiastic. "For the foreseeable future, product placement is an experiment," he told GameSpot. "In the best case, it can be seen as opportunity to offset some extra development costs. Offsetting costs will result in better games, but it's not a big revenue strategy."

However, Brown indicated Electronic Arts wasn't about to let any product placement opportunities pass it by, and added, "We've got teams of people working with product marketers and studio leaders to see what we can do." And Anderson made it clear Activision would continue to develop new product placement opportunities. "We have been working on and executing these types of programs very successfully for years and will continue to do so going forward."

A more important question may be how far is too far? Will players who have plunked down $49.99 for a game feel cheated when they're bombarded with product logos? Brown is quick to point out that game product placement will never be as intrusive as television advertising. He said that subtlety is the key. "If we can include product placement without affecting the game experience or annoying the player, it will be a big success. If the commercial activity becomes obtrusive, players will let us know. We're not going to do anything that compromises the quality of the game or annoys the players."

Discussion

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Will any extra profits be passed onto consumers by decreased game prices or are the publishers just going to keep it all, trying to squeeze as much revenue out of games as possible.