In The Game

Energy running low, hip-hop icon 50 Cent searches frantically for his shooter. Can he escape the threats lurking in the shadows of the alleyway? Yes!—if he refuels with the one product that can power him up—Formula 50, a Vitamin Water product.

Glacéau, the maker of the vitamin-filled energy drink, is one of a handful of brands featured in Vivendi Universal Games’ 2005 release, 50 Cent: Bulletproof. Players can virtually experience the grape-flavored beverage, which in real life gives consumers 50% of their daily dose of vitamins, according to the company.

In the M-rated game for players aged 17 and older, gamers buy Formula 50 with virtual dollars to fuel the 50 Cent character in the game. “Using the product in the way it is [consumed in real life] is a way it made sense for us,” says Glacéau Director of Brand Marketing Eric Berniker. “It’s not a forced fit. It just seems real.”

50 Cent: Bulletproof was listed on Family Media Guide’s top 10 list of most violent games for 2005. But Berniker says Glacéau’s placement in the game works well for its target audience—men and women who are looking for healthier alternatives to high-calorie soft drinks. The product rolled out in October 2004 and met great success. When 50 Cent: Bulletproof hit store shelves in November 2005, Formula 50 helped fuel the growth Berniker says.

To give players more than just a memory of a brand, marketers are turning their products into virtual experiences via game integration. Brands are moving away from wallpaper placements, like logos on billboards, and instead are intertwining their products into the storyline.

“Ads make the game more realistic,” says Grant Johnson, VP-Nielsen Interactive Entertainment, Hollywood. “If an ad fits in the gaming world, [players] are fine with it.”

If players interact with a brand in a unique way for a lengthy period, “what you see is this explosion of impact in terms of the lift,” he adds. “Once you have your brand in that position…you see the impact on brand ratings, brand recommendations and purchase interests. That’s where you really hit the home run in this space.”

In-game advertising, a first for Whitestone, NY-based Glaceau, is spurring growing interest by marketers that want to extend their brands to hard-to-reach consumers—predominantly males 18-34, but also soccer moms, professionals and children.

“Brand marketers are realizing that the male audience is really spending more and more time playing games,” says Tomas Melian, VP-integrated marketing, Vivendi Universal Games, Los Angeles, CA. “It’s not passive interaction. It is something [gamers] are actively partaking in and paying attention to…in great detail.”

Millions of people are playing video games every day—about 112 million of U.S. gamers are age 13 and up. By yearend 2008, the number of gamers is projected to grow to 148 million, Yankee Group Research says.

Of all game players, males 18 to 34 spend the most time at the controls, averaging 5.1 hours each night during prime time, according to Nielsen Interactive Entertainment. A December 2005 study it conducted jointly with Activision found that some 32% of active gamers are females 13 and up. Video game ads can determine whether consumers will buy products and recommend them to friends, the study said, and pervasiveness and brand integration in games tend to persuade players to change their minds about a brand and/or recommend it to others.

The Nielsen/Activision study, which surveyed 1,350 male gamers 13 to 44, found that the majority of gamers who remembered a product in a game felt it was relevant. More gamers changed their opinion of a product positively after playing the game, the survey said.

In-game advertising “creates a more intimate relationship between the player and the game, depending on the level of integration,” says Paula Cueno, senior manager, business development-corporate alliances for Activision, Santa Monica, CA. “You can get that hands-on experience. You have a better feel for the functionality of that brand.”

One of the study’s goals was to show the impact of in-game brand integration compared to traditional advertising and product placement in other media. Through it, new standards were established to assess in-game ads via integration levels—static placement (think billboards or 3-D storefronts) or unique brand presence, in which players significantly interact with a brand in a game.

A branding haven

Like Glacéau, other marketers are playing in the gaming space, including Honda, Cingular Wireless, Axe, Dunkin’ Donuts, Reebok and Pizza Hut. Some Subway restaurants, for example, are testing the waters inserting dynamic ads—ads delivered over the Internet—into PC-based games.

Engage In-Game Advertising, a San Francisco-based media company that specializes in in-game advertising, began a pilot program in November that promoted Subway’s Daily Special sub in 725 California locations. Counter Strike, a military action strategy game, and Custom Play Golf powered by IGA Partners Radial Network, features billboard ads promoting the sandwich.

The in-game placement cost Subway less than $50,000, according to David Scott Smith, VP-business development for Engage. The program reached 121,000 unique gamers and delivered 96,000 viewing hours as of early January. As a result, Subway committed to a year’s worth of in-game advertising that will roll out in other U.S. markets, Smith says.

