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Spot On: In-game advertising--poised to pop

  • By Dan Tochen, GameSpot
  • Posted Jun 9, 2006 3:42 pm PT

Analysts agree: advertisers' need to capture elusive teens means in-game advertising will be big--but the infrastructure needs work before mainstream marketers will come on board.

SAN FRANCISCO--The atmosphere at today's Game Advertising Summit is buoyant. Speakers at this GDC-produced conference on the emerging in-game advertising market believe it's poised to explode. And it's not all talk either--some players are putting their money where their mouth is, as evidenced by Microsoft's recent purchase of in-game ad leader Massive.

But although it's widely accepted that the market is heading for rapid growth, questions remain: How fast will the market grow? Who's the best target for in-game advertising? Will advertisers, publishers, and gamers get on board?

At this morning's analyst session, Michael Cai of Parks Associates and Julie Ask of Jupiter Research addressed these questions. Cai opened the session by sharing his growth predictions. In 2009, he believes that in-game ad revenue on PCs will crack $400 million--more than 10 times the revenue in 2005. Though projecting more than tenfold growth may seem aggressive, Cai points out that $400 million will represent only about 2 percent of the total online advertising market in 2009.

If Cai's projections are correct, in 2009 it will be hard--maybe impossible--to find a new game that's ad-free. Will gamers support the injection of advertising into their favorite pastime? Cai has explored this question in depth by surveying gamers, and his research has yielded interesting results.

Though a significant percentage of gamers (from one-fourth to one-third depending on demographic group) are strongly opposed to in-game advertising, a similar percentage is strongly in favor of it--as long as it enhances gameplay or provides an opportunity to win prizes. Moreover, the hardcore gamers--the ones who play the most and spend the most money on gaming--are much more likely to be tolerant of in-game ads than are less committed gamers. In short, it seems that public opinion in the game market will not be a significant barrier to the growth of in-game advertising.

Julie Ask took the podium next to present her perspective on how in-game advertising will coexist--or compete--with other forms of advertising.

As Ask pointed out, there's plenty of competition for "emerging technology advertising dollars," and just 8 percent of online advertisers currently use in-game ads. As that statistic shows, in-game advertising is still niche media, much closer to podcast advertising (used by 9 percent of online advertisers) than to in-page display ads online, a well-accepted format currently used by 46 percent of online advertisers.

However, Jupiter's research shows that in-game ads are much more effective in reaching teenagers than other kinds of online advertising. The teen market is notoriously difficult for marketers to capture, so as the infrastructure for in-game ads improves, it seems clear that advertisers will recognize the potential and get on board. Ask is particularly interested in the potential in the mobile-game space, where a number of companies are already working with different ways of using ads in mobile games to target the enormous audience of cell-phone users.

When is all this going to happen? Or, in the words of Michael Cai, "Where's the inflection point?" At some point, like Internet adoption or use of cell phones, in-game ad revenue will switch from its current steady but slow growth to a rapid growth phase, Cai predicts.

Speaking with GameSpot after his presentation, Cai said that the catalyst for that phase of explosive growth was to reduce the complexity of in-game advertising. Currently, the in-game ad market offers no common ad format across games, and there's no central point of contact for advertisers, who mostly negotiate separate deals for each game.

Though a number of firms, including Massive, have made progress toward solving these problems, until these barriers are removed entirely, Cai explained, in-game advertising will not be attractive for most marketers. Cai doubts that point will come within the next two years but thinks it's a possibility in 2009 or 2010.

But when it happens, when the market does take off, will developers get on board. After Cai and Ask finished their presentation, GameSpot caught up with Dan Connors for the developer's side of the story. As the CEO of Telltale Games, which both develops and publishes, Connors sees in-game advertising as a promising opportunity, especially for independents and smaller firms. It's a new source of funding that could supplement traditional models, and Connors even thinks that in some cases it might be possible for in-game ads to completely underwrite development.

So it seems that smoothing the technical bumps may be all it takes for in-game ads to explode. It will be a challenge for rival firms like the platform owners and competing developers to work together to make this happen, but the potential gains are so large that Cai's estimate of a few years for the market to gel may be right on track.

