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Q: value of advertisement in online games ( Answered,   2 Comments )
Question  
Subject: value of advertisement in online games
Category: Business and Money > Advertising and Marketing
Asked by: gestalt77-ga
List Price: $150.00
Posted: 15 Mar 2006 11:57 PST
Expires: 14 Apr 2006 12:57 PDT
Question ID: 707675
Hi there! We'd like to know how much are the total revenues from
advertisement in online games today ? What are the most successful
companies, how high are their revenues and what are their business
models/rates? What are the forecasts for this space? Appreciated is
any other information about this topic like expected trends or
announced plans.
Answer  
Subject: Re: value of advertisement in online games
Answered By: belindalevez-ga on 11 Apr 2006 09:33 PDT
 
<Online in-game advertising.

Market
In 2005 U.S. marketers spent $71 million on video game advertising
which is expected to grow to $561 million by 2009. 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.
Source: In the game. Feb 1, 2006. Promo. 
http://promomagazine.com/marketing_in_the_game/

Market researcher IDC predicts that total U.S. revenue from online
gaming will increase almost 50 percent annually over the next few
years, from $210 million last year to $1.8 billion in 2005.

Jupiter predicts similar growth, with U.S. revenue projected to hit
$2.55 billion in 2006. Advertising revenue will continue to account
for about 30 percent of the market, Jupiter forecasts, with the bulk
of revenue coming from subscriptions.

A current trend is for sponsored games. Microsofts?s The Zone gaming
site offers several sponsored games.
http://news.com.com/2100-1040-823258.html

Advertising within online games (ad-supported games and 'advergames')
will rise to $230 million in 2007, from $75 million in 2002. These
gamers will clearly become an increasingly attractive target as the
group outgrows its traditional young male, tech-geek core. "Everybody
seems to think games are for teenage boys," says Singer. "The
demographic is getting older."
A recent survey by the Entertainment Software Association has found
that the average gamer is actually 29 years old, with 41 percent
reporting a household income of more than $50,000. Gamers are also
more diverse than perhaps thought: 44 percent oare female, and 26
percent are women 18 or older. These demographics are expected to
become even more representative of the mainstream as gaming becomes
more pervasive.
Source: Game consoles positioned to dominate ?digital living room? by
Michael Shields.
http://72.14.203.104/search?q=cache:U8Ng8tQYwyYJ:www.mediapost.com/dtls_dsp_news.cfm%3FnewsID%3D252593+%22gaming+advertising%22+revenue+billion&hl=en&ct=clnk&cd=5

According to the Yankee Group, advertising in games is expected to
rise to US$800 million in 2009 from nearly US$120 million in 2004.

Around US$266 million - that's more than one-third of advertising in
games in 2009 - will come from "advergaming."

Mitch Davis, chief executive of video game ad network Massive Inc.,
revealed that the audience video game advertising would top US$1
billion in the United States by 2010, and approach US$2.5 billion
worldwide.

Anita Frazier, informed the Advertising In Games Forum audience that
there are 100 million game capable cell phones currently in the
Marketplace - with 65% of the population owning a cell phone.
Source: Advertising in Games Forum predicts $1Bn in revenue 2010 Mike
Slocombe. 18 Apr 2005

http://digital-lifestyles.info/display_page.asp?section=cm&id=2117
---------------------------------------
Advertising providers.
The online in-game market is a new market with many new start ups.

Massive Incorporation.
Offers an advertising network that places ads within video games.
Games in the massive network include Splinter Cell, Chaos Theory,
Anarchy Online and Mall Tycoon.
Source: Hoover?s
http://www.hoovers.com/massive/--ID__128144--/free-co-factsheet.xhtml

Massive Inc. ? company website
Massive's mission is two-fold: to develop ways for Advertisers to
reach 18-34 year-old males who play video games, and provide Game
Publishers a means to profit from their game content and consumers. To
accomplish these goals, Massive is developing a number of innovative
advertising products involving new technology and new advertising
ideas.
Massive?s patent-pending ad serving technology and unique ad units
guarantee that advertisers get precise, measurable exposure in their
campaign.
The dynamic nature of the Massive Network gives advertisers the
opportunity to target gamers with different messages based upon
geography and time of day. The advertising creative and campaign can
be highly customized and changed quickly to meet evolving market
conditions and brand priorities.
Ad messages are customized to contextually fit each game environment
and then served to locations within the game that are pre-selected by
Massive and the game?s creative developers.

