Social gaming presents a myriad of integration opportunities for advertisers, but is the reality living up to the hype? In this analysis we take a look at how brands can begin integrating with social games today. More after the jump.
Companies such as Microsoft and Electronic Arts have begun reducing their efforts towards in-game advertising for retail games, citing the lack of enthusiasm of gamers to being sold to when they are playing games. This makes sense as customers who are paying $50+ for a game and/or subscription fees to play some of these MMOs don’t want to be hassled with ads. With that said, it’s also very premature to extrapolate the death of in-game advertising. Asides from in-game billboards, there are plenty of other in-game opportunities for brands to be involved in depending on the types of creative solutions that can be found. But console gaming isn’t the only frontier for brands to explore when thinking of brand integrations. Social games may yield exponentially more benefits for those brands that can find the right tie-ins.
Brands looking to be part of the gaming experience have a few options they can pursue. They can create or hire someone to create advergames, which are custom produced branded games, but risk compromising game quality with over-promotion. Hence advergames would not be classified as a successful brand engagement vehicle today. Another option is in-game advertising as we just discussed; an option that gained momentum in 2006 but hasn’t been too favorable in consumers’ eyes because of the blandness of the advertisement injections within these games. Regardless, brands have pursued in-game advertising as a way to seek improvement in the following metrics (examples of which are given in my previous post about in-game advertising):
- Brand Recall
- Brand Recommendation
- Brand Sentiment
- Purchase Intent
- Positive response to creative
The media darling Facebook has always been an enticing avenue for brands to promote themselves. Witnessing the rapid ascension of games on Facebook, brands begun exploring ways to work with popular social game developers for possible integrations, but quickly realized that offers were the easiest place to integrate and had the lowest risk so they simply became part of the network.
As the industry matured, brands realized the kind of engagement social games could drive are beyond what offers can simply do since the players are alert and active during game play. Premium brands don’t want to be seen as an ATM – simply giving away currency for some action. They want to be a part of the actual experience; however such integrations can have complex cycles and require approval and planning in advance.
Social gaming through channels like Facebook can be the best tie-in for brands because of the free-to-play nature of these titles. Facebook is a platform that fosters social interactions and developers can optimize their games on it real-time as opposed to Apple’s iOS which requires submitting app updates through their curation process. The best tie-ins are entertainment companies as they have fast turnaround times when discussing what they want and also have some predictability (developers can expect an influx of entertainment-related activity during summer time and plan ahead).
Developers are hesitant to do anything other than focusing on running a live service. Developers also need to gauge the opportunity cost and figure out how a branded experience will tie-in with the game – not a simple task as many developers have planned out content releases months ahead in time and figuring out tie-ins can be a time-intensive process.
Developers realize that the social gaming audience has matured and are learning to ignore a lot of display advertising. Players are coming to Facebook to have authentic gaming experiences that help them connect with their social graph, so the question for advertisers becomes, “How can we naturally integrate with a particular game that has the audience we’re trying to reach?”
Advertising has been a core component of monetization for many online games. The advent of social gaming flipped that dynamic and ads make up less than 10% of revenue for these games. The majority of the revenue is driven from virtual currency sales. In addition, offers have been reported to comprise 15-35% of revenue for many games. Despite being a credible source of revenue, branded offers may be an inferior way to monetize an audience vs. promoting your own titles (by creating an offer to promote your other games).
Fast forward to today and we are seeing innovative methods in monetizing audiences on social games. Ad spending in social games has increased 60 percent since 2009 according to eMarketer and brands are looking for ways to be part of the experience that’s authentic and yields clear benefits. Before we delve into what’s happening today, let’s take a brief look at back at what the most popular social gaming companies have done with brand integrations.
Zynga has been a front runner in branded integrations, offering players in July of last year the ability to plant Cascadian Farm blueberries on their farms. This branded promotion was well received by the players who opted to plant the branded blueberries over other crops, resulting in a 550% lift in unaided brand awareness.
In November of 2010, we covered PlayFirst’s integration of Charles Chocolates in their Facebook title Chocolatier: Sweet Society. These branded goods were unlockable through the gameplay and could actually be ordered for delivery from within the game. The week before we covered CrowdStar’s collaboration with music agency Sparkart to sell a branded Bon Jovi bundle that included branded virtual goods, Facebook Credits giveaway and a coupon code for the Bon Jovi online store.
A few weeks prior to that we reported on Zynga’s partnership with the Farmers Insurance Group to launch a branded crop-protecting airship for Farmville players and is now working on a partnership with Nickelodeon/Paramount to promote Rango in Frontierville. As part of the Rango promotion, players can do three Rango quests and win a Rango statue inside the game. Zynga has in the past partnered with Sony Pictures Entertainment, Dr. Dre and Universal Studios Home Entertainment for Mafia Wars related campaigns. CrowdStar has also had its share of brand integrations, the most notable being their deal with Old Navy to include an Old Navy store within It Girl.