74 Comments

  • nirvana_2

    Posted Jun 15, 2006 10:27 pm GMT

    american's don't sell their mothers just because they don't have....

    bow down to the mighty god the *money*

  • nirvana_2

    Posted Jun 15, 2006 10:25 pm GMT

    This is pandora's box. The last thing companies have in mind when running ads is respect for the player.

    So expect to see ads for whichever products in whichever games, don't mind the setting. That's why we should oppose this practices. Unless the game is given to us for free, of course, which may be fair because after all, we are supposed to buy the announced products!!.

    Returning to reality, that won't happen. Don't understand why nearly all of you support this dumb idea since it really gives few advantages for us players as opossed to a lot of disadvantages, like the possibility to potentially break suspension of disbelief.

    If we had been playing games without ads, then let's keep it that way!!. No one has ever mentioned that was very unrealistic because it had no ads!!!

  • Kratos_Aurion56

    Posted Jun 13, 2006 8:15 pm GMT

    Say no to ads in games!

  • YEPEE00

    Posted Jun 13, 2006 3:42 pm GMT

    they can't even get the games right & they want ads in them.

  • alpha_company

    Posted Jun 12, 2006 12:34 pm GMT

    Woohoo....more money to waste....

  • Seraphim_24

    Posted Jun 12, 2006 7:52 am GMT

    Most advertisements are intrusive, especially online. I hate pulling up a web page and getting pop ups. I hate opening my email and seeing that I've been flooded by spam, and I hate ads that interupt my favorite TV shows. A huge part of the reason I just buy my shows on DVD is because I can't stand the constant bombbardment of advertisments already in my life.
    I don't mind, however, product placement. Its more subtle, and less forceful. Product placment in a game would be fine by me, but I don't want an ad interupting my gameplay experience.

  • Bonzeemer

    Posted Jun 12, 2006 7:12 am GMT

    I get ads from t.v. ,movie theatres,the Internet,billboards,shopping malls,etc.
    Do I want ads in games? No. No no ...stop right now.

  • cduran

    Posted Jun 12, 2006 5:51 am GMT

    Placing ads in games may be a double edge sword. On the good side in may bring the price of games down, but I really doubt that since 99% of all companies look for ways to increase profits (not bring down costs). On the other hand (the most negative effect IMO) is that it may limit the types of games everybody releases. Most comapnies, especially smaller ones may limit themselves to developing games that lend themselves to in game ads, leaving us with very few choices as far as game genre.

  • thepyrethatburn

    Posted Jun 12, 2006 12:06 am GMT

    KingCartridge beat me with the TMNT2 mention. Could advertising in-game work? If it were kept subtle, yes, it could. Will it be kept subtle? Probably not. Advertisers aren't likely to shell out money for an ad that is easily ignored.



    As for the other point of whether this will make games cheaper, Occam's Razor says no.



    I do find it amusing that this whole debate is taking place at the same time that the gaming industry is trying to demonize the purchase of used games as being harmful to the industry.

  • KingCartridge

    Posted Jun 11, 2006 10:18 pm GMT

    The only in-game ads I remember liking was when I was a kid, and Pizza-Hut was pretty heavily advertised in TMNT 2: The Arcade Game for the NES. I thought it was pretty cool back then, probably because it was so unusual to see ads in a game.

    Also, I loved Yo Noid! for the NES, and that was basically, just one big advertisement for Domino's Pizza. I don't mind the ads as long as they're rare, and they make sense for the game.

  • chrisdojo

    Posted Jun 11, 2006 5:08 pm GMT

    wow. a lot of people really had alot to type about....

  • halfling666

    Posted Jun 11, 2006 4:20 pm GMT

    frigging ick....

  • ThomasElla

    Posted Jun 11, 2006 3:01 pm GMT

    Let me just put it this way: If in God of War III, Zeus recommends having a cool, refreshing Coke, Hermes is wearing Nikes, or Kratos is wielding the Blades of Wal-Mart, I'm going to quit gaming altogether.

  • boolow407

    Posted Jun 11, 2006 2:46 pm GMT

    Wonderful...Now we are gonna have to install pop up blockers on our consoles too. This will ruin gaming.

