Hate Seeing In-game Advertising? Well … Then STOP Buying That Stuff!

The relationship between brand advertising and games is not new – many pinball game I remember from my youth had blatant branding and tie-ins, and then in the late 70s and early 80’s companies such as Atari and Intellivision used tie-ins with popular products to boost sales. And as a reminder, the video game arcade industry in the early 80’s was estimated as being the size of the movie industry and all of Nevada’s casinos … combined!

So obviously brands wanted a piece of that action – but most efforts in those early years were not all that successful, generally finding that movie tie-ins such as Tron were more successful than putting a brand name product in to Tapper (since you couldn’t really read it anyway).

As graphics and home console popularity grew through the late 90’s and early part of the last decade, more and more companies began taking advantage and placing static ads into games. Gamers accepted this begrudgingly as part of the reality of media – there are ads everywhere else, now they’re in games. The problem came starting about five years ago with the use of targeted ads.

Since they first started appearing several years ago, gamers have railed against targeted ads based on information collected from their online accounts. Some of the complaints make sense – the Pepsi ad at the top is from Battlefield 2142, a game that takes place in the frozen tundra of a futuristic second ice age where factions battle for control of the small amount of habitable real estate. And obviously there is a need for lots of cold Pepsi. I am reminded of the Family Guy special ‘Something Something Dark Side’ where one Rebel keeps popping up around Hoth offering people a bag of ice.

The problem for gamers who oppose these ads has just been revealed by Nielsen: they work. Gamers are being effectively influenced into buying the stuff they see in games.

But wait, as usual the story isn’t so clear. Neilson conducted the study, but it was commissioned by Electronic Arts on behalf of Gatorade. Here is some info from the press release:

The study focused on households that purchased at least one of six EA SPORTS™ titles: NHL® 09, NHL 10, NBA LIVE 07, NBA LIVE 08, NBA LIVE 09 and NBA Street Homecourt. Gatorade had a variety of product placements within the games including arena signs, players’ water bottles, score updates and other call outs.

The study was based on Nielsen’s US Homescan panel of more than 100,000 households, representative of the US population, including a subset of Homescan homes that scanned video game UPC (Universal Product Codes) barcodes. The scanned barcodes were matched to a reference library of more than 14,000 video game titles. Nielsen compared the households that purchased at least one of the studied games before and after Gatorade branding was integrated into the games (the test group) with households that didn’t purchase one of the games (the control group).

These test and control group homes are projected out to the broad Homescan panel by matching them with the larger Homescan household universe based on similar purchase patterns and demographics in order to achieve a statistically reliable sample. Finally, the sales impact of Gatorade advertising was measured by analyzing and comparing Gatorade purchase behavior between the households that had and hadn’t purchased the games that carried Gatorade advertising.

If you ignore the convoluted sampling plan logic, you are left with this: they were studying the sales of sports games against the sales of sports drinks. And they felt that with their ‘extrapolated demographic models’ they were able to determine that a statistically significant increase in Gatorade sales based on exposure to in-game advertisement.

EA actually takes it a step or six further: they said the study “shows that in-game advertising increased household dollars spent on Gatorade by 24%, and offered a return on investment of $3.11.”

But hold on just a minute – remember that this release is from EA, not Neilson, and all that Neilson said is “dollars put into video game product placement result in more retail dollars”.

Because of my avocation, inside my head I am screaming “SHOW ME THE DATA”. The type of sampling extrapolation that was described is notoriously variance-inflating, but since that is what Neilson has to do with everything I am willing to defer to their expertise.

But I still wonder – what about all of the other factors? What about the common sense thought that households more inclined to buy sports games would be fans also of the real sport and perhaps even more sports-oriented to start off with?

I am also calling BS on EA’s entire $3.11 return on investment claim, meaning that for every dollar spent on in-game ads Gatorade would see >$3 in returns. What about the massive Gatorade campaigns within the sports played on TV? Or featured ads on the internet associated with sports and so on. Calling out and isolating all of that revenue to a single source based on an extrapolated data set would require MUCH larger sets of actual data … unless you are just assuming all positive impact comes from your preferred factor.

But why would EA want to bias the outcome in their favor? Because game publishers currently make ~$5-6 profit per game sold and estimates show that in-game ads could boost that by $1-2! A 20-33% profitability increase is HUGE when you have games like the sports games that sell missions of copies per year! I believe that Gatorade benefits from all of their ad placements, but at a rate of 3:1 specifically from in-game ads? I’m not sold.

In the end, I support the Neilson claim that “dollars put into video game product placement result in more retail dollars”. I mean, it is true on radio, TV and the internet – it would be weird if that WASN’T true! But the stuff EA is claiming just doesn’t pass the smell test.

What are your thoughts on in-game ads and this latest info from EA and Neilson?

Source: BusinessWire

Categories: Editorials, Gaming