Introduction

The first and most notable information that is contained within the research is the value that advertisers see in using video games as an advertising venue. Video games are increasingly popular as they are connected not only to Xbox Games and other unique gaming possibilities, but also popular movies and television shows, like Pirates of the Caribbean and the popular show, ‘24’. One of the clear goals of advertising anywhere is ‘brand recall’. An advertisement cannot be considered effective if people do not recall the brand or product being sold. This is no different in video games. One of the key elements in determining the success of a video game is whether or not there is a high level of brand recall. Another important feature of advertising is whether or not it is deemed to be intrusive. For example, in today’s movie theatres, there is always a series of commercials prior to the movie previews. This is rather recent practice. However, it would be interesting to determine whether or not theatre goers consider this intrusive. Again, it is the same with video gamers. According to one research study with video gamers, there were few negative responses to product placement in video games.

“The first research question concerned players’ attitudes toward product placement. Attitudes were measured according to responses to three questions on the above-referenced seven-point Likert scales. In addition to mean scores on each of these queries, an overall mean attitude score was computed (mean = 5.71; alpha = .62). The results show that players in this study were generally positive toward product placement. They did not consider the practice deceptive (mean = 5.47) nor did they think it impaired or interrupted the game-playing experience (mean = 6.2)” (Nelson 2002, p. 88).

The practice of using advertising in video games is part of a strategy that the industry calls ‘integrated advertising’. It is part of an overall strategy to increase product placement wherever there is a large-scale market for the product. For example, young people use video games and they also drink pop, like Pepsi or Coke. Therefore, it seems logical that placing pop advertisements within video games would be an effective strategy. “The practice of product (or brand) placement has grown significantly during the past 20 years; marketers now frequently use placements as the basis for multimillion dollar integrated promotional campaigns” (Karrh, McKee and Pardun 2003, p. 138). The fact that advertisers feel it’s worth their time and money to place advertisements in video games is an important statement in and of itself. Advertising is, after all, about strategy and recall.

Researcher Michelle Nelson (2002, p.1) studied the effects of placing brands in computer and video racing games. “Open-ended comments revealed that players’ attitudes, however, depended upon the game genre and how and where the brand appeared”. Nelson opines that one of the reasons advertising within video games can be considered effective is because of its interactive nature. That is, video gamers are actively involved in the game and the products appear as part of the background scenario. As long as they don’t interfere with the game, they will likely be considered simply ‘a part of the game’. One of the key facts about advertising in video games are the sheer numbers. “Playing games has become computer-owning America’s favorite pasttime, over watching TV, going to movies, or reading books, according to the Interactive Digital Software Association [IDSA] (2000). The potential reach for advertisers is enormous, with an estimated 145 million Americans admitting to playing games” (p. 4). With these kinds of numbers at stake, it’s no wonder that the advertising industry sees a valuable market in product placement within video games. Another fact is the fact that video games are becoming increasingly sophisticated. With 3D environments, sounds and sometimes even smells emanating from their speakers, it’s an easy thing to become highly addicted to. The environments created by the gaming industry are far more realistic than in the past and thus it’s easy for young people to spend hours of their time involved with their games.

According to Seth Grossman (2005, p. 227), the new term for advertising in video games has been coined as ‘advergames’. Grossman also notes that some of the companies that see great potential in advergames are cookies, fast food, soda pop, candies and cereal companies. But, researcher Kathy Prentice (2006) notes that it’s not only about product placement within games that’s the issue. She suggests that products are actually an integral part of the game. This is quite a different notion than traditional advertising. Video games offer companies a completely new way of displaying and selling their products. For example, a key figure in the game can be drinking Pepsi as part of one segment in the game. Or, they can go into a McDonald’s and it all seems perfectly natural. Gamers accept these product placements as part of the overall environment of the game itself. Prentice (2006) quotes Nicholas Longano, chief marketing officer for Massive, “In a sporting game there could be branded blimps over a stadium. A character could be wearing a t-shirt with a logo emblazoned on it.”