  • EliteMercenary

    Posted Jun 11, 2006 12:23 pm GMT

    As long as the companies keep with the spirit of the developers I have no problem with it. It is when they defy why that developers of the game intended where things go awry.

    People finding ads in the Grand Theft Auto franchise clearly don't understand the ethos those games are conveying. The game is completely satirical, the violence and the story is a mockery of a plethora of views and cultures.

  • daveg1

    Posted Jun 11, 2006 4:56 am GMT

    the in-game ads is a master stroke!

  • faizali86

    Posted Jun 11, 2006 4:52 am GMT

    in game ads like ads in the environment?
    i think thats ok as long as they dont have any intrusive ads.

  • 2p4eva

    Posted Jun 11, 2006 3:08 am GMT

    I think advertising is the wrong road to go sown. I think as soon a big companies approach publishers, developers will be forced to edit their game through the publishers wishes via the ad company. To be honest the publishers don't give a %^&* bout the games, they just want to make money. I know everyone says 'just don't buy the game' but dumb people will. The only way to stop ads is for hardcore gamers to say no.
    Also the point about ads being incongruent is totally tru. Wen are coke just gonna advertise a random can on the floor. They are gonna take up the whole side of a skyscraper.
    And finally there isn't a chance in hell that GTA is gonna do ingame ads. If they do they have just turned back on all the subtle digs at the companies in the previous GTA games.

  • cikame

    Posted Jun 11, 2006 2:46 am GMT

    as long as its billboards and in places where it would be in real life then i dont mind, say, walking through liberty city and someones stuck some movie posters on a wall.
    i however hope that its not in games like prince of persia, deep story in ancient egypt oh look a subway.

  • Spaceoffz

    Posted Jun 11, 2006 2:31 am GMT

    In games wouldent be too bad, it's always been the gameplay that counts, not the amount of adverts.
    I agree it would be quite annoying but, you should well know, the games overadvertised are games not worth buying.
    Mabye some exceptions, but still...
    I WOULD preferrably go against the action but it is a prediction and it but im only trying to point out its not the end of gaming...

    Rubarack
    The whole point of advertising is to be incongruent, if it's a good fit and looks right in the world and people don't stop playing to look at it then it was a waste of the advertisers money. Blatant ads in loading screens for fantasy RPGs will be the least of your worries once the big money starts coming in.

    Thats a great point...

    Also...

    Mona5443
    until ads lower the price of games, I don't want to hear anything. A game like PGR has ads up the *** but is still $60. Bull.

    If the prices are lowered that that'll be good too, but otherwise we could all say NO.

  • chickonspeed

    Posted Jun 11, 2006 12:45 am GMT

    Ads are okay only if as an enhancement. But, quite honestly, I do not want to pay dollars in order to have advertising shoved in my face. It does my head in to know that I'm buying advertisements.

  • chipface-z

    Posted Jun 11, 2006 12:01 am GMT

    Product placement doesn't belong in games. If there's going to be a billboard in a game. Make up some kind of brand like in the GTA games. Rockstar does it well.

  • RoboChocobo

    Posted Jun 10, 2006 11:56 pm GMT

    Advertisements have no place in my videogames. It's one of the reasons I bought a Tivo. I'll pass t hank you.

  • jag215

    Posted Jun 10, 2006 10:47 pm GMT

    Here are my "Rules of In-Game Advertizing"

    1. Do not pop an add up on screen for no reason (I don't have to big a problem if its during loading screens)

    2. Don't use the adds to add to your profit instead use it to help pay for development costs and make games cheaper.

    3. Make adds at least somewhat relative to the games they are in. (Don't show an add with basketball in it in Madden, or something like that)

  • dragonfoxmem

    Posted Jun 10, 2006 10:07 pm GMT

    NO NO NO NO, for all sakes. It is really annoying already when playing MSN games online. I often get "break" ads between levels.

    They are just like pop up ads when you are surfing internet. See how we people hate popup ads.

  • superbrett2000

    Posted Jun 10, 2006 9:45 pm GMT

    From the article:

    If Cai's projections are correct, in 2009 it will be hard--maybe impossible--to find a new game that's ad-free.

