The fundamental difference between in-game advertising and TV advertising, is that this is ad serving more like internet ad serving. You know something about who is viewing the adverts and when they are viewing them.
You don’t need a company that is expert in interviewing gamers to ask them if they saw adverts, nor do you need a company that has built up audience of devices such as people meters, to register what activity they are doing all day. TiVo for instance has a relationship with Nielsen Media, but this was less about Nielsen explaining to TiVo how to collect audience measurement data, and more about TiVo putting its data in the hands of a company that already knows how to monetize it.
We have been waiting for a movement by Sony Computer Entertainment on advertising for around two years now, and we suppose it as least bodes well that Sony has opened up some form of deal this week with Nielsen, which not only has a virtual monopoly on US TV audience measurement data, but has some in-game understanding and internet advertising know how.
Under the arrangement, Sony will share with Nielsen game network traffic and other data from Playstation 3 systems and the PlayStation Network, so that it can analyze and benchmark the data to create new measurements for calculating the reach, frequency and effectiveness of game network advertising.
But when Massive launched itself as the first in-game advertising network, it never needed Nielsen (although it also has a deal with it), and instead spent a long time convincing advertising agencies that it had the reach, and could insert adverts to run at the right time of day, and in the right region, in the right context. The context was probably the most important issue. Who wants to advertise something soft and cuddly in the middle of a shoot’em’up.
That probably took two years of effort, and yet when Microsoft bought the company, that single move probably did more to legitimize the marketplace for in-game advertising than anything that Massive had done to date.
Sony has consistently been running behind Microsoft in terms of introducing new ideas to its gaming platforms. It was behind on rollout and sophistication of the gaming network, it was behind in bringing its PS3 to market, and it is behind on embracing advertising, so perhaps that’s why it has reached for Nielsen, to legitimize its future efforts in in-game ads, as well as like TiVo, offering it a route to advertisers and agencies with that data.
The company says that usage data provided by Sony to Nielsen will include enabled first- and third-party games, on PS3s and the Playstation Network, but does not give any idea of how many games that applies to. If all PS3 games have an ability to embed advertising in them, with all the relevant part of a game such as TV sets, advertising hoardings, race track sidings etc.. already enabled to have new adverts swapped into them, then Sony could suddenly unleash a huge new revenue stream, and that’s what this seems to suggest. Naturally, like Massive and other in-game networks, the initial rollout will begin in the US.
The audience measurement system will be developed and managed by Nielsen, and the data will also be merged with other existing game census, including that captured by People Meters in 12,000 US homes, to form a picture of what is happening in the gaming world.
The service will launch in the fall and Nielsen will also work with Sony to identify the right media formats to work in. It’s a shame that Sony hasn’t been able to apply the same rules, and use the same statistics regarding its PS2 gaming platform, already installed in around 100 million homes. The problem with this is that advertising networks can only insert new adverts where the console is online, and once again here this means that Microsoft is already way ahead, since so few of the PS2s were ever networked, and also Sony may have the largest installed base, but Nintendo Wii is the right partner for advertising, given the rate at which the device is flying off the retail shelves.
The latest figures suggest that the Wii console outsold Sony’s PS3 by 6 to 1 in Japan during June, according to the Enterbrain web site. The only satisfaction is that the PS3 outsold the Xbox in a ratio of almost 3 to 1, but the gap, especially in its native Japan is both significant, and growing behind the Wii.
In the meantime, US researcher Parks Associates issued a report on all forms of game advertising, say that it will grow from $370 million now to over $2 billion by 2012 growing at a compound annual growth rate of 33%. We said that two years ago, and were laughed at, but in-game ad are moving faster than anyone ever realized.
Ads inside games only had an average monthly expenditure in the US of under 50 cents per home throughout 2006, compared to broadcast TV at $37. Given the amount of time gamers play games for, and the fact that this rivals TV viewing hours, that statistic is way out of kilter.
Parks said in-game advertising will grow fastest, to make up $800 million of the market but warned that the lack of industry standards, and media fragmentation presents the game market with hurdles.