Big Picture: Time to get your game on

James McGrath
By James McGrath | 15 May 2015

Gaming is going gangbusters, but despite the huge scope for brands to get into it, advertisers are finding it a tough nut to crack.

According to PwC Australia’s entertainment and media outlook report, Australians spent $1.55 billion on gaming in 2013, whether that be on PC, console, or mobile.

That market is tipped to grow to $2.24 billion by 2018 – up roughly 39% within five years – to be 8.8% of the total people spend on entertainment.

Of all media and entertainment categories, gaming is tipped to be the fastest-growing segment, with an annual compound growth rate of 7.6%.

The potential audience is also broader than many people may think. According to the Interactive Games and Entertainment Association the average gamer is 32 years old, and with 78% of gamers aged above 18, the image of the gamer with youth and money to burn isn’t quite the reality.

The total game advertising market is forecast by PwC to be just $50 million in 2018, or 0.3% of the total market, so why is a medium so many are spending so much on attracting so few ad dollars?

“I think brands have figured out that it’s very hard to do well,” M&C Saatchi creative director and self-described gaming nut Andy Flemming tells AdNews.

He’s talking about the first layer of how brands can reach out to consumers – through in-game advertising. Putting brands in games where they’re contextually relevant as product placement, as you would in a movie or TV show. For example, if a game is set in the real world and the characters use laptop computers, then why can’t those laptops be
Dell-branded?

It’s all about immersion and it’s the most obvious way for brands to step into gaming. In fact, this sort of placement can help enhance a game experience, according to Flemming.

“Advertising pervades our lives, so people don’t mind a bit of it in games because it gives you a level of authenticity,” he says.

“If you’re walking through Times Square in a game, it’s actually going to be quite jarring if the brands aren’t there.”
Dr Jeffrey Brand, who specialises in studying games and gaming for Bond University, says while there’s not a lot of empirical evidence to prove an increased level of brand engagement in gaming, he says the signs are there. It’s a relatively small segment for advertisers, but it offers a different brand engagement experience than more traditional marketing channels.

“People engage with gaming in a way which is really difficult to replicate using mobile phone screens, TVs, or even big cinema screens,” Brand tells AdNews.

“There are only really two interfaces there – that is the seeing and the hearing. With gaming, there’s literal interaction so they’re using a lot more of their brain to consume that content, so, of course, with that there’s going to be a lot more immersion.
“If you’re getting me to do something, such as move around in a virtual space, I’m going to suspend disbelief a lot more quickly.”
But if brands can help enhance immersion, they can also do a lot to screw it up.

“If there’s product placement that doesn’t fit within the game universe, it totally breaks the immersion,” Flemming says, adding it’s detrimental to both the brand and the game.

“It can do massive damage to a game if gamers believe that the game studio had sold out, and actually did a big deal with Ford or whoever. In the way James Bond has. I think James Bond, sadly, has sold out. He used to drink Martinis shaken not stirred, and now he drinks Heinekens. That’s fucking sacrilege, man.”

When players see something that’s not quite right, he says, they are broken from the immersion the world of a game presents and are forced to consider the piece of advertising, and their reaction may be extreme.

Brand points to the way a child reacts when you pull a game away from them and says it’s not that different in the world of adult gaming.

“A funny thing will happen when a parent comes and unplugs a game console – the kid is completely thrown, more so than turning off the TV,” he says.

“That’s not because the audio-visual stimulus isn’t there, it’s because there’s a thought process going on. Gamers are continually thinking about their next move, what they’re doing in that world.
“If you’re broken out of it, you’re broken out of that thought process and psychologically that’s really jarring and distressing for the gamer.”
Flemming says it’s this intensity of reaction that makes brands nervous.

“I think brands can be a bit wary of wading into that pool because they’ve figured out that gaming can be an absolute hornets’ nest if you screw it up.”

It takes a collaborative approach between brand and game developer to identify the opportunity where the gamer can be reached with a brand message without breaking the experience.

And for game developers, there’s very little reason to come to the table.

Unlike other mediums – such as app development, which has grown up with ad-funded models at the core – gaming developed as a medium independent of advertising support.

The economics underpinning game development does not include advertising, and game companies have managed to get along just fine without advertising support. So why risk the wrath of consumers by getting into bed with advertisers?
“I think for brands to approach gaming companies that are making profit on a par with them, the game companies are in control of that conversation,” Flemming says.

“They’re quite powerful players. I don’t think you approach them unless it fits their franchise.”

If there’s one trend in gaming that brands could potentially get in on the ground floor with, it’s the upcoming virtual reality revolution. The opportunity for big brands to underpin the economic model of VR could be huge.

“I think what will happen is that the big gaming houses and social networks like Facebook will set up virtual worlds, with lobbies where you can hang out with friends and play a game together or watch a movie,” Flemming says.

The first glimpse of this could be when Facebook finally goes public on games made for the Oculus Rift later this year.
“I don’t see any particular reason there can’t be micro-transactions within that for real-world and virtual purchases, or billboards," Flemming says. "So if brands can come along and throw a few dollars into the mix … there’s no reason they can’t be involved at the start rather than coming in at the tail end.”

