Posts filed under ‘games’
As Google expands its lucrative ad network to new markets, industry watchers increasingly believe the search giant will buy its way into the nascent market for advertising inside video games.
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Google has reportedly looked at acquiring AdScape Media, a small company, founded in Ontario and now based in San Francisco, that specializes in so-called in-game ads. Google did not return calls seeking comment, and an AdScape spokeswoman declined to comment on the talks.
Though an industry insider who asked to remain anonymous said negotiations had stalled, such an acquisition would allow Google to take on old foe Microsoft, which last year acquired a similar but larger company called Massive. In-game ads, however, are one place where Microsoft would have a rare advertising advantage over Google thanks to thriving sales of its Xbox 360 gaming console and a long list of gaming titles.
“Google would be playing catch-up against some significant entrenched providers,” said Michael Goodman, a program manager at research firm Yankee Group Research. “The biggest challenge for them is they might see themselves closed out of the Xbox as a platform to serve ads to.”
In-game ads may sound like a niche, but it’s a growing one that reaches a choice demographic for advertisers. A recent Nielsen Entertainment study found that men aged 18 to 34 are spending more time playing video games (12.5 hours on average per week) and less time watching television (9.8 hours per week). About 6 million U.S. households have at least one “power gamer,” someone who spends as much as 20 hours per week and $50 per month on games, and there are more than 15 million active players of casual games, which are free ad-supported games such as Tetris or cards, said Michael Cai, director of broadband and gaming for Parks Associates.
“It’s not a pimply faced teenage kid playing video games in the basement anymore. It’s people with a lot of disposable income,” said Jeff Berg, content editor at the Interpublic Emerging Media Lab think tank. “It’s a natural space for Google to move into if they can do it effectively.”
The dollar value of this market isn’t nearly as small as many people would think. Parks Associates predicts that game advertising revenue will grow from $120 million in 2006 to $200 million this year and $300 million in 2008. Yankee Group forecasts in-game ad revenue to reach $732 million by 2010. Buying AdScape wouldn’t get Google a lot of new customers, but it would get the company technology, Goodman said. “Google already has significant relationships with advertisers, but they would have to build up relationships with game publishers,” he said.
“Google is the king of search ads, but they aren’t that dominant in brand advertising.”
–Michael Cai, director, Parks Associates
Over the last 18 months, the search giant has been rapidly moving into new ad markets such as print and radio, using its automated online ad-delivery system to provide a way for advertisers to reach new customers via offline mediums. Google purchased radio advertising provider dMarc Broadcasting for just over $100 million a year ago and has been conducting radio ad delivery tests.
While it’s hard to imagine virtual world games like World of Warcraft being a great advertising vehicle for Coke or Pepsi, plenty of games could be ideal, such as sporting titles.
“For example, we take Nike’s (ads) they’ve used for print or television and implement that straight into the games across our sports titles,” said Justin Townsend, chief executive of in-game advertising firm IGA Worldwide. The ad is delivered over the Internet and can be changed depending on which advertiser has purchased the ad rights, he said. The ads are targeted geographically, so players in Germany, for example, will see a German version of the ad. Because Google’s greatest success has been in contextually targeted ads rather than display ads, it might be better suited serving ads that appear alongside casual games, which are sold over the Web, Cai said.
“The question is whether Google is interested in getting into a new media form–gaming, and whether they are looking beyond search and trying to address a new ad business–display advertising,” he said. “Google is the king of search ads, but they aren’t that dominant in brand advertising.” But is the gaming industry ready for Google’s automated kind of advertising?
“It’s not clear,” said Jonathan Epstein, chief executive of Double Fusion, a competitor to AdScape, IGA and Massive. “It doesn’t mean it can’t get there, but when you look at how markets evolve it’s always the specialists that drive innovation and focus in the market.” Eva Woo, vice president of marketing at AdScape, said her company has a technology that allows advertisers to interact with consumers without interrupting the game, something that could appeal to Google. If a gamer opts in, AdScape’s Real World Virtual World Gateway will deliver messages via SMS or e-mail from the advertiser, Woo said.
When the game detects that a player has reached a certain level in the game or that a player is having problems getting beyond an obstacle in the game, for example, the advertiser could offer hints, rewards or coupons. “We’ve been developing this (advertising) technology for five years,” she said. “We have one patent issued and 15 patents pending.”
A risk for Google, of course, is getting shut out of Microsoft’s growing Xbox market, and the question remains whether gamers will rebel against publishers who allow advertisers into their gaming worlds.
“Male gamers playing core games don’t mind ads if they help make the gaming experience more realistic rather than disrupting their gaming activity,” Cai said.
Originally by Nick Wingfield and Kevin J. Delaney of The Wall Street Journal (WSJ.com subscription required)
Google is in talks to acquire closely held Adscape Media, whose technology allows for the delivery of ads over the Internet and in videogames. Google Inc.’s efforts to broker advertisements beyond the Web could soon expand into ads that appear in videogames.
The Mountain View, Calif., company is in talks to acquire Adscape Media Inc., a closely held San Francisco company whose technology allows for the delivery of advertising over the Internet and placement within videogames, according to people familiar with the matter. They added that a deal could be reached as early as next week. While the possible terms of a deal aren’t known, Microsoft Corp. last year acquired Massive Inc., a company that delivers in-game ads, for close to $200 million.
