The latest issue of Trendwatching is titled Youniversal Branding, and is about advertising in games, MMOs and virtual worlds (VWs). Trendwatching is often a fun, interesting read if you are OK with the language being a bit inflated, their tendency to invent "clever" (irritating) terms like "Youniversal," "Massclusivity," "Twinsumer" and "Tryvertising," and really long articles that often lump lots of stuff together that, when you're done, make you go... what were they talking about again? That being said... they often cover lots of ground, have many great links, and provide a viewpoint that isn't always available elsewhere. I recommend a subscription.
"Youniversal Branding" is basically about the current state of advertising in games/VWs. They report that in 2005, advertisers placed ad buys of $USD 56 million in games (up from $USD 34 million in 2004), and predict that that market will be $USD 732 million by 2010.
That sounds like a lot of money, but let's put it in perspective.
According to a report by TNS Media intelligence, total US advertising spending in 2005 was $USD 143.3 billion. That number does NOT include "paid search advertising." According to this article, Google and Yahoo! had ad revenue of about $USD 6.5 billion last year, and expect a combination of about $USD 10 billion for 2006. Let's assume AskJeeves and MSN got at least 200K, and I'll add 6.7 to that 143.3 number and get a nice, round 150 that I love so much.
So... games got around $USD 56 million compared to $USD 150 billion (that's US only). That's .04%. Let's be super clear. Not "four percent." Four one-hundredths-of-a-percent. Four percent of a percent. 0.000373333 to be exact.
According to the Trendwatching article, 100 million people worldwide play games every month. That is a pitiful amount of advertising for that size audience.
"But wait!" you cry. "People pay to play those games! They subscribe! We don't need advertising, because folks shell out $10 or $15 a month to play. What's your point?"
My point is "soap operas."
There has been a discussion on my favorite virtual world blog, Terra Nova, about how the use of a game in an insurance industry ad may or may not constitute mainstream acceptance of gaming or a change in the general gestalt of how games/gamers are viewed. My take is that the ad is bad, and that marginalized, cartoonish, even disturbingly inaccurate portrayals of sub-cultures have always been used in ads to make hay.
Games in ads does not cultural sway make. But ads in games does.
The Trendwatching article is OK. It doesn't break any radical ground for any of us who are already immersed in MMOs/VWs. Refreshingly, it has the stones to admit as much right up front. What it does do, however, is gather unto itself many of the issues related to advertising in games. It is a good starting point for a discussion which harks back to the earliest days of the first really transformative, mass-market, captive-audience media in our history: radio.
Before radio, all mass media was, to a great degree, "pull." Yes, you had to wait for a newspaper or magazine to publish the next issue, but you could then read it at your leisure, and do so where you wanted to. It was consumed on your schedule, in your environment. You can read on the train, at work, at home, out loud. You can share the paper, save it, read it in any order you want. Same for books and magazines. And that hadn't changed, really, since Guttenberg.
Radio? Entirely different. When a radio show is broadcast, you must listen to it right then and there. It is immediate, and presumptive. It requires that you put down what you are doing and listen (or at least listen while doing something radio-friendly). It needs "radio space." You need to schedule time if you want to be sure to catch your favorite show. Before the advent of recording devices, if you missed Little Orphan Annie... you were SOL -- Sorely Ovaltine Lacking.
It was so different, in fact, that early audiences didn't get it. And early advertisers didn't, either. The first ads on radio were bought as 30 minute blocks of time where pitchmen simply read -- on and on -- about the benefits of their products or services. They were infomercials, essentially. But people didn't want to listen to that. Not then. Why would you schedule time away from family, work and friends to listen to a guy talk about Soapolio for 30 minutes? There just wasn't anything -- from an audience perspective -- worth listening to. And from an advertiser's perspective -- worth buying into.
Until soap operas. There were limited news, sports and music examples before the coming of the soaps, but I'd liken those numbers to what we've got in gaming ad revenue right now; percents of percents. At some point, though, a number of advertising agencies got very clever. They made the jump -- whether it was creative, intuitive or purely mercenary we don't know for sure -- that what was needed was a way to get folks coming back to their radio sets every day, at the same time. So they invented, wrote, directed and produced soap operas for their advertising clients. Originally soap manufacturers, hence the name.
Advertisers wanted to reach an audience. The audience didn't have an overwhelming, commercially viable interest in the current media. So the advertising agencies invented a reason for folks to "go to the watering hole." Voila. Radio advertising took off, more radio shows were produced, and within a decade, spending on that media eclipsed that of print advertising.
Gaming is still a relatively new media. I ain't saying it's in any way similar to radio, btw. But it's new. And VWs/MMOs are real new. Many of my gamer friends will decry the idea of blatant advertising in games/worlds. I will agree with them. As long as by "blatant" we mean "bad." I would point to the example of the early radio advertisers sitting at a mic and reading print copy for half-an-hour. That's just dumb. You can't take what worked in other, older media and make it work in a new one. What worked in TV didn't on the Web. What works in print doesn't work on radio. I'm not saying that we should look for advertising and marketing to be the same or even similar in games to what has come before.
The obvious has already been nailed to the wall. NASCAR games have NASCAR cars with NASCAR correct logos. NBA games have Nike sponsorships. VW's with fashion conscious avatars are getting some real-world design shop advertising/marketing. This is the tip-of-the-iceberg. The "read the print copy on the radio" stuff. It will get us the "percent of the percent."
Until someone figures out the "soap opera" for games/VW's, MMOs/VWs may be marginal from an economic standpoint, and probably a cultural one. The Trendwatching article blends info about MySpace into its talk of "other worlds," but I find that fallacious. Having a blog or MySpace page isn't gaming or being immersed in a VW. There are surface similarities, but it ends with some tool blending. And link ads from MySpace aren't "virtual ads" any more than banner ads on Gamespot are.
We are finding new ways to link the Web and our new virtual worlds back to our lives all the time. They are, indeed, relevant to our intellectual, emotional and creative selves. I have no argument with that. I loves 'em. As marketers, though, we need to get out of our print/radio/tv/web boxes and think about how to bring brand new economic, and probably advertising-type value to MMO/VW spaces. And as gamers, we should welcome new ideas (as long as they don't suck). Because without orders-of-magnitude more investment, we won't see the kind of growth that brings major growth and improvements to the industry.
[Thanks to George at IAG for the pointer to Trendwatching. I usually get around to reading it eventually, but his link came in within a day of the TN post on the insurance ad, sparking this train of thought.]