Unsurprisingly, game design and devleopment is a skill that’s scant within agencies.

Soap Creative, recently acquired by Japanese giant Dentsu Aegis, however, is making great gains with its SMG Studios division.

“Part of the reason we were keen to explore that [Dentsu] deal,” SMG Studio and Soap Creative founder Ashley Ringrose tells AdNews “was it would allow us to sell gaming to the likes of Carat and Vizeum, and have them sell the concept to clients, because at the moment it’s a really tough sell.”

SMG’s revenue grew over 500% to more than $750,000 last year on the back of its gaming revenue. But Ringrose says SMG has had trouble selling the immersion angle to clients.

“It’s weird. Brands seem to think that five seconds is enough time for their brand message to get out there, but I’m telling them that you get engagement on a whole different level for upwards of five minutes,” Ringrose says.

He also says brands aren’t keen to get into the market because games are seen as part of a campaign rather than a standalone piece of communication. He believes they have to stop thinking of it as part of a one-shot campaign.

“Brands say to us: ‘I can spend $100,000 on a homepage takeover on MSN and get the same number of eyeballs I get with a $100,000 game, and I don’t need to further promote my MSN piece.’ But what they’re not getting is that after the
campaign ends, people still play the game and that is a massive opportunity for ongoing promotion that will get you a tonne more eyeballs than an MSN homepage takeover for a day,” Ringrose says.

“There needs to be a shift in thinking,” Ringrose explains. “There’s more investment in the short term, but the tail is longer.”


Case Studies
YOU SOLD OUT, MARIO!
A word of warning: Bad in-game advertising is becoming a rare beast as brands shy away from playing in the space, but it does happen. In August 2014 Nintendo partnered with Mercedes-Benz on its Mario Kart franchise.
In Mario Kart, users drive around a hypercartoonish race track using fantastical vehicles, with the drivers all characters from the Mario universe. The partnerhisp replaced the cars with Mercs and gamers were quick to mock the tie-up.
Articles titled “Mario Kart 8’s DLC is so gross” on gaming sites such as Kotaku started to crop up, despite the fact the content was optional and free to play. The tie-up arguably damaged Mercedes and Nintendo equally.
WINNING WITH “WHERE’S MY WALLET?”
Last year M&C Saatchi created the ‘Where’s My Wallet?’ game for Commbank, in which users were invited to search the largest photo ever taken of Sydney for a wallet hidden somewhere in the concrete jungle.
The game attracted 43,000 unique visitors in 10 days, with those who stuck it out and found the wallet staying within the game experience for a whopping 64 minutes on average.
Flemming says the game worked only because it was created as part of a brand story.
“The game was essentially part of that brand story, but it was just one of the tools in the toolbox we used. All the brands we have are up for anything if it can be justified as part of a meaningful story.
“With a standalone game, I couldn’t guarantee them reach. If you put a game out on the app store, the stars have got to align because you’re up against hundreds of thousands of other titles.”


Mobile mindset may be more easily monetised
Mobile is the space that is most ripe for brands to move in on, because it’s a more casual mindset to hardcore gamers.
Australians are set to spend $321 million on mobile gaming in 2018, against a global figure of $15.26 billion worldwide according to PwC. The segment is growing faster than the broader ‘gaming’ category too, with PwC tipping an annual mobile gaming growth rate of 8.2%.
A recent Business Insider report claimed 33% of time spent on mobile apps is spent gaming.
According to Dr Jeffrey Brand of Bond University, this is where the real opportunity for brands to push messaging lies: “Advertisers have less to worry about from mobile or casual gamers, because essentially they’re just playing to fill in time.
“They’re not necessarily looking for that [total immersion] escape,” Brand says.
“There’s less of a hurdle to surmount in trying to deliver commercial messages in casual games where it’s expected that interruption is going to be part of the experience.”
The market is there, and advertisers are trying to reach it in two ways: through banner ads and display ads between levels in games, but also by creating bespoke games featuring brands.
Animoca Brands is an ASX-listed developer that licences third-party IP such as Garfield or Astro Boy, and then takes game engines it owns, such as a tower defence game, and uses them to create apps for the Apple and Android app stores.
It primarily focuses on third-party entertainment IP, and CEO Robby Yung tells AdNews that consumer-facing brands have been slow on the uptake.
“They’re custodians of a brand, so when a couple of years ago we were talking to them about mobile gaming they were very cautious. I wouldn’t say it’s hard to be in that space now, but it is harder to get traction in a very populated
marketplace.”
He also says that the objectives of entertainment IP and brand IP are totally different. With entertainment IP, the owners of the IP are seeking a route to monetisation from the game itself.
“We find that with brands outside of our core, they have different objectives which are driven by marketing departments,” Yung says.
“It may be about branding, it may be about short-term reach. More often than not, those type of arrangements are project-by-project.”
The revenue split between specialist mobile game developers such as Animoca Brands and consumer-facing brands has also been a sticking point.
“More often than not, they’re looking for a project hire. We find with those seeking to monetise their IP rather than expose it ... that they’re much more open to a revenue-sharing arrangement, which is much more compelling for us.”

  • This article was first published in the May 15, 2015 edition of AdNews. 
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