Is Advergaming a Viable Advertising Approach? What Factors Predict the Success of Advergaming?

An argumentative essay by Cindy Yuen The generation of young, electronics and technology proficient, young adults have for some time, been a demographic that advertisers have been attempting to reach. With services such as AdBlock Plus, TiVo and Bugmenot.com, which allow viewers or internet users to screen and block advertisements, this very profitable market segment is increasingly becoming harder to reach. These determinants are why advertisers are looking at more creative ways of targeting audiences, particularly the younger demographic, by using in-game advertising and advergaming. In 2006, $370 million was spent on in-game advertising or advergaming (Loechner, 2007 as cited by An & Stern, 2011) and big name companies such as Apple, Procter & Gamble and Visa have all utilised advergaming as an advertising medium (Jon Casimir, 2010). However there has been a lot of debate over how effective and how invasive it is which has lead to the question: Is advergaming a viable advertising medium? Advergaming has the steadiest growth in online advergaming which enjoys economies of scale, a large creative platform and advantages such as viral marketing that other advergaming categories cannot achieve, and for these reasons it is a viable advertising medium. Mobile advergaming is subjective to the trends of mobile consumption patterns as to whether it is viable in the future, however with our projected smart phone trends, it appears likely. However electronic advergaming is not feasible in the long term due to a variety of determinants including, the risk involved in advertising in a virtual world and whether advertising is welcome in particular gaming categories. Advergaming is a relatively new marketing tool and is defined as a form of branded entertainment that features advertising messages, logos, and trade character in a game format. Sponsors of advergames create these electronic, online or, increasingly common, smart phone games for the sole purpose of promoting a product which can be utilised to make the brand seem fun and entertaining (Jon Casimir, 2010). Although advergaming and in-game advertising are sometimes used synonymously, in-game advertising integrates a brand into a pre-existing game that was not made for the sole purpose of advertising a product (Marketing Week, 2008). Types of video game advertising include pre-game, post-game and interstitial ads (ad breaks), sponsorships and product placements. It is expected that two thirds of all video game advertising will be in-game by 2012 (Marketing Week, 2008).

Is advergaming a viable approach? What factors predict success of advergaming?

This advancement in advergames has been substantial in establishing credibility in this new advertising medium. Advergames have since made great leaps forward in integrating the brand within the game including one idea, consuming the product to progress through the stages of the game. One example of this includes the game Splinter Cell: Pandora Tomorrow which featured a main character who used a Sony Ericsson P900 smart phone and T637 camera phone to beat the terrorist bad guys you couldnt win unless you used the products (Jon Casimir, 2010). The integration of the brand in this way creates a multimedia, interactive format for consumers to experience the brand. Lifestyle trends have recently been moving towards greater time usage on video games. In a given week, todays teenagers are spending as much time playing video games (10 hours) as they do online (11 hours) and watching TV (12 hours) (Marketing Week, 2008). Video games also remain one of the primary pastimes of the desirable male, 18 to 34 year old demographic who spend an estimated half of their disposable income on entertainment, including video games (Marketing Week, 2005). Tapping into this demographic is one determinant to why advertisers are turning to advergaming as an advertising platform, and the audience is growing. Marketers have steered clear of video game advertising in the past because violent themes combined with teenage boys with minimal purchasing power did not make it an attractive market segment (Marketing Week, 2008; Marketing Week, 2006). However advances in animation and communications technology have lead to greater variety and appeal to multiple demographics. A report from Media Contacts expected video gaming to continue to grow globally with the estimated number of installed game consoles set to exceed 150 million worldwide by 2010 which are now reaching former gamers, women, seniors, non-gamers, in various geographical locations who sit outside the traditional 16 to 34 year old audience (Marketing Week, 2006). Not only is video game advertising reaching more demographics, its also increasingly becoming more fragmented with games targeting groups of people with particular interests, online communities, geographical locations and time of the day (Jon Casimir, 2010). Online advertising is especially appealing to companies for its viral marketing potential. Not only are online games generally much simpler and cheaper to develop, players can spread awareness through word-of-mouth and pass the game on. This makes integrating the game across platforms easier and the sender acts as a peer endorser with potentially high credibility of the brand (Mallinckrodt & Mizerski, 2007). The use of video game advertising also reinforces a prestigious brand image, which may be appealing to large companies.

