With the Xbox 360 at the top of many holiday shopping lists a few weeks ago and the anticipated arrival of the PS3 this spring, the video game segment of the entertainment industry continues to grow. While the hardcore audience is still young males, casual game-playing is starting to attract more women.

The advertising options in gaming are also on the rise with logos, products and commentary about products integrated into the action.

To find out how to get your client’s message embedded in video games, read on.

This is one in a Media Life series on buying the new out-of-home venues. They appear weekly.

Fast Facts

What
Real-time, dynamic, interactive advertising integrated into video games.

Who
There are several companies involved in video game advertising. For this article Media Life spoke with Double Fusion, a new company in San Francisco, and Massive Inc. in New York.

How it works
Ads are integrated into interactive console and online games through the internet.

“The brand becomes part of the game,” says Double Fusion CEO Geoff Graber. “The user can interact with it so it becomes an integral part of the game-play experience. The key is not to disrupt the game. Our goal is to make it feel like the real world.”

For example, an ad could appear on a billboard, truck side or TV screen that is part of the game, or a character could be wearing branded clothing or drinking a certain brand of soda.

“There’s an analogy to TV where a program is taped with space left for commercials that will be placed later. That’s what happens in video games. The game developers leave space for dynamically placed ads,” says Michael Goodman, senior games analyst with the Yankee Group in Boston.

Static, video, animation and music can be incorporated into video games in two- or three-dimensional format. Billboards and posters are examples of 2-D options.

Audiovisual options would include a snippet of a TV ad on a TV screen that appears in a home setting, or an ad could be playing on a Jumbotron screen in a street setting.

Creative is often developed specifically for a game or for a genre, such as sports.

“Some advertisers test creative to see what resonates with gamers,” Longano says. “It’s not passive like a TV ad when you have no idea of who is at the other end watching. With a game there has to be somebody playing. This audience is completely engaged.”

There are slots for several advertisers within one game, and ads can be added, removed or updated in an existing game.

“There can be a vending machine within a game, and one day the soft drink advertised is brand X and the next day it can be brand Y. A restaurant in a game can serve bacon and eggs in the morning and a brand of fried chicken in the afternoon,” Longano says.

Other types of video game ads include static ads that are imbedded or hard-coded into games and product placement.

“There are different types of games with different levels of involvement across the platforms,” Goodman says. “A person playing Hearts online has a different experience than if he was playing Halo 2 on Xbox, night and day.”

Markets
Available in virtually every market.

Numbers
Young men play 12.5 hours of video games a week while they watch television 9.8 hours, according to Nielsen Entertainment. Men age 18 to 34 spend an average 41.7 hours playing the game they last purchased, according to the research firm NPD Group of Port Washington, N.Y.

Gamers on average spend more than $700 a year on console games, PC games and accessories, according to a study by IGN Entertainment of Brisbane, Calif. The market this year for online video games is projected to be worth $750 million in 2006, according to a study by Juniper Research of London.

How it is measured
Each ad view can be evaluated by how long the user views it and how they interact with the brand within the ad. “You can report on the number of impressions delivered, the time they’re delivered, the geography or where they’re delivered. You know if the gamer stopped at the ad and for how long,” Longano says.

When a gamer stops at an ad for 15 seconds, Double Fusion counts that as one impression. Massive uses 10 seconds as its measure.

Massive provides daily audience data reports to advertisers. So far, it has placed ads in more than 11 million game sessions.

Research
A study last October by Nielsen Interactive Entertainment found that in-game advertising resulted in a 60 percent increase in awareness for a new product and that animated 3-D ads achieved twice the recall of static billboards. Half of 900 respondents to a pre-exposure survey conducted jointly by Nielsen and Double Fusion agreed that in-game advertising makes a game more realistic. Just 21 percent disagreed. Additionally, 54 percent agreed that the in-game advertising caught their attention while 17 percent disagreed.

Another Nielsen study conducted with Activision, a game publisher, included 1,350 male gamers aged 13 to 44 split into groups that played games with ads and without ads. The study found that ads that are relevant to the game were tolerated on the screen longer and resulted in improved brand awareness and positive feelings about the product.

 A report from Nielsen Entertainment last year, “Benchmarking the Active Gamer,” found that nearly 25 percent of a gamer’s leisure time is spent playing video games and that male gamers play 12 hours a week on average.

What product categories do well
Ads that regularly appear in video games include food and beverages, games, electronics, communications, including cell phones, entertainment, including video releases and movie premieres, automobiles, packaged goods, and retail, along with those for non-profits and public service organizations.

Demographics
Over 70 percent of males in the 18 to 34 demographic play video games, according to NPD Group. Three-quarters of households with a male member age 8 through 34 own a video game system, according to Nielsen Entertainment.

The video game market is not homogeneous, Goodman says. “Casual, mobile and hand-held gamers are distinctly different groups.” The console group is 60 percent male with an average age of 26, Goodman says.

Campaigns can be geographically targeted, with different campaigns running on the East Coast and West Coast, Longano says.

Making the buy
Double Fusion: Lead-time is two weeks with creative in hand. An additional two weeks is required to convert creative to 3-D. Minimum buy is one month.

Factors that affect cost are all measurable factors like locations in games, number of times an ad appears in a game and length of contract. Production is also a consideration.

Massive Incorporated: Lead-time is 10 days for new advertisers and 48 hours for existing advertisers with creative in hand.

Inventory can sell out. “In any given game there can be 150 ad elements, less for some options like sports stadiums. So it’s limited in terms of inventory. It’s a finite universe,” Longano says.

A typical flight is one to two weeks.

Massive's network includes 120 game titles from 30 publishers, including Atari, Codemasters, Sony Online Entertainment, Buka, Eidos, Funcom, Global Star, Legacy Interactive, MTI, Nadeo, Nival, Oxygen, Skyworks, Sproing, THQ, Ubisoft, Vivendi Universal, Konami and others.

Who’s already embedded in video games
Double Fusion is now launching its program. Massive’s advertisers include Coca-Cola, Comcast, Honda, NBC, Nokia, Panasonic, T-Mobile, Verizon DSL, Warner Bros., XM Radio, Sci-Fi Channel, Panasonic and the U.S. Navy.

What they’re saying
“On television ads are intrusive. When you look at advertising in video games it’s built into the context of the game. So, if you’re playing a football game and the Goodyear blimp flies overhead you expect to see it because you’re at a game. You expect to see ads on a racing car so in the context of the game, the ads are making the game seem more realistic.” -- Michael Goodman, senior games analyst for Boston-based Yankee Group

Web site info
Double Fusion at www.doublefusion.com
Massive Incorporated at www.massiveincorporated.com