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The Rise and Fall of In-Game Advertising

Posted by on April 21, 2016.

For as long as there has been media, there has been advertising. The earliest known printed advertisement can be traced back to Song dynasty China – somewhere between 960 and 1276 AD. Every time the world has been exposed to a new medium, it has been used as a vehicle for marketers to sell products – from early printed flyers, to magazines and newspapers, radio, television, the internet, and now video games. The video game market is not just for players, but increasingly for large corporations buying advertising space as well.

There is even an entire section of the market dedicated to video games developed for the sole purpose of advertising a product. While somewhat unusual in the current gaming sphere, these ‘advergames’ were fairly popular in the early years of gaming, one of the earliest examples being a clone of Space Invaders from 1983. Titled Pepsi Invaders, the game promoted Coca Cola by having the player shoot down the letters PEPSI and the Pepsi logo instead of aliens. Advergames still exist today, and sometimes advertise an ideology or a political group instead of a product.

Product placements and static adverts within video games go back nearly as far. One of the most infamous examples is Zool, a platform title from 1992. In order to obtain the funding needed to complete the project, the developer partnered with Chupa Chups, thus becoming a game remembered for its overbearing product placement more than its gameplay.

As gaming grew into a triple-A industry to rival Hollywood, marketers started to take more notice of the variety of demographics that video games appealed to. In 2006, Splinter Cell: Chaos Theory included advertisements from such disparate companies as Axe, AMD and Nokia, among others. In a sense, video game advertising enjoys the benefits of both static and targeted advertising. The market research has already been done; the developers already have data on the audience the game is going to reach, so advertisers can easily tap into that knowledge without having to go to the inconvenience of breaching an individual’s privacy as do other targeted ads.

Gaming’s increasing online connectivity soon allowed for ‘dynamic’ ads to be incorporated into gameplay, bringing video games even more in line with web browsers as a platform for advertising, with a much more clear-cut demographic reach and less widespread adblocking from the users. Dynamic in-games ads work a lot like the more advanced browser-based ads, allowing for geo-targeting, real-time changes to the ad campaign, and faster implementation than static ads, which have to be arranged before a game’s release and won’t see the light of day until the end of the development cycle.

But this development also marked a point in the rise of resistance to in-game advertising. While resenting ads in games was nothing new, users were growing more and more vocal about it. Dynamic in-game ads require the sort of game world, market reach and coding detail that, for the most part, only AAA game studios can muster. This means that the most likely place to find a dynamic ad is within a game that’s already selling for full retail price – many of which include DRM which requires the user to always be connected to a central server, thus preventing gamers simply disconnecting to block delivery of the ads.

The growth of discontent with in-game ads has grown alongside the resistance to pop-ups and browser ads. For all the evolution and change it has undergone, internet advertising is losing its power. Awareness of the security risks associated with internet advertising is compounded with the fact gamers are often extremely resentful of seeing either dynamic or static advertisements in their games, especially if they have already paid up front for a new, full-price game.

As of 2015, ad blocking software was in active use by an estimated 198 million users around the world. That figure is sure to be even greater today, as that was a 41% increase on the previous year. While advertisers and publishers continue to try new ways of making users engage with – or just accept the presence of – adverts, the popularity of adblocking increases in parallel.

Perhaps it is this decline in web advertising’s reach that has pushed companies to seek new ways to get exposure for their products. It is considerably more inconvenient to block adverts within any video game that includes non-optional adverts, so this may be one of the reasons for in-game advertising’s increased prevalence. However, the gaming community too has been growing more and more vocal in its distaste for advertising. Optional product placement has long been employed, fairly inoffensively, by EA, especially in the Sims series. In 2000, as optional downloads, players of The Sims 1 could include a Pepsi machine in their game, and four years later Sims 2 players were offered an in-game Alienware PC.

But in 2013, with the latest SimCity release, the same tactic is faced with a backlash that EA’s product placements haven’t seen before. An entirely free, optional DLC item allows players to include a Nissan brand electric car charging station in their cities, but players have objected vocally to having product placement offered as a feature.

Despite the backlash against the increasing intrusiveness of adverts and their effect on gameplay, security and privacy, advertising at its core serves a purpose that is vital to most businesses; raising public awareness, desire and engagement with a particular product or brand. If resistance to advertising is set to increase to the point where it no longer becomes viable, how might companies put their image out there in a more acceptable way?

With so many options available, different ways of presenting and targeting advertisements within games, the medium should be a very strong platform for marketing and generating sales. However, Alex St. John, founder of Wild Tangent does not agree that in-game advertisements, whether static or dynamic, are a good solution. Instead, Wild Tangent’s games, which are mostly in the style of mobile and casual games, offer the option for players to view advertisements in loading screens. If accepted, this offers players a way to earn premium currency which can be used throughout all of Wild Tangent’s titles. In 2007, when Wild Tangent adopted this model, their revenue increased by 400%.

But it is not just the advertisers who suffer from this rising no-tolerance attitude towards adverts. For both websites and some video games – particularly in the spheres of mobile gaming or free browser-based games – selling advertising space has, for a long time, allowed content a way to monetise itself, pay for server costs and hosting, while still remaining free for the end users. If these adverts are to die out, how will websites and free games earn enough to maintain themselves?

One option is for the advertisers to take a more personal, grassroots approach to buying advertising by sponsoring particular creators. This is already being seen quite prevalently with YouTube and Twitch personalities; a company pays a creator directly, and a short message is delivered within and alongside the content of the video. This has the advantage that the creator is in control of when and how the advertisement is delivered, while the viewers and subscribers are still watching the personality they want to see, rather than an obstructive, irrelevant, unskippable pre-roll ad that delays their desired content.

Audience donations are becoming an increasingly reliable source of income as well, whether they are delivered through crowdfunding services such as Patreon or by direct payment through PayPal. Between sponsorship and viewer donations, this has created a marketplace that supports professional gamers who make their living from live streams of gameplay and commentary. Not only that, but advertisers do not have the economic stranglehold that they do in other markets; crowdfunding allows for less dependence on ad revenue and allows creators free rein over the companies they choose to advertise for, if any.

For decades, online advertising both within the medium of gaming and outside it has been a war for attention. Not a war between different advertisers wanting to raise the highest awareness for their product, but a war between the ads themselves and consumers. Increasingly, users are rejecting adverts, finding ways to avoid even seeing a banner ad or an in-game product placement, while advertisers fight to find new ways to ensure exposure, sometimes resorting to invasive or obstructive means. However, their grip is slipping more and more rapidly. Some advertisers have found ways to work ‘with’ the online and gaming communities, and have delivery mechanisms for their ads that operate only with consent of the end user, often offering rewards for accepting them. While companies adopting this policy are definitely in the minority for now, the current trends and figures show that there needs to be a paradigm shift, before gaming loses its viability as an advertising medium.

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Submitted in: Expert Views, Josh Townsend |