I just read that in-game advertising company IGA Worldwide is struggling. Obviously the economic downturn isn't helping anyone. But video games have stayed strong and as more games use Internet connections for new content, one would expect such a company to be doing well.
It appears that if IGA falters it may be its own fault, having made some bad deals for upfront payments. But that's only part of the story. The bigger issue is that in-game advertising is not like other mediums and requires the industry as a whole to mature.
The current problem is that every in-game advertisement is a custom project. You can't just pop in text or graphics as you do with an ad network such as Google or Yahoo and have it appear correctly in a video game.
Even if games use the same engine, it doesn't mean that the developers have implemented everything the same way. Unlike Flash or Java games, you are dealing with a vast array of different technologies (3D and trapezoids and such) that are not common in other advertising scenarios.
Let's assume that the technology problems can be solved. What are some of the business issues facing in-game advertising?
- Lack of standards. The ad buyer working off a spreadsheet sticks to what they know and will slot their ads into places that they know will work (for better or worse).
- Few success stories. The biggest success story to date is the Obama campaign's usage of ads in Madden and other select games
- Lack of vendor options. It's bad enough that there are only a few big game publishers left. Forced customized ads that aren't dynamically changeable makes the whole the process less appealing. At least with a banner ad you can move between networks.
On the positive, users have repeatedly said they are OK with ads, along as they don't change the gameplay. And the more that dynamic content heads into games, the easier it will be for advertising to play a role. Standards will be key to the maturation of the market.
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