The question is whether or not this is an effective strategy. According to a study conducted by Nielsen Interactive Entertainment in 2005, product placement in video games is turning into big business. “A study last October by Nielsen Interactive Entertainment found that in-game advertising resulted in a 60 percent increase in awareness for a new product and that animated 3-D ads achieved twice the recall of static billboards” (Prentice 2006). Again, according to Prentice (2006) the proof is not only in the numbers of companies that advertise in video games but who advertises. She lists some of the prominent companies as the Sci-Fi Channel, Nabisco, Coca-Cola, Comcast, Honda, NBC, Nokia, Panasonic, T-Mobile, Verizon DSL, Warner Bros., XM Radio, Panasonic and the U.S. Navy.

In fact, the gaming industry now generates more revenue than box office sales, movie rentals, and book and music sales. In 2006, video game revenues soared to $12.6 billion (+19% year to year), compared to U.S. box office receipts at $9.5 billion, flat from 2005. 1 Worldwide, video game and interactive entertainment revenue reached $33 billion in 2006. 2 According to Jupiter Research, the time U.S. teens spend with video games is now on par with radio, mobile devices, and music, and right behind watching television

Current Advertising Models

Advertising in video games can be broken down into two broad categories: advergaming and in-game advertising.

Advergames are commissioned or sponsored by a marketer, and designed from scratch around a brand or product. They deliver brand messages, drive web traffic and build awareness. Most can be played for free. It’s a simple value exchange: Users give a brand their attention, and the brand provides an entertaining experience.

Advergames are incredibly flexible. They can be developed for IM applications, banner ads, mobile devices, interactive billboards, web sites, Facebook applications, widgets and more.

In-game advertising integrates a brand into a pre-existing narrative. In-game ads can be static, meaning they stay the same every time the game is played, or dynamic, meaning they can be manipulated via an Internet connection to precisely target the player.

Static in-game ads are typically hard-coded during development and appear as billboards or props, like vending machines, or on game menus and loading screens. Usually, a player can interact with branded billboards, signs and more to get information he needs to progress in the game.

For example, Doom 3 contains static ads such as of McDonald's and Coca-Cola.

Dynamic in-game ads can be updated every time the game is played, if the PC or console is connected to the Internet. The ad-serving agency factors in the user’s geographic location, the day of the week, time of day, length of play, and any other available user information. Marketers can get data on exposure time and ad type, and agencies can optimize performance.

For example, EA's Battlefield 2142 contains dynamic ads such as of T-Mobile and McDonald's.

Variations on existing advertising methods

Pre-game, post-game and interstitial ads: These can roll before gameplay even begins – for example, as a loading screen – or after a specific level or time period, or at the end of a game session.

Sponsorships allow a marketer to own 100% of the territory in and around an existing game. A brand can sponsor a gaming tournament, a zone, or even the release of exclusive content, like unlock codes for special features, hidden items, extra levels and more.

Product placement in video games works a lot like placement in movies or television, with opportunities for integrated brand messaging, sponsorship, and use of products or services by the characters. These elements are typically hard-coded into games and can require long lead-times, usually nine to 18 months prior to release. Rising game development costs (now into the millions) sometimes force marketers to make a significant investment upfront.

Challenge: Long lead-times. Some games take three to five years to produce, well beyond the shelf life of most ad campaigns. Since no one ever knows whether a game will be a hit, a pact upfront is a gamble. You could wait for the sequel – but if the first is a blockbuster, the price of a deal will rise accordingly.

Co-branding gathers many of the best elements of video game advertising. For example, Lego announced in May 2008 it was building a subscription-based MMOG for kids, Lego Universe. Players have to spend virtual money to buy bricks, but they’ll earn more just by playing the game.

Game skinning lets a brand sponsor display units around game content and includes custom branded integration in the game. This isn’t as expensive as other executions but also doesn’t allow for as much creativity, as it’s akin to recycling an existing game.