Types of ad units include (but are not limited to):
	Billboards and Posters 
	Vehicles 
	Pizza Boxes 
	Soda Cans 
	Screensavers 
	TV Screens 

Advertisers receive daily reports of audience data from the Massive Ad Server.
http://www.massiveincorporated.com/

Privately held Massive is backed by $20 million in venture capital. It
rolled out its system more than a year ago, and says it has signed up
37 publishers and developers that have already placed ads in nearly 70
games. Source: Baseball video game get in game ads. By Scott Hills.
http://sg.news.yahoo.com/060406/3/3zwlz.html

Details of Massive?s venture capital funding deals.
Jan20, 2005 - $10 million.
Jul 20 2004 - $5.5 million.
Oct 01, 2003 - $2.10 million 
Source: The VC Deal.
http://vcdeal.com/vc/vcresearchcenter/funding_detail.cfm?companyid=12063
----------------------------------
IGA
NYC-based IGA Partners are about to close a $10 million plus (might
close at $13-15 million rage) first round, according to a reliable
source. The company had no comment on the funding... The funding, led
by some top-tier VC firms, has a commitment for a matching second
round from the investors too, based on performance. IGA is in
competition with the more well-known Massive, Inc and others, for PC
and console in-game advertising
http://www.paidcontent.org/pc/arch/2005_11_17.shtml#052455
---------------------------------
Shockwave
Shockwave.com announced today an in-game advertising network for the
company's titles that will "ultimately offer advertisers more than 50
million ad impression opportunities a month."
Shockwave has dubbed the network The Shockwave.com Immersive Network.
Right now only one title is being used to test the system
network?Switch Wakeboarding. Ads are placed on ramps or on the sides
of passing boats. http://biz.gamedaily.com/industry/adwatch/?id=11037

Shockwave.com ? company website
http://www.shockwave.com/home.jsp

Atom Entertainment Inc.
Estimated sales - $11.1 million.
http://www.hoovers.com/atom-entertainment/--ID__132734--/free-co-factsheet.xhtml

-------------------------------------
Double Fusion
Provides advertisers with the means to serve rich media ads and
products into games. Advertisers can track and gather information
regarding their campaign success and user acceptance.
Formats include
Commercial breaks
Billboards and posters
Video billboards
Background music
3D products (static/animated/interactivity)
Location & positioning
Background
Storyline
Part of the main storyline or the main character.
http://www.doublefusion.com/advertisers.htm
Double Fusion is an Israeli-based company. has signed a multi-year
deal with the game publisher Midway to serve ads within its
action/adventure title Stranglehold.

The deal with Midway, which publishes games such as Mortal Kombat and
Gauntlet, is the first such agreement for Double Fusion with a
U.S.-based publisher. Until now, the company has run several dynamic
ad campaigns within game titles based in the U.K. To distinguish
itself, Double Fusion has long touted its ability to produce "rich
media" ads (with video and sound) inside game content.
Source: Midway, Double Fusion Ink In-Game Ad Deal. Mike Shields. February 24, 2006.
http://www.mediaweek.com/mw/news/interactive/article_display.jsp?
vnu_content_id=1002074827

The company also announced that it closed a US$10 million financing
round led by Accel Partners and JVP (Jerusalem Venture Partners).
Double Fusion is widely recognized as a leader in the rapidly growing
in-game advertising market. The company's technology is utilized by
video and PC game publishers to place advertising within their games,
which Double Fusion represents to leading marketers and their
advertising agencies.
Source : Double Fusion Names CEO ; Closes US$10 Million Funding Round
With Accel Partners and JVP. PR Newswire.
http://cfdj.sys-con.com/read/150708.htm

-------------------------------------
Adscape Media
Adscape Media, formerly BiDamic, is a leading technology innovator,
having developed and implemented the world's first dynamic in-game
advertising technology and deployed the first dynamic in-game
advertising technology and deployed the first dynamic in-game
advertising network. Using this technology, Adscape Media now delivers
advertising messages to the gaming audience while increasing game
publisher revenues.