“We were able to reach out and touch the core audience,” Smith says. “That’s where games [become] a perfect fit.”

“A lot of people are moving away from TV to spend time playing video games,” says Shawn Hazeghazam, an advertising board chairman for Subway. “We want to be pioneers that reach out to this segment.”

While in-game advertising has some marketers buzzing, the concept is largely untested. Some shy away from it because they don’t want to be associated with violent M-rated games that target older audiences. Others are willing to venture one-offs.

Yet, for most marketers, the make-or-break question is return on investment. Publishers typically measure a brand’s ROI based on number of game units anticipated to be sold, the strength of the franchise and number of people playing the game per unit sold, Melian says.

“Advertisers are starting to get it, but it’s a small universe,” says Monika Madrid, senior manager, strategic sales and partnerships for San Francisco-based publisher Ubisoft. “We’ve already learned the hard-knock school lessons [but] more education is needed. We’re taking baby steps.”

In-game advertising is on the fast track. In 2005, U.S. marketers spent $71 million on video game advertising, according to the Boston-based Yankee Group. By 2009, video game advertising is expected to skyrocket to $561 million, Yankee Group says.

“The bottom line is you have a more engaged consumer in a gaming environment,” says Cory R. Treffiletti, senior VP-engagement architect, Carat Fusion, a New York digital media agency. “When a video game is on, that is the focus of attention not only for your eyes, it’s for your ears. It’s not a multitasking medium.”

For gamers, the thrill of the game is the virtual experience, the chance to escape reality and, to a degree, control their destiny. Gaming, whether online, mobile or console-based, lets players be a part of the storyline and live in an alternate reality.

“It allows the player an experience that generates real emotions,” says Bruce Friend, executive VP, managing director-media & entertainment insights for Culver City-based consumer research and consulting firm OTX. “In a video game, you decide where you are going….You can’t do that with a TV show.”

For marketers, gaming gives brands access to millions of eyeballs that aren’t diverting to other things, Friend says. Gamers are highly engaged in their environment and are more open to a marketer’s message.

“From an advertising standpoint, if you’ve got somebody’s attention and can get a message in front of them, that’s a very big thing,” Friend adds of in-game advertising. “As long as it is interactive and organic, it makes games more realistic.”

Follow the Money

The options to integrate a brand into a game vary in cost, ranging from hundreds of thousands of dollars to millions, depending on the level of integration. The average cost for a standard integration ranges from $200,000 to $400,000, Treffiletti says.

Brands with big pockets may opt for deep sponsorships, in which players interact with a product or brand as part of the game, or see characters wear branded clothing, Vivendi Universal’s Melian says.

Smart in-game ads make sure the placement fits and doesn’t disrupt the storyline or gamer, says Sarah McIlroy, director of in-game advertising and promotions for Midway Games.

“Brands are sensitive to over commercialization and to blatant marketing,” McIlroy says. “[In-game advertising] needs to be organic and really credible to the storyline. If it is done correctly, it can actually influence purchasing decisions.”

Some experts say dynamic placements will play a big role in video games. Unlike static ads, dynamic ads are not burned into a game’s coding and can be changed on an ongoing basis, says Nicholas Longano, CMO, Massive, Inc., a New York-based video game advertising network.

Dynamic ads can be inserted into a game within 24 hours, compared to brand integration in a console- or PC-based game, which can take nine to 12 months. They are measured on impressions, frequency and reach—similar to how marketers buy TV advertising.

With the frequent mixing of dynamic ads, “there’s a thrill to the experience,” Longano says. “It never gets boring. One thing gamers don’t like its repetitiveness.”

Film-like quality

Video games are so popular, the industry is rivaling films. And in some cases, game sales have surpassed box office hits.

In its first day of release in November 2004, Microsoft Xbox’s Halo 2 sold $125 million worth of games—the biggest day in entertainment history, says Xbox Director of Global Marketing Chris Di Cesare. Only mega-films like Spider-Man 2 and Star Wars: Episode III Revenge of the Sith came close to that record, reporting $114 million and $108 million, respectively, in box office sales during opening weekends.

And video games are mimicking the quality of films. Xbox 360, released in November, boasts photo-realistic images and enhanced sound.

“Not only do the sights, but the sounds with Dolby surround-sound make things come to life,” Di Cesare says of Xbox 360. Sony’s PS3 and Nintendo’s Revolution are set to roll out later this year, but each has withheld release dates.

With improved graphics, comes greater opportunities for marketers, Treffiletti says. “The video quality is almost movie-like,” he says. “As it becomes more seamless with the real world, you’ll see more and more real-world advertising.”