Impact of video games advertising

Patrick Caldwell (2006) is one who is interested in the effect that advertising has on the psyche of those who play video games. His concern is that there is not only overt advertising but covert, or subliminal advertising; a fact of which he feels could possibly have a negative effect on those who play. He notes that another strategy within advertising is not only to make products seem appealing (appealing = worth buying) but to create an emotional resonance with the potential buyer. In other words, it’s more than just product placement and product appeal, but product importance in our lives. Companies want the public to feel good about their products and who they are. As he states, “We do not buy something if we distrust the company.”

In addition to that JJ Richards, General Manager, Platform Services, Advertiser and Publisher Solutions Group in Microsoft writes in his blog that:

"In order for an ad to be incorporated into a game, the ad needs to enhance the entertainment value of the overall game experience, never detract from game play, and add realism to the game - meaning, ads in games are integrated in locations where one would expect to see ads in real life. Our process of integrating ads is done with gamer satisfaction being the most important criteria, and Massive makes sure that every new in-game ad goes thru extensive testing with gamers prior to placement.

Our research indicates that most gamers like advertising in the game because it adds to the realism. Imagine playing a Major League Baseball game with no ads behind home plate, next to the scoreboard or on the outfield wall - not very realistic. Now imagine the outfield with up-to-the-minute ads you just saw on television or read in a newspaper - the latest movie release, television show, or a new car model. That is much more realistic.

Gamers are consuming the experience with the ads. The ads add to and enhance that experience, which our research shows is highly effective for both game play and advertisers."

Another concern that arises as a result of advertising within video games is the age of the person playing the game. It’s an unfortunate fact of life that even though some games are intended for a specific audience, individuals younger than the intended audience can get a hold of the games too. Thus, young viewers may not only see inappropriate game content but inappropriate advertising as well. “Though many games are targeted to older teens, members of the age 12-to-17 set are most likely to play, according to one 2004 study” (Collins 2006). Not only is age a concern but advertising within video games is already at the next level of consumerism. Again, according to Clayton Collins (2006), users of one particular game can not only see Pizza Hut in their game, they can order it. “Then, early last year, Sony Online Entertainment formed an alliance with Pizza Hut centered on the fantasy role-playing game Everquest. A player can type “pizza” to open a browser window and order home delivery.” While it’s true that the key point to advertising is to encourage consumers to buy products, this could potentially have harmful effects especially if subliminal advertising were to take place. However, most people in the gaming industry feel certain that there are specific reasons why the use of the Pizza Hut strategy might actually be an anomaly as opposed to a new trend in advertising.

“Some observers, including Mr. Greenfield, do not yet see clear evidence that in-game ads will cause youths to buy more. Greenfield also maintains that too much ad clutter could actually annoy gamers and even trigger retaliatory hacking. “This is a rebellious group,” he says. Already the Pizza Hut order option has been derided on some websites, says Steve Mounsey, a 20-something gamer who manages a GameStop store in Beverly, Mass. “A lot of people make fun of that” (Collins 2006).

Yet, Collins (2006) notes that not everyone agrees that this type of advertising can’t and won’t work. Video games which are increasingly more complicated will demand that the advertising be more interesting too. “…Claire Rosenzweig, executive director of the Promotion Marketing Association (PMA), a nonprofit research and educational organization. What you see is an incredible rise in experiential marketing, and ‘advergaming’ can be included in that branded experience.”

However, since using video games is largely a personal experience, the fact is there is little to no control over what takes place within the gaming environment. Not only might advertisers be concerned about what they’re connected to but parents have begun to be concerned as well. If companies are advertising to kids within their video games, there is a question as to what kind of effect it has on them. Are they pushing to buy for the products they tend to see in their video games, or are these advertisements simply part of the background? “It’s virtually impossible to know what kids are doing,” especially as gaming goes mobile on hand-held devices, many with wireless Internet connections, says Susan Linn, cofounder of the coalition Campaign for a Commercial-Free Childhood” (Collins 2006).

According to Nelson (2002), there is a need for additional research in the area of the effectiveness of product placement in video games. “Future research might test the relative effectiveness of each of these methods, including the increasing use of sensory cues such as audio in the form of licensed music, sound effects, and announcers and, in the future, look for branded smells. In addition, new versions of games typically offer greater customization features. In the future, it will be very interesting to note whether or not these customization features leads to an increase in the number of people who play these video games.