An acquisition of Adscape, if completed, would allow Google to offer the hundreds of thousands of advertisers who currently buy online ads through its system to also buy ads that appear within videogames. The market for delivering ads into games — such as a virtual billboard on a racetrack or a poster in a boxing arena — is still in its infancy, but major games publishers such as Electronic Arts Inc. believe it could be a lucrative business and many are pursuing it aggressively. Sending ads over the Internet is just now becoming more feasible through new game consoles such as Sony Corp.’s PlayStation 3 and Microsoft’s Xbox 360, which are designed to be connected to the Internet.
One person familiar with the matter says Google for months has been discussing with game publishers the prospect of delivering ads over the Internet into the action of their games.
If completed, a deal with Adscape would form part of an ambitious Google effort to broker advertising across many types of media globally. The Internet company, whose 2006 revenue is expected to top $10 billion on the strength of its online-ad sales, currently is testing systems for selling ads in newspapers and on radio, and has said it plans to extend into television ads. People familiar with the matter say it is discussing a possible agreement with CBS Corp. that would include brokering TV and radio advertisements. Both CBS and Google have declined to comment on any talks.
A Google spokesman declined to comment on any talks with Adscape, saying “We are always considering new ways to extend Google’s advertising program to benefit our users, advertisers and publishers. In-game advertising offers one such possible extension among many others.” Adscape Chairman Bernard Stolar said he “has spoken to every major player” about a possible acquisition of Adscape, but there currently is no such deal.
People familiar with the matter say Google had looked at Massive prior to Microsoft’s acquisition of the company. A purchase of Adscape would add a new front to expanding competition between Google and Microsoft, which today stretches from Web search to word processing. Google could look to form an alliance with Microsoft’s archrival in the games console business, Sony.
In-game advertising has attracted an array of contenders, including IGA Worldwide Inc. and Double Fusion Inc. Adscape’s chairman Mr. Stolar is a well-connected veteran of the games business, having previously served as an executive at Sega, Sony’s U.S. games division and Atari, and could help Google form crucial partnerships with publishers.
Below is an interview with Michael Taggart & Walter Burch, founders of TenHunt. We hope you find the interview informative and useful. Please visit their website and check it out! http://www.tenhunt.com/.
TechAddress: Tell me a bit about your company, what it does and what’s your value proposition?
TenHunt: TenHunt was developed first and foremost with the consumer in mind. The idea really sprang from the notion that it would be a lot of fun to have a live, online scavenger hunt where people compete for prizes. Being that we are internet marketers at heart, we realized that there is a huge value for advertisers to be involved in the TenHunt games. Users will be exposed to their message/products/services when they are scouring their website to find the answer to the next question. That experience may lead the consumer back to that website when they are looking for something that the advertiser offers.
TechAddress: What makes your company stand apart from your competitors?
TenHunt: Most free iPod sites and the like are simply scams that people can never actually finish to win the product in question. TenHunt is a real-time competition and so we differ in the fact that a prize will always be given out simply to the fastest TenHunt player. It’s as simple as that. We don’t know of any other online scavenger hunts on the web, so it seems that we don’t have any direct competition at the moment. Users and the community as a whole will drive the success and direction of TenHunt.com. We have already received a good amount of feedback that has caused us to make changes to the game/site to better serve the players. For instance one user sent us this recently:
“Just a suggestion….don’t make the game be on Friday night! We’re all computer geeks enough; we don’t need to emphasize that by playing games on Friday night by ourselves.” This email has led us to change the date of next week’s TenHunt to Thursday. This type of feedback helps immensely. We want the game each week to be shaped by the players.
TechAddress: What are some of the main features?
TenHunt: One live, real-time, online scavenger hunt. Everyone starts at the same time and receives the exact same questions in the same order. There are live statistics to let players know where they stand at any point during the game.
TechAddress: Who’s your target customer or audience?
TenHunt: Anyone who wants to have fun online and potentially win a cool prize for free. TenHunt is not limited to any one demographic. The prizes and game play will determine the overall demographic of the site going into the future.
TechAddress: Any new things in particular that you’re working on right now?
TenHunt: We are adding an RSS feed for upcoming games as well as adding sections to the player’s area that will show them their overall TenHunter rank and things of that nature.
TechAddress: Where do you see your company heading in the future?
TenHunt: We are shooting for the goal of giving away over a million dollars in prizes by the end of 2007. We would also like to give users the option of playing multiple TenHunts each week for a variety of different prizes.
TechAddress: Any negative feedback or criticism regarding technology and services?
TenHunt: Most negative criticism is from people that are skeptical about whether or not we are a real company giving away real prizes. Other people feel that the business model is not sustainable. However, we know for a fact that if you can get people to experience and truly engage with a website that is very valuable to an advertiser. We feel that the model is sustainable. There just isn’t anyone out there doing this yet, and the whole concept is fairly new.
TechAddress: So what would you say is the guiding principle behind your company?
TenHunt: The guiding principle is to provide an incredibly fun and exciting game/site for people to interact with. The players make the game and our guiding principle is to always protect their interests.
TechAddress: What is the mission of your company and what are you bringing to the market that is innovative?
TenHunt: We think that the TenHunt concept is innovative in its own right. Our mission is to create a site that brings advertisers and consumers together in a way that is beneficial to both sides. We believe the model will bring about a whole new channel to internet marketing.
TechAddress: Where are you in terms of funding and your lifecycle?
TenHunt: Self-funded with an indefinite lifecycle.
TechAddress: If your technology or service is not formally launched yet, when’s the launch date? If you have already launched, when was your launch date?
TenHunt: We have already launched, but the first TenHunt starts at 7:19 PM PST tonight (Friday November 10).