    If this is the case, then it may be hard--maybe impossible--for me to find any new games to buy. I'd maybe consider new games if prices drop to the $10 to $15 level for new games.

  • fenriz275

    Posted Jun 10, 2006 4:14 pm GMT

    I sick and tired of constantly being advertised to. Sometimes I wish I could reach into my television and choke the life out of the people in commercials. This could have potential though. Imagine you're playing a game and all of the sudden one of those stupid Old Navy commercials with the lame dancing morons starts. Your in-game character whips out the old uzi and mows them all down. Now that's in-game advertising I could appreciate. Seriously though, this will work for about ten minutes until someone starts making "mods" that strip all of the ads out of a game, just like you can mod EA games to skip that annoying EA splash screen at the beginning.

  • peter685

    Posted Jun 10, 2006 3:32 pm GMT

    Does anyone seriously think that any possible savings will be passed on to the consumer. I think they are right in that by 2009 there will be ads everywhere but I am interested to see what benefit (if any) will be passed to consumers. Cant wait for those extended loading times which are manufactured to show an ad and have no reason for the actual game.

  • Enigma2K99

    Posted Jun 10, 2006 3:02 pm GMT

    Pretty soon, games will take pauses for commercial breaks... watch....

  • quietguy

    Posted Jun 10, 2006 3:01 pm GMT

    It's not how much that in-game ads will be displayed; it's HOW in-game ads are placed. That's a really big problem and worry a lot of us sees. I don't wanna startup Halo 3 and see ads start popping up in the menus already, or even become integrated into the interface.

  • byronman91

    Posted Jun 10, 2006 2:28 pm GMT

    well Im a teenager and when I see the Axe spray billboard in Buronout 3 [I will get revenge soon] I dont go " OMG I need that spray!" So it doesnt work on every1

  • The_Random_One

    Posted Jun 10, 2006 11:42 am GMT

    Well, I'm just gonna go ahead and agree with the majority. Product placement works well in sport and modern games - any regular rally car has more ads in it than an advertising agency's catalog anyway - but I can't see how it might ever work in fantasy or historical settings.

    I find the prediction that by 2009 few to no new games will be ad-free quite troubling. It's probably an exaggeration though. I mean, movies nowadays have lots of product placement, but you won't find any in a Western movie, for instance. Games will likely work the same. Oblivion and WoW have little room for advertising, but expect every racing and modern action game to have it.

    WarGameJunkie has a point about companies wanting to make sure their brand name is spotless in the game. I remember that, when I found the Puma store in True Crime: New York City, I extorted the clerk, destroying every bit of furniture in the store in the process. Later I came back and chucked some grenades around, which not only destroyed the furniture but also stained the walls with blood. I have to wonder if Puma would agree to that...

    But, whoever thinks GTA games should have in-game advertising to make it more realistic - you are not paying attention to it. On the outside GTA games are just violent firefights where you can kill whoever you want and commit all sorts of crimes, but if you look at it deeply you'll see it contains harsh comments about the politics, lifestyle, and consumism of the modern world. Pay attention to what the characters say and think; read closely the fake billboards; listen to the musicless radio stations. I can safely say that, no matter how far in the future you look, you'll have a better chance of seeing Michael Moore in a George Bush campaign ad than a harmless Nokia billboard in a GTA game.

  • Rubarack

    Posted Jun 10, 2006 11:11 am GMT

    The whole point of advertising is to be incongruent, if it's a good fit and looks right in the world and people don't stop playing to look at it then it was a waste of the advertisers money. Blatant ads in loading screens for fantasy RPGs will be the least of your worries once the big money starts coming in.

  • illphil

    Posted Jun 10, 2006 11:01 am GMT

    I personally dont like real advertisments in games, but some of the fake adverts in some games can be rather humerous, but the best use of fake ads ever was the alien buddy spam mails that you would receive throughout the game, in short advertisers will slowly start to controll the content of the game by threatinging to cut funding and such, i thnk things are going great for games the way they are right now, i mean games are made to relax not get commercials shoved down our throughts

  • d1ab10cm

    Posted Jun 10, 2006 10:38 am GMT

    Hmm... im kind of in both ends of the prism on this one.