Research

Methodology

Author's primary means of researching the topic was to produce a survey which would elicit responses from ‘gamers’, that is, people who regularly play video games. It was this researcher’s intent to make the survey easy to understand and the questions easy to answer. The questions were designed to be elicit valuable information but not disrespectful or threatening in any way.

Author of the topic used survey research that was performed at Extraball Café, located in Rome, at Piazza Pio XI - extremely popular place among gamers. According to author's word the advantages of the particular survey were that it could be answered quickly and anonymously. The questions could be answered in such a way as to elicit good information without having to be personally involved, which leaves me, more time as the researcher. It is also more effective for the respondents.

Conclusion

Authors confirms that in terms of the data provided by his survey, there is a clear pattern that demonstrates the majority of gamers are young males between the ages of 15 – 25. These young men tend to spend a great deal time playing video games and surfing on the Internet. The majority own their own personal computers and consoles and in several cases, they own multiples of both the above.

In his final chapter author emphasized next notes:

• There is definitely a connection between the advertising in games and the sense of realism that gamers feel about the game itself. Logos and the presence of brand names provide a context for the action, although there is some difficulty in doing this in the science fiction genre. While the action genre remains strongly popular, the other genres are almost equally so, with the exception of games which offer role playing opportunities. These gamers tend to enjoy games where they can be shooting at targets and simulations of various types. It is not unusual to see this pattern given that it’s likely these same young males are the ones attending action films in the movie theaters.

• The data provided leaves no doubt that this demographic is a highly important one for advertisers. By placing ads in games, they literally have a captive audience. Unlike movies, the gamers are highly unlikely to fast forward because when they do so they might miss a quintessential aspect of the game. Therefore, the ads are going to be seen no matter what. In fact, the data also supports the assumption that young people are actually buying games for the purpose of finding other products to purchase. These games therefore provide a context not only for casual fun but also high stakes advertising. Millions of young men are buying these games world wide. In doing so, they provide the advertising industry with one of the biggest possible pay days they’ve had since the invention of the television. It is clear that the advertising industry is going to increase their presence in video games and the gamers have already accepted that. It is, in many ways, a match made in advertising heaven.

• One of the more interesting pieces of information is the fact that although the majority of these gamers identified themselves as students, they are clearly not using their computers for their studies, at least not for the most part. To them, computers and consoles are mediums for entertainment and purchasing other products they might want to buy. The advertising industry is absolutely justified in targeting this demographic because they may prove to be one of the most powerful advertising tools the industry has. Young people with disposable income, or parents with disposable income will purchase an ever increasing number of products. The more they do, the more games they will purchase and the more products they become aware of. Thus, a powerful purchasing cycle is created and perpetuated.

• Another argument one could put forward is that communication skills of this generation might also not be as well-developed. Their communication skills focus on sending emails to one another via the Internet – an environment where spelling and grammar are not as important as sending a quick message to someone such as; “how r u?” The statement is clear and yet it’s certainly not spelled correctly, nor does it really say very much. Young people are also relying, at least to some degree, on these video games for their personal stimulation. As many of these games are in the action genre, there is certainly a concern as to how much violence they are being exposed to. Again, the issue of controls comes into question. Yet, how can the industry control whether or not a young boy gets a hold of his older brother’s console one day and sees things that a boy of his age shouldn’t be able to see? It’s almost an impossible task to control this industry. Also, now that an entire generation of young people have been exposed to these games, we have yet to see what the effect will actually be.

In the end author author highlight that although our sample size was small, there is definitely a correlation established between the advertising of brands and products in video games and the purchasing and playing of these video games themselves. Future research should also focus on what kinds of brands these gamers prefer to see in their games. Extensive research needs to be conducted on this subject because the gaming industry is only going to continue to grow. There is no doubt that the advertising industry realizes they’ve hit ‘pay dirt’ with these games and their captive audience not only loves the games, but sees these advertisements as adding the sense of realism they prefer inside the games themselves.