Using Adscape Media?s patented and patent-pending solution,
AdverPlay?, advertisers target gamers with measurable and customizable
advertising campaigns. Gamer demographics include two of the most
coveted groups: 18 to 34 year old males and 24 to 48 year old females.
By dynamically deploying ads in real time into an interactive
immersive virtual environment, a highly effective ad campaign results.
With careful screening and selection of advertising content the gaming
experience is enhanced increasing gamer retention of the message.
http://www.adscapemedia.com/

In this article Chris Gilbert explains how Adscape differentiates
itself from its competitors. ?We're building the management team out
with video game industry veterans, which we feel is very important
because understanding the development cycles, understanding the gaming
audience, being able to place conceptually appropriate advertising so
that it enhances the gameplay and also provides value to the
advertiser, and the gamer gets something else out of it, as opposed to
just being bombarded by ads [is vital].
And while there's similar attributes to other companies, such as
serving dynamic ads and the ability to be able to measure metrics, the
RVG aspect [Real World/Virtual World gateway] of our SDK is very
innovative. [It's] one that will not only provide gamers with new
things to do and interesting ways to do them, but also provide more
value for both the publisher and the advertising community.

I think there are a couple of areas that are very different. First of
all, this issue of quality versus quantity is very important. In
particular, we want to encourage the industry to take as much care in
how ads are designed and how they're implemented, as much care as they
have for developers who've been developing the games themselves.
It's very important that the advertisement enhances the experience
rather than detracts from it. So, quality is extremely important to
us.
And the second area that's going to differentiate us is this whole
concept of RVG and the bidirectional communication technology and what
kind of features that it provides--both for the gamer as well as for
the advertiser.? Source: Adscape joins in-game ad fray. Gamespot.

http://www.gamespot.com/news/6145056.html?print=1

Ascape Media was launched in 2006.
Source: Former Sega execs launch new in-game advertising firm. Paul Loughrey.
http://www.gamesindustry.biz/news.php?aid=15026

-------------------------------------
Burst! Media
Annual Sales $4.5 million (estimated)
Employees 51
Source: Hoover?s
http://www.hoovers.com/burst!-media/--ID__100493--/free-co-factsheet.xhtml
-----------------------------------
Engage In-Game Advertising, a media agency, has launched, and SUBWAY
Restaurant is its debut customer.
Engage will place advertising in games that run on consoles, computers
and mobile phones. It will offer particular focus on regional
marketing, allowing advertisers to target specific audiences and
geographic areas.
Source: Engage in game advertising launches. By Emma Brownwell. January 11, 2006.
http://www.imediaconnection.com/news/7795.asp
------------------------------------
Electronic Arts
In 2003 EA.com earned $32 million from advertising revenue. It
predicts that further growth will come from subcription revenue and
not from advertising.
http://www.dfcint.com/game_article/aug03article.html
So far, those ad revenues have been limited. Electronic Arts, which
had $4 billion in sales last year, for example, took in only about $10
million in revenue from placing commercial images. Source: A New
Reality in Video Games: Advertisements. Matt Richtel.
http://www.nytimes.com/2005/04/11/technology/11game.html?ei=5088&en=8051cb4fd7e22151&ex=1270872000&partner=rssnyt&pagewanted=print&position=

-----------------------------------
Trends
This site contains lots of articles and announcement about the in-game
advertising market.

In fall 2004, two companies, inGamePartners and Massive, began
experimenting with enhanced versions of product placement, including
multiplayer online games that could be played free if a gamer agreed
to view ads.

Then, early last year, Sony Online Entertainment formed an alliance
with Pizza Hut centered on the fantasy role-playing game Everquest. A
player can type "pizza" to open a browser window and order home
delivery.