But improved graphics come at a price. The cost to develop a game for the next gen consoles is rising by about 50%, says Michael Goodman, senior analyst at the Yankee Group. The average cost to produce a video game ranges between $8 million to $15 million.

“As technology improves, [publishers and designers] are going to do more,” Goodman says. “It takes time to do more. Time equals money, so the cost of the game goes up.”

Get your wallets ready. Consoles, once priced at $50, now cost $60 just to stay in line with publishing cost increases, Goodman says. Despite the increase, players and developers alike are hot for the game.

Some brands are blurring fantasy with reality. Nissan North America, Inc. has teamed with Microsoft Corp. to create the first fully integrated gaming system in a new concept car, the Nissan Urge.

When it debuted last month at the 2006 North American International Auto Show, the Urge came complete with a Microsoft Xbox 360 gaming system installed in the driver’s seat and Project Gotham Racing 3 preloaded. Gamers use the car’s steering wheel and pedals to play the game on a flip down LCD screen—when the car is parked—adding a new layer of realism to the game.

“Research shows these kids are obviously interested in this technology,” says John Cupit, design manager at Nissan Design America, San Diego, CA. “[Gaming is] their favorite pasttime. It’s such a natural fit. We think this will connect with our audience.”

NEXT-GEN CONSOLES HEIGHTEN EXPERIENCE

Playing on a 19-inch tube is going the way of the joystick, especially for gamers working the buttons on new console systems. In fact, those who own or plan to buy the Xbox 360 console are twice as likely to upgrade to high-definition or widescreen TVs or buy new audio equipment, according to Video GameTraxx, a weekly video game tracking survey by OTX (Online Testing Exchange), a Culver City-based consumer research and consulting firm.

The high-tech capabilities (i.e., cinematic quality) of Xbox 360 and its competitors—PS3 and Nintendo Revolution—are fueling purchase decisions.

Twenty-five percent of gamers who own or will soon buy an Xbox 360 said they intend to buy HDTV; 17% said they would buy the gaming console and a widescreen or projection TV. Another 19% of consumers said they would buy an Xbox 360 and a new home audio system, the survey found.

“Because the quality of the experience has improved, people want to have better home systems,” says Bruce Friend, executive VP, managing director-media & entertainment Insights, for OTX. “People will…get the 60-inch screen, as opposed to the 42-inch screen, to get the highest-quality technology to experience the game.”

All the better for advertisers. According to the survey, more than 40% of gamers respond well to products and services that appear in video games; about one-third said they are likely to buy products and services advertised. Some 57% of respondents said they are open to in-game advertising if it helps reduce the cost of the game.

“Eyeballs are shifting,” Friend says. “Advertisers need to migrate toward those eyeballs in those platforms. In-game advertising is one way to do that.”

OTX surveyed 2,400 consumers 13 to 54 during three-week periods in November and December who played at least four hours of console or PC games or six or more hours of massive multi-player online role-playing game.

SOON PLAYING ON A CELL PHONE NEAR YOU

While in-game branding on mobile devices is still in its infancy, marketers are intrigued by it. Some 65% of Americans own a mobile phone, and nearly every cell phone on the market has game capabilities.

“The verdict is still out as to what the right implementation is going to be,” says Tomas Melian, VP-integrated marketing, Vivendi Universal Games.

Technology poses one of the main challenges for advertisers. The resolution on cell phone screens—less than 2-inches-tall or wide—is too small for brands to consider placement options, says Sarah McIlroy, director of in-game advertising and promotions for Midway Games. “The graphics aren’t quite there,” she says. “You don’t get nearly what you would in a PlayStation or an Xbox game.”

With consumers’ hunger for bigger screens, some say mobile game advertising just won’t cut it. “It doesn’t seem like a sexy environment to advertise in,” says David Tokheim, VP-marketing for Brisbane, CA-based IGN Entertainment.

Others disagree. Over the next three years, in-game opportunities in the mobile space in the U.S. will explode, says Grant Johnson, VP-Nielsen Interactive Entertainment, Hollywood.

Meanwhile, more brands are designing games around a specific product as “advergaming” is making its way to the mobile space. Last year, Ford launched a downloadable cell-phone game based on Land Rover’s Range Rover Sport Tourer in the U.K.

In the U.S., Philadelphia-based Virtu Mobile designed a snowboarding mobile game for Winter 2005, which let players catch Campbell’s Soup at Hand products to extend the snowboarder’s life in the game.

“There is a huge opportunity to reach people by their mobile devices,” Johnson says. “It’s just a matter of time.”