By many accounts, 2009 was the first year that interactive advertising budgets actually shrank. Stats for display were dismal, and even search struggled to show the kind of growth the industry has become accustomed to. Then there’s in-game advertising. Judging from the layoffs at Microsoft’s Massive and the pending sale of IGA Worldwide, you’d think that the whole industry died last year.
And in some ways, the hype and unrealistic expectations around dynamic in-game ads (the specialty ad units that run in console games played on networks like Xbox LIVE) needed to die. Per Matt Story, a director at Publicis’ Denuo: “I don’t think dynamic in-game advertising will grow the way we speculated it would a few years ago. The creative is dynamic, but the features — what a brand is actually able to do — aren’t. And they’re starting to see more opportunity outside of the core game experience.”
Case in point, Dr. Pepper’s newly-launched, year-long deal with Electronic Arts (NSDQ: ERTS). The campaign will seed 500 million Dr. Pepper bottles and fountain drink cups with special codes that let players download content like virtual clothes or weapons for EA games. The deal starts with five games, including The Sims 3 and the upcoming Mass Effect 2, with more titles to come later this year.
This follows Dr. Pepper’s 2008 deal with Major League Gaming (MLG) that put the *MLG* logo and star player Tom “TSquared” Taylor on over 175 million bottles of soda. No financial details on either of Dr. Pepper’s game-related buys, but *MLG* has inked a similar deal with new sponsor Hot Pockets; it says that campaign payout was in the “seven-figure” range. We can expect an influx of deals like this — that equate a brand with a tangible reward for the player — as opposed to a glut of purely promotional in-game ads.
Still, both Story and fellow game ad exec Jay Krihak say some advertisers will leave room for dynamic in-game ad buys in the media plan: “If you’ve created an experience or an arcade game on Xbox LIVE or the PSN, then you need something in-game to support that,” said Krihak, who serves as senior partner, group director & gaming innovation at WPP’s MEC Interaction. “Sports titles are a no-brainer, too.” Meanwhile, Story said movie studios would continue to use in-game ads to promote upcoming releases, as they still see the channel as delivering “a great ROI.”
As for in-game ad sales reps, the outlook is murky at best. “On some levels, it’s a failed business model more than a deterioration of advertiser interest,” Krihak said. “You have companies like EA that have taken their inventory back from the in-game ad firms, because they can package it with around-game experiences [like the Dr. Pepper deal] better than a third-party.”
And despite a partnership with *comScore* to measure the effectiveness of in-game ads — and there have been a few studies from the likes of IGA, Double Fusion, Nielsen, etc. — there’s also the big question of why Massive’s team is separate from the rest of Microsoft’s interactive ad division. The company’s Advertising Business Group is responsible for the rich media ads that can run on Xbox LIVE, and the 1 vs. 100 game show that has attracted advertisers like *Sprint* and Honda. “Microsoft (NSDQ: MSFT) still needs to figure out why there are two separate groups,” Krihak said. “And if there’s no justification, then they just need to collapse them.”