Is advergaming a viable approach? What factors predict success of advergaming?

As discussed previously, advergaming is a very attractive medium with high potential for reach and frequency, economies of scale, effective cut-through ability and un-paralleled engagement with precisely targeted players/demographics. A study by Gurau (2008) concludes that advergames do increase the frequency of purchase of the sponsored product. However one question on the minds of sceptics and advertisers is What factors contribute to a successful advergame? One major determinant is the players attitude to advertising both in-game advertising and advertising generally. A study by Nelson, Keum and Yaros (2004) found weak correlation between attitudes towards advertising and purchase behaviour. In the opinion of Mike Zeederberg, MD of digital marketing agency Profero, there is an even divide of people who disdain video game advertising and those who do not mind it (Azhar, 2007). Therefore advertisers cannot expect to completely capture this market. However when the consumer has favourable attitudes towards advertising, it has found to have a positive effect on the individuals consumption behaviour. Jon Casimir in the Gruen Transfer (2010:167) states Gamers are a passionate, connected and vocal bunch. Youd think theyd be resistant to any advertising that was intrusive or interruptive. But there has been very little real backlash about encroachment. Contrary to this belief, other people regard product placement in video games as a positive thing, because it adds realism and helps finance game developers (Azzizi, 2009). The research by Ho (2006) also supports this study and concludes respondents' attitudes are more positive with product placement in video games compared to movies due to the fact that video games are not as realistic as movies. However the placement in in-game advertising needs to be very carefully selected. Research has found that the game played and the brand sponsored has a positive relationship. The effectiveness of the advergame is increased where brands are centrally placed and is congruent to the game content (Peters, 2008 as cited by Azzizi, 2009). Advergames that are related thematically to the products sponsored should increase the likelihood of positive conditioning of brand attitudes recalled by playing an advergame (Azzizi, 2009). If visibility is low or there is low congruence between the brand portrayed and the theme of the game, the advergame may find that it is not as effective. For example All State Insurances advergames test reflexes and response times on its website of their players. It promotes to older drivers who, if they score well, receive a discount on their car insurance (Jon Casimir, 2010). Another consideration when determining the success of an advergame is the difficulty of the game and your target audiences capability. This needs to be considered because it heavily impacts the interest to play the advergame, especially in young adults (Gurau, 2008). Research has found that more experienced players are more attracted to difficult games as well as product placement in games (Azzizi, 2009). However, even though more experienced players are attracted to more advanced games, this does not 3

Is advergaming a viable approach? What factors predict success of advergaming?

appeal to the masses. Advertisers solution to this is to create simple games, allowing creative, low budget games (B & T Weekly, 2003) able to be played on mobile phones, on the internet and even received as small 400kb size attachments in emails, which have proven to be a highly effective form of viral marketing (Marketing Week, 2001). By creating simpler games, this creates an entry point into video games for non-gamers or people with negative perceptions of gamers (Marketing Week, 2006). However despite the potential for games on smart phones, the scope of development is limited due to the nature of the device itself. In other words, the approach is limited by adoption curves of compatible handsets, which are not low-cost items. However there is still potential these games can also be deployed using the wireless platform, meaning they are ideal competition prizes, or as part of a direct campaign because of their low distribution costs (B & T Weekly, 2003). One advantage to advergaming is that it can enjoy economies of scale including low costs. However advergaming and in-game advertising is not always cheap. With electronic games and some online games, they can typically take 18 to 24 months to develop then additionally any advertisements or product placements would need to be hard-coded into the software. This requires an enormous amount of advanced planning and co-ordination between the agency and game developers (Marketing Weekly, 2005). The US Armys game titled Americas Army cost a reported US$7m to build (B & T Weekly, 2003). Therefore we can see that the reported advantages of advergaming do not apply across the board. As we have discussed, when advertisers consider using advergaming or in-game advertising as an advertising platform, there are a lot of factors to consider and determinants influencing their decisions. Advergaming, whether it is mobile, online or electronic, is contingent upon situational, internal and external factors as to whether it is an effective medium to advertise in. When we consider geographical demographics, Australia may be a leader globally in game developing, but even mobile gaming (a cheaper advergaming solution) has not taken Australia by storm. Even when we consider the previously mentioned issues with adoption of smart phones, the mix of Australian telecommunication technologies makes development and deployment extremely difficult, and therefore it can be seen that Australia is not a viable market (Australia has a population of only 20 million) (B & T Weekly, 2003). But with the new generation of mobile handsets, the mobile advergaming sector has a lot of potential to grow. Smart phone applications and games are increasingly popular and organisations are already creating applications that advertise their products, which appeal to a large variety of demographics. Therefore if correctly implemented, mobile advergaming can/will be a viable advertising approach in the future.