    In game advertising can be beneficial in the sense that it helps promote awareness in the market, as formentioned the 'teenagers'. But how will in-game advertising affect the gameplay seems to be on the minds of everyone.

    It would be very awkward to find modern world advertisements in say... RPG Gaming, it won't be possible in game, unless its a MMORPG where they can have a small 'banner' or 'affilate button' on the log in screen showing some sort of advertising, but interactive advertising? As someone mentioned it would be very very awkward to find Coca Cola in Oblivion, or even be able to purchase Dolce Gabana clothes in Final Fantasy!

    For some games it CAN be applicable, but to some extent. Such as billboard advertising certain games or television shows. A great example i have seen is in Need For Speed Underground 2! But also it can be exposed within the famous GTA series, with radio stations being similiar to the podcast advertising.

    My conclusion is, if in game advertising does rise, make it congruent with the gameplay style.

  • d1ab10cm

    Posted Jun 10, 2006 10:35 am GMT

    Hmm... im kind of in both ends of the prism on this one.

    In game advertising can be beneficial in the sense that it helps promote awareness in the market, as formentioned the 'teenagers'. But how will in-game advertising affect the gameplay seems to be on the minds of everyone.

    It would be very awkward to find modern world advertisements in say... RPG Gaming, it won't be possible in game, unless its a MMORPG where they can have a small 'banner' or 'affilate button' on the log in screen showing some sort of advertising, but interactive advertising? As someone mentioned it would be very very awkward to find Coca Cola in Oblivion, or even be able to purchase Dolce Gabana clothes in Final Fantasy!

    For some games it CAN be applicable, but to some extent. Such as billboard advertising certain games or television shows. A great example i have seen is in Need For Speed Underground 2! But also it can be exposed within the famous GTA series, with radio stations being similiar to the podcast advertising.

    My conclusion is, if in game advertising does rise, make it congruent with the gameplay style.

  • Erock7

    Posted Jun 10, 2006 10:30 am GMT

    Mr_Flesh makes a good point, I too would find that pretty lame. It's not like that is a far fetched idea either, what company would like their business shown in a less than perfect way? None, and especially if they're paying the developers to write it in. In games ads like that could definitely turn me off a game. I've never played GRAW, but for the sounds of it, that Axe billboard is so ridiculous. Also I find it highly unlikely they will lower the cost of games even with the inclusion of ads.
    One game loaded with advertising that I have dealt with is CSI 3Dimensions of Murder. If that's how games are going to be then screw it, I would rather pay the extra 10 bucks not to have Nokia, GMC, SanDisk and countless other products shoved down my throat . Because how they were used in CSI was unbelievably lame. Brass even says at one point "I wish I had a ride like that", talking about the GMC Yukon.... Wow... lame.
    However this goes, I just hope developers know that inclusion of ads have the potential to ruin games for a lot of consumers. Some may be ok with all this, but when I pay money for a game I don't enjoy people trying to sell me crap while I play.

  • hamumu

    Posted Jun 10, 2006 10:26 am GMT

    As long as theres no full screen ads, announcers, or ads on online game lobbys I'm all for it.

  • Mr_Flesh

    Posted Jun 10, 2006 9:57 am GMT

    It's funny that one of you should bring up GTA....the reason thier are no real car brands in GTA is because automanufacterers do not want thier cars showing damage or poorly running. This is why all racing games with real car brands show only glass and paint damage. This a perfect example of where in game advertising can go wrong. As for interactive ads? You got those in your browser how many really play them....and I want to play an emmersive game not full around with sinage. Billboard placement....how lame is that......C&C Marketing Alert.

    If a game doesn't have in game advertising then it can spoof something real.......Again would you see the employees acting like real fast food employees with real fastfood environment (trays on the, floor crack head mumbling to himself in one corner dirty tables, etc) if burger king was in the place of burger world....the place would be sparkling clean the employees would all be chipper and helpful.....how is that real? See developers have to give up creative freedom to allow advertising in thier game. And how many times will the dell computer thing amuse you? But how immersive is that game when you set off a grenade in the cubicle farm and the only thing left standing are the dell computers?

