The geography of this gaming landscape ranges from videogame consoles to personal computers, from software to the Internet, with a total population of millions of gamers.
Counting gamers with the precision that Nielsen Media Research tabulates a TV audience, and the ability to promise advertisers results with the precision of a magazine rate base, are dreams that will need to become reality to make interactive gaming a viable mass medium for advertisers.
"What's intriguing-and it all needs to be validated-is that you have this group [of more than 86 million PC gamers worldwide] and they are watching less and less television," says Scott Levitan, general manager of Philips Mobile Infotainment of North America. "It's becoming tougher and tougher to grab a hold of this group [with conventional ad media]. And they are spending a hell of a lot of money. "
"Measurement is important because as they get more data, it becomes a much more attractive medium for marketers because they'll know who the audience is," says Michael Goodman, Yankee Group senior analyst.
Coming next October is new technology that will not only insert specific brands into videogames via the Internet, but also track their exposure to gamers. Richard Skeen, VP-advertising at Massive Inc., says the in-game advertising company's technology for new PC titles from Atari and Ubisoft will place marketers' brands into a game when the player connects to the Internet.
ads can be changed
The ads can be changed over time and remain in the game after the player goes offline. Mr. Skeen says the technology also offers accountability to the advertiser by tracking ads viewed by the game player.
Tim Harris and P.J. MacGregor,VP-partners of Starcom MediaVest Group's games-centric SMG Play, say they're encouraged by the recently announced initiative by Activision and VNU's Nielsen Entertainment to attempt to measure videogame audiences. The plan is to measure everything from ad exposure to audience recall for console-based videogames. For the first time, videogamers will be tracked to provide advertisers with a standardized measurement.
"It will validate and measure and sell the importance of this sector," Mr. Harris says. "A lot of folks believed it on their own, and those who were skeptical have been given a wake-up call."
Marketers think of videogaming all as one thing, says Mr. Harris. However, it's a complex virtual world and getting more complicated.
SMG Play was the first major in-house agency unit to focus on gaming last year. In early May, WPP Group's Young & Rubicam followed suit when it opened Bounce Interactive Gaming.
There are three main game platforms for advertisers, says Dave Madden, exec VP-sales, marketing and business development for Wild Tangent, as well as chairman of the Games Committee for the Interactive Advertising Bureau.
One platform involves in-game product placement on software purchased at retail and used with game consoles or personal computers. Many of these games, such as Electronic Arts' "Madden NFL" franchise, can be played interactively against remote competitors.
The second ad-friendly platform consists of Internet-based games that sell a traditional form of online advertising not integrated into game content. Examples of such "casual gaming" sites include Pogo.com and Yahoo! Games.
The third platform is custom-published games that appear on marketers' Web sites, such as the soccer game that Wild Tangent created on Nikefootball.com or the race game on Kraft Foods' advergaming site Candystand.com.
Of the various platforms, console-based games may offer the greatest challenge to measuring users. "In the online space, everything is extremely accountable," Mr. Madden says, but it's much too early to offer an industry perspective on software-based console interactive games.
NPD Group plans to conduct a study to determine how often people play games online or try to gauge how many of the gamers are actually going online, says NPD analyst Richard Ow.
"It is a niche market; it is growing, but it is still niche," he says. "From an advertising standpoint, based on what we have, the best we can do is to try to understand what kind of market it is and what kind of gamer is going online.
"It is a very select group of people, and there are obstacles. Broadband penetration is one of the obstacles. Many are teenagers or younger. A lot of these services entail pay to play. How do teenagers play if they need a credit card and don't have one?"
"The media opportunities are the videogames sold at retail that reach millions and millions of people," says Julie Shumaker, EA director-ad sales. "By nature, the online will come. If you get into a videogame that is online-enabled, you reap the benefit both ways."
"Within paid-for games-bought in the store-you can set up a server and the site administrator will know exactly how many people are playing at any one time," says Forrester Research analyst Paul Jackson. "[Players] have a user ID or password, but may not represent their true identity. The issue is really the coordination of gathering those numbers and getting people to release those numbers when you have 10,000 sites around the world. People who are running those sites know, but gathering the data and amalgamating those numbers is a tricky task."
Measuring videogame usage will mean new challenges to ad agencies. "It is difficult to fit into their ROI analysis," Ms. Shumaker says. "They know how to buy online media on a cost-per-thousand basis; on the flip side they know how to buy gross rating points."
EA builds "relationships with top clients and agencies," she says. "If I'm talking to Gatorade-they are continuing X factor around competitive male-focus sports-we would talk about the Madden game and NFL street game. Are we going to work on an ad opportunity to integrate branding or go deeper and have product as some interaction in the game? That leads to pricing."
As a pricing strategy, Ms. Shumaker offers the example of EA's "Sims" title.
"We are charging [the advertiser] 35¢ a unit and we know the average gamer plays that game a minimum of 45 times during the ownership of that game and we give [the advertiser] a million-unit guarantee-even though we know we'll sell millions. They have three integrations into the product-like a soda can, a billboard and maybe their product in a convenience store. That's three exposures in the game; 180 million unique impressions for a million unique people. And then you back it in based on 35¢ per unit based on what the net CPM would be."
Wild Tangent's Mr. Madden likens the evolution of the interactive gaming business to the maturation of broadcast and cable TV, saying, "Everyone from software publishers to platform providers to portals are all trying to figure out `What's my value in the food chain?` "
contributing: beth snyder bulik