$46.8B Record U.S. agency revenue in 2015
Zynga is looking to level up in-game advertising.
The gaming company behind the "FarmVille" and "Words With Friends" franchises has developed a new ad product called Sponsored Play that inserts branded levels into its games that people can play like they would a normal level. It's the first ad format created by Zynga's in-house agency Studio E, which was formed earlier this year as part of the company's push to attract more advertisers in order to subsidize its largely free games.
"When we think of Sponsored Play, it really is product placement at scale," said Zynga's VP-Sales Julie Shumaker. "It's the mechanism by which our great game designers can now focus on brand KPIs within a native environment of the game to build engagement experiences specifically on behalf of the brand that reward the player." (KPIs are jargon for key performance indicators.)
Clorox, one of the first companies to test the Sponsored Play product, used the branded format in Zynga's "FarmVille: Harvest Swap" game to promote its Hidden Valley Ranch brand via a level in which people could harvest ingredients for a Hidden Valley Ranch recipe. After people completed the recipe, they could click a link to the brand's recipe site.
Brands are charged each time a person plays their sponsored level and can offer players a reward in exchange for playing. Another brand that tested the product, Naked Juice, offered people in-game currency for harvesting a piece of fruit, then tweeting an image of a character holding that fruit.
During the branded product's testing period, Zynga measured double-digit increases in the number of people that opt to play a sponsored level versus those who chose to watch video ads, with people spending on average 15 to 25 seconds in each branded level.
While the sponsored gameplay products sound more time-intensive for brands than slotting in a banner or video ad, they're quicker to produce than a typical in-game product placement and don't require much effort from the brands, according to Zynga. "Because we do it in-house and I think we're quite good, we've taken a lot of the pressure out of the brand and agency of record," Ms. Shumaker said. "They should have very little heavy lifting."
For these types of campaigns, a brand tells Zynga's Studio E team its objectives and the audience it wants to reach. That team -- which includes several developers, a pair of designers and some account managers -- comes up with different ideas to present to the brand. Soon after an idea is approved, the campaign is ready to go live.
The Clorox campaign was put together in 18 days, said Ms. Shumaker, who previously ran traditional gaming giant Electronic Arts' ad business and said product placements within that company's games required nine months of lead time.
Zynga formed Studio E shortly after the company's co-founder Mark Pincus returned as CEO in April 2015 in a bid to improve its in-game advertising and attract more advertisers in turn.
Zynga garnered 81% of its second-quarter revenue, $162.2 million, from things like in-game sales of virtual goods, up 24% from the quarter a year earlier. Advertising and "other" revenue streams contributed 19%, $37.8 million, up 70% from a year earlier. Monthly unique users in the second quarter totaled 62 million people, down 24% from the quarter a year erlier.
"You have to make your games accessible, which often means largely free," Ms. Shumaker said. "And you can't have largely free games if you don't have quality, great ad experiences. So we feel like Studio E is a really wonderful business unit to take that as a starting point and build from here."