Big recent studies - including one in November by Mediaedge:cia and
another, just last month, by Nielsen Entertainment and gamemaker
Activision - show relevant, well-integrated in-game ads to be
remarkably persuasive among 18- to 34-year-old males, a group
marketers have found to be elusive of late.
Source: In-game ads link to the real world. By Clayton Collins. Staff
writer of The Christian Science

Videogame maker THQ Inc. on Monday said it has agreed to carry in its
games ads delivered over the Internet by Massive Inc., a deal that
reflects the industry trend towards building an online advertising
model for videogames.
The deal is important because THQ, based in Agoura Hills, Calif., is
the first major videogame publisher to agree to start carrying
Internet-delivered advertising. The game maker, whose popular titles
include "SpongeBob SquarePants" and "World Wrestling Entertainment,"
did not disclose financial details.

Pricing for advertising varies according to the size, angle at which
it is shown and the amount of time it's on the screen. Ads are usually
sold in 10- or 15-second time slots, and can change continuously,
according to the dynamics of the game. A Coca-Cola ad, for example,
could be on a billboard in one scene and on a Coke bottle in another.

Full motion video ads can also run where it makes sense, Longano said.
An example would be in a game that recreates Times Square in New York.
Under the multi-year deal, THQ is expected to start carrying Internet
ads in about 10 percent of its games, increasing the pool over time,
Longano said.
Source: THQ is the first major video game publisher to support
Internet-delivered advertising. By Antone Gonsalves. TechWeb News.

Already, video game publishers have waiting lists of companies angling
to promote video ads and get product placements, including in Anarchy
Online, a game that takes place 30,000 years in the future and whose
free version attracts 2,000 new users around the world every day.

Next year, cellphone maker Nokia is doubling to 10 the number of games
in which it will advertise, and the world?s largest independent game
maker, Electronic Arts, which had one game with ads in 2002, will have
product placements in at least half of the 30 titles it releases next
year.
Costs for advertising in video games have grown exponentially. They
can range from $5,000 to $500,000, prices that rival spots in small
films, according to some agencies.
Source: Advertising enters storylines; meet Nokia in video games.

Advertising revenue from online games, including the more hard-core
multiplayer games, is projected to grow to $1.1 billion by 2008, up
from between $450 million and $550 million last year, according to the
Yankee Group research firm.
Source: Advertising in video games to generate ?200m by 2008 ? report.
By Leigh Phillips.

Short TV-style commercials will make their way into the video game
world starting in the summer as in-game advertising provider Massive
Inc. plans to debut 10-second spots on its network next month.
Source: In-game ads get active. By Georg Szalai.

http://medialit.med.sc.edu/videogameads.htm
---------------------------------
Market reports.

DFC Intelligence report ? Online Game Business Models. This 138 page
report covers a number of aspects of online advertising.
http://www.dfcint.com/game_report/online_game_bizmode_toc.html


Online and mobile gaming ?US ? December 2005. this report from Mintel costs $2995.
http://reports.mintel.com/sinatra/reports/index/&letter=15/display/id=121116&anchor=a121116>


<Search strategy:>

<"online gaming" "advertising revenue">
<://www.google.com/search?hl=en&q=%22online+gaming%22+%22advertising+revenue%22&btnG=Google+Search>

<"gaming advertising" revenue billion>
<://www.google.com/search?hl=en&q=%22gaming+advertising%22+revenue+billion>

<"2005 revenues" "in game advertising">
<://www.google.com/search?hl=en&q=%222005+revenues%22+%22in+game+advertising%22>


<Hope this helps.>
Comments  
Subject: Re: value of advertisement in online games
From: trevorc-ga on 16 Mar 2006 08:05 PST
 
Can you please specify what types of online games you are referring to?

Does this include basic flash games, poker games, etc?

Or by 'games' are you meaning 'video games'; including World of
Warcraft, Everquest 2, City of Villains?

Thanks
-Trevor
Subject: Re: value of advertisement in online games
From: gestalt77-ga on 17 Mar 2006 03:44 PST
 
Hi Trevor!

>Does this include basic flash games, poker games, etc?
No

>Or by 'games' are you meaning 'video games'; including World of
>Warcraft, Everquest 2, City of Villains?

Yes, this type of MMO

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