  • lordxymor

    Posted Jun 10, 2006 9:23 am GMT

    They could easly make deals with sponsors to subside game prices, by adding ads in games. Just image how much sponsorship can gran turismo 5 get, they could probably just give the game for free. Of cource, there are several games where ads won't work at all.

  • insane956dv

    Posted Jun 10, 2006 9:06 am GMT

    solid snake eating a whopper between fights aint so bad

  • bloodtears

    Posted Jun 10, 2006 8:25 am GMT

    Simple solution to games like oblivion bottom right corner have a spot where every time the game loads one of four or five adds shows... to offset game development costs Id go for a advertisement in the start screen and hey they could even charge 5 dollars extra for an adds free version for those of you who feel that clicking start in a special font is all part of immersion

  • pal3_99

    Posted Jun 10, 2006 8:09 am GMT

    Just think about pikmin 2 in-game advertising it was kinda cool to go find a 7-up cap or a kiwi cap. If advertising was like that it would be all right.

  • WarGameJunkie

    Posted Jun 10, 2006 7:14 am GMT

    Like almost everybody else, I'm ok with in-game advertising if it enhances the experience. The new MOH game has a deal with Jeep so that more realistic looking WW II Jeeps are actually going to be in the PS3 game. That I think is very cool.
    I also would like if Rockstar got a deal with Burger King or McDonalds and instead of having a generic "Burger World" they turned them into Burger King or McDonalds. The one thing I worry about that though is the companies might try to dictate that no bad things can happen in a game in a store with their name on it because they don't want the brand name affected. It sounds stupid, but IMO it might happen.
    The idea of using Coke or Pepsi machines is a good one. I always thought the fake generic soda machines actually cheapen the experience.

    Unlike some, I'm ok with Sony or Intel ads using a PDA or something of that nature in games like GRAW or Splinter Cell. In real life, those companies produce those products, so Sam's PDA in Splinter Cell ought to have a real technology company's name on it. Like using a real Coke machine, I think it just adds to the realism.

    The best part about this is hopefully in-game advertising will defray some development costs and we can get game costs back down to $50 instead of the $60 many 360 games are now and PS3 games are expected to be.

  • Living_Bobbeh

    Posted Jun 10, 2006 5:33 am GMT

    "The mod shop is around the corner from the Burger King in Rockport"
    I love Need For Speed

    The Sumsung ad on the menus of Perfect Dark Zero was stupid, seeing as I'm playing it on one of their tellys.

  • Blazer88

    Posted Jun 10, 2006 3:53 am GMT

    Booooooo!!!!Not a good thing.

  • BAT

    Posted Jun 10, 2006 2:38 am GMT

    I am ok with ingame ads as long as they work in contxt with the games content. BUT ONLY THEN !!! There is no way you can put ads into a fantasy RPG like Oblivion or WOW without ruining the experience. So some games should always remain ad-free. But i fear for the worst

  • SnuffDaddyNZ

    Posted Jun 9, 2006 11:54 pm GMT

    It's very simple.

    Game reviewers must contine to report games that have in-game advertising, and the games players must BOYCOTT all games that feature obtrusive and unecessary advertisements.

    We have to protect the legacy of gaming. One of the things that makes gaming so great compared with other forms of entertainment like Television and Radio are that we do not expect to see advertisements in game or interrupting gameplay.

    There's the issue that games are works of art, because after all you don't put McDonalds logo's on the Mona Lisa and therefore you shouldn't ruin the art of games by putting adverts in games.

  • troakun

    Posted Jun 9, 2006 11:10 pm GMT

    The price of video games has already gone up, I shouldn't have advertisments in them as well.

    Instead of investigating the effets of violence in video games, I think the money might be better spent investigating the effects of advertisments in video games. Neo*Pets is evil enough by itself, I don't need that kind of corporate evil in my video games.

  • rusty_ghia

    Posted Jun 9, 2006 10:46 pm GMT

    I am vehemently opposed to adverts in my games. And once we see advertising become more prevalent in games, we'll see advertisers dictating game content. Can you imagine it? I fully expect to see the day where a game like Oblivion, a high-fantasy game that takes place in a very unrealistic, very distant setting, gets transmogrified into a modern day setting so that advertisers have a medium to shove more #$%^ commercials down our throats. And we'll have to pay for the "privilege."

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