Is advergaming a viable approach? What factors predict success of advergaming?

The use of online advergames also shows significant promise, and do not face the problems mobile advergaming faces. Potential for reach and frequency are potentially extremely high due to the circulation of internet and compatibility of computers. Online games are also very cost effective and use multimedia to interact and engage with the player, showing no limit to creativity for advertisers. If implemented correctly, online advergames have a variety of advantages including the ability to accurately target their target audience, word-of-mouth potential, viral marketing, and the ability monitor click-rates, website visits etc. Therefore online advergaming is an effective and viable medium. There are, however, a few reasons why electronic in-game advertising and advergaming may not be viable in the long term. Firstly, aside from the costs and investment of resources in developing an advergame, the message and execution strategy of the placement of the product in the game must be sensitively dealt with, as this advertisement message will last as long as the game does, and will have to stand the test of time so to speak (Jon Casimir, 2010). Also it is not clear how much interference from advertising gamers will accept. As we have addressed previously, there are parties who both support and hate the concept of video game advertising, however the advertisements must be congruent with the game content. For example Everquest ll allowed players to click an icon and book a delivery from the nearest Pizza Hut. Everquest ll is set in a very common gaming era: medieval (Jon Casimir, 2010). Advertisers also need to recognise the ambiguity of the virtual world in which they are promoting their products. Advertisers may not be aware of cultural, moral or otherwise hidden messages in the gaming content and would not respond well if on launch of the game, there was a public backlash about advertising in a electronic game with a hidden sex scene in it, which was rumoured to be the case in the PS2 version of Grand Theft Auto: San Andreas (Marketing Week, 2005). One contributing factor to why some gamers engage in role playing games, in surreal worlds is to indulge the imagination by escaping reality. By placing advertisements in this type of games, the advertisements may be counterproductive for the players and the brand may incur negative outcomes consequentially. Finally we have to concede that despite the empirical evidence supporting brand recall and brand preference, this may simply be due to the novelty factor of in-game advertising or advergaming (Marketing Week, 2005). Novelty is a concept with an expiry date and in the long term, after more competitors have entered into advertising in virtual space and possibly accelerated the mitigation of the novelty factor through advertising clutter, electronic advertisement may exist as another world where advertising is considered disruptive and annoying. Therefore advergaming and in-game advertising in

Is advergaming a viable approach? What factors predict success of advergaming?

electronic games doesnt appear to be viable in the long term and advertisers should cautiously proceed when considering advertising in this medium.

References
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Is advergaming a viable approach? What factors predict success of advergaming?

Marketing Week, 2006, Video Games: Gaming begins to prove its worth as an effective medium, Marketing Week, viewed 16 April 2011 <http://global.factiva.com/aa/?ref=MKTW000020060505e2540002b&pp=1&fcpil=en&napc=S&sa_from=> Marketing Week, 2008, Video Game Marketing Opportunities: Getting in on the Game, Marketing Week, viewed 16 April 2011, <http://global.factiva.com/aa/?ref=MKTW000020080905e4940001l&pp=1&fcpil=en&napc=S&sa_from=> Nelson, M.R., Keum, H., & Yaros, R.A., 2004. Advertising or Adcreep? Game Players Attitudes toward Advertising and Product Placements in Computer Games, Journal of Interactive Advertising, 5, 1, 3-30.