Another recently announced campaign is Clorox’s Scoop Away brand campaign which is integrating inside of social game Happy Pets on Facebook. As part of the campaign, players receive a free Scoop Away branded kitty litter box for their pet by watching a Scoop Away video via the WildTangent BrandBoost platform. This engagement provides additional in game value from Clorox by keeping a player’s litter box clean for 7 days versus the normal 24 hour period a standard litter box provides. With this meaningful and relevant tie in to the existing game mechanic, Scoop Away aims to position itself as the kitty litter brand of choice to players of the game.
If developers really want to add additional revenue streams to their games, they have to be mindful of maintaining authenticity without disrupting players’ gaming experiences. Offering a solution in this space is WildTangent, an 11 yr old private company that has gone through a couple of different pivots and is now positioned strongly to help social game developers add additional revenue streams to their games. WildTangent has been quite successful with its pre-loaded games business where they pre-load casual and MMO games on OEMs.
WildTangent is offering an easy-to-integrate solution called BrandBoost to social game developers that is a complete opt-in experience. With BrandBoost, social game developers can offer their players premium advertising on behalf of specific brands that in turn reward the players with a branded virtual good. WildTangent avoids out paying virtual currency – instead focusing on delivering a branded virtual good that perhaps has some special functional benefit vs. other premium virtual goods in the game that are there just for decorative purposes. Recently, WildTangent carried out a Clorox campaign inside CrowdStar’s pet focused title Happy Pets. In this campaign, players watched a video for 30 seconds and received a litter box that kept their litter box in the game Happy Pets clean for 7 days.
In addition, WildTangent has relations with plenty of game developers so if an advertiser comes to WildTangent looking to integrate into games, WildTangent can suggest 2-3+ games that would be a good tie-in for the brand. WildTangent is now working with many companies such as PopCap Games and CrowdStar to help fill and represent their inventory with brand tie-ins, so we can expect more and more interesting things to come.
So what exactly is special about BrandBoost and other solutions such as Hi5’s SocioPay and SocioPath? Both companies have 1 element in common: Alex St. John. A veteran in the gaming space, Alex St. John spent several years at Wild Tangent and is now CTO of Hi5, a social entertainment company. These companies are offering Ad/Commerce Hybridization models that blend advertising and commerce without cannibalizing commerce revenues. This model requires extensive analytics to predict user behaviors and serve the right mix of payment options and advertising to maximize revenue.
Traditionally advertisers will do a media buy based on the kind of impressions and engagement being offered. For example, taking over IGN’s front page, which has about 600k visits a day, can cost between $50,000 – $60,000. The dynamics of social gaming are way different, however, as the engagement on games is far deeper, hence costs substantially more. A game with 100k DAUs and 1MMAUs can easily command 125-150K for a branded integration.
Brands that want to advertise on games first have to identify which games would be a good fit for their particular campaigns. A fit may seem simple as a food company integrating into a farming game – but it is more complex than that. Brands must look at demographics, behavior, regional specifications and other user data. If you don’t have access to it yourself, companies such as WildTangent can help suggest games that would be a good tie-in.
Once initial conversations start, brands have to relay their goals and success metrics to the developers and then decide on the length the campaign will run. Developers can then internally discuss whether the ideas and creatives suggested by advertiser would be a good fit for a content update to their game and whether it would make sense from an opportunity cost perspective. Since developers usually plan out content updates and releases well ahead of time, conversations should start atleast 1-2 months prior to the date of execution unless its something very urgent or spontaneous such as raising money for a disaster relief that a brand wishes to sponsor in some form or fashion.
If all is go, then contractual agreements can be put underway and integration plans begin. Brands tend to sponsor virtual items with some kind of bonus value add and hope that such a campaign will boost brand sentiment immediately and build loyalty in the long run. The key thing is to avoid coercion and keep the campaign opt-in, letting players who don’t wish to view the branded engagements exit out. It’s also important to run the campaign for a specific length of time, creating scarcity in the process.
Facebook will be making Facebook Credits mandatory for all developers come July. It also has one select partner through which it will be letting developers use offers: TrialPay. However, these are all ‘hard offers’, and don’t encompass soft offers. A hard offer is anything that requires the exchange / capture of user data and personal information. In the case of offers, information about users engaging in offers is sent by developers to TrialPay. Brand advertising on the other hand is a soft offer as it’s not capturing user information. With that said, any soft offer engagement is instantly recognized and developers can pass along data back to the integrated brands daily showcasing how their players are responding to the campaign. The brand and developer can leverage this real-time data to work together to optimize the campaign in order to deliver their players the best experience possible.
In the future we will see social games add in a plethora of location-based elements, mobile and cross platform capabilities and unique brand tie-ins where brands sponsor and enhance player experiences (i.e. giving boosts). For a company that’s offering an interesting solution on mobile, check out Tap Me. Another company called RadiumOne, previously known as gWallet, has a solution called ‘ShareGraph’ that helps brands reach consumers that are having conversations with their ‘real’ friends outside of social networks about specific topics that are relative to the brands’ interests.
The best type of brand integrations are those where players don’t even notice that the brand is there, yet report an increase in brand metrics. We have barely begun scratching the surface on brand advertising within social games, so expect this space to mature and for developers to add nice revenue streams for themselves and brand partners alike.
Azam Khan is a social and mobile gaming analyst. If you are a brand or a game developer looking into the in-game advertising space, please contact him at Azam@socialtimes.com.