IGA co-founder Ed Bartlett
As its biggest advocate moves on, what next for the in-game advertising business?
Ed Bartlett was originally in the development business at Bitmap Brothers, before breaking off to establish his own ads firm Hive Partners - quickly acquired by IGA Worldwide in 2004. This week, the former vice president of Europe announced his departure from the company to pursue other interests both and in and outside of the games business.
GamesIndustry.biz took the opportunity to catch up with Bartlett and discuss the current state of the in-game ads market, and here he discusses the biggest growths, misconceptions, and most importantly, the future of the sector.
Q: Can we start with your reason behind leaving IGA Worldwide - why leave now?
Ed Bartlett: I've had a number of projects I've been wanting to turn my attention to for some time both in the games industry and beyond. With new investment secured for IGA, now felt like the right time to make that leap.
Q: What would you say was your most important single deal/client that you signed while at IGA?
Ed Bartlett: I guess there is a different answer depending upon the reasons why it was important. Obviously signing up the first investors was most critical to the business, since the model for the industry demanded significant upfront investment, pre-revenue. You certainly couldn't launch this type of business in the current financial climate.
However, without class-leading inventory we also would never have built the necessary reach or profile needed to turn the heads of the big brands, so signing up the likes of EA and Valve was also key.
But if we are talking purely personally, then my involvement with Trackmania Nations was definitely my proudest moment, and also a very important product for the company.
Q: What would you say in-game advertising has done for the game industry, aside from the financial aspects?
Ed Bartlett: Well, aside from the tens of millions of dollars of new revenue it's brought into the industry, I think that collectively the in-game advertising companies have done a huge amount, possibly more than anyone else in fact, to challenge media misconceptions about gamers and the games industry.
That assertion might cause a few raised eyebrows, but the fact is that the success of the entire in-game advertising industry hinged upon convincing the world's leading consumer brands that the gaming demographic was no longer made up of 12 year-old boys in their bedrooms. Part of the strategy for that was also educating the press across multiple categories, and getting them to write positively about the industry. Between IGA, Massive and Double Fusion we pretty much turned that perception on its head in a remarkably short space of time, which has ultimately led to much broader and more even-handed coverage of the industry as a whole.
Probably my biggest single frustration is how few industry people even know or recognise that.
Q: The games business has changed radically in the past 2-3 years - what has been knock-on effect in the in-game advertising market?
Ed Bartlett: Naturally there has been an increased focus on casual and social games, where you have a higher turnover of eyeballs and can do more aggressive placements such as pre-roll video and complete brand takeovers. It's closer to online advertising, which the agencies already understand and have metrics and buying patterns for, so it's been easier for them to adopt than what I would call core in-game ads, where you are buying contextually relevant billboards within the game environments. What we will start seeing more of is the blurring of those two offerings into single larger media buys.
Q: The in-game ads market was forecast to generate very big billion dollar spend back in the mid-2000s. Do you think it ever reached those highs? And what factors affected those predictions?
Ed Bartlett: I think there were a few surprised faces at some of those forecasts at the time, even from us. However, the reality is that those figures are in fact a fraction of the latent value, which should give everybody great confidence for the future.
At IGA we had some unbelievably detailed modelling spreadsheets mapping out potential inventory and sales, and to be honest it's hard for even the most conservative person not to get carried away when you look at the figures.
The biggest issue early on was that in-game advertising fell between two stools with the advertisers. Although we were answering lots of major problems for brands, their agencies just weren't set up initially to buy what we were selling. Unfortunately by the time all that got put into place, the economy took a tumble and advertisers started reeling in their budgets. Thankfully that's now bouncing back.
The fragmentation of the industry also played its part. Nobody expected Microsoft to buy Massive, at least certainly not that early in the market, and it became very confusing for advertisers wanting to buy the audience of a specific game title and not being able to do so from one vendor.
Q: How have the rise in alternative business models such as freemium, free-to-play, micro-transactions affected the ads market?
Ed Bartlett: It's funny, freemium was a dirty word until Trackmania Nations arrived, and then people started taking notice. The next thing you know we had people knocking down our doors with free-to-play advertiser-funded game concepts.
Unfortunately most people failed to consider two key things. Firstly if a game is free, regardless of the quality of content on offer people just won't persevere if the game doesn't grab them immediately. Friction equals failure in free-to-play, simply because there is no emotional or financial investment compared with buying a retail title.
The second issue is that the growth of advertising spend is not linear in line with that of available inventory at this stage. So if you're getting $1 per user with 100,000 users, and you suddenly ramp overnight to 1 million users, that $/user ratio is going to drop significantly because the available advertising spend is a relatively limited finite amount for now.
With that said, it's still a fantastic model if you get it right. The smart people will work out a balance between free and paid - give away the game engine and some starter levels, build the reach and then monetise through advertising, branded content and micro-transactions.
Q: What is the next big thing or area of expansion for in-game advertising?
Ed Bartlett: There is still a lot of room for technical innovation and IGA in particular has some great ideas and new formats on the way, but I also think there is a huge opportunity for brands to get much more involved with games as a whole. If you look at some of the brand partnerships around the bigger film launches which tie into mainstream co-promotion, that kind of thing doesn't happen nearly enough in games.
I think there is also scope for some interesting stuff around transactions, particularly as game's transition to a more service-based model. Brands could help subsidise costs and services, which would be received very positively by gamers.
Of course the new cloud-based services like Gaikai and OnLive could also bring some interesting disruptive dynamics to the table that perhaps go beyond what the established console platforms are willing or able to do at this stage.
Q: Microsoft recently closed down Massive Inc. Is that a sign that the big budget ad campaigns have disappeared from the console games market, and if so, what has been the replacement?
Ed Bartlett: No, absolutely not, at least that's not our experience and we know they have been on many of the same briefs and plans as us. I can only speculate of course but me it seems to be simply a strategic move to cut overheads in areas where it's going to do them least damage, in line with other divisions they've closed recently.
There was a certain amount of confusion in the market between what they were doing with Massive and what they were doing with the Xbox Live platform. Ultimately I think they can probably still answer a significant percentage of briefs very nicely with Xbox Live.
Q: IGA recently secured further funding - what factors have helped a resurgence of interest in the in-game ads market?
Ed Bartlett: Well for starters the economics have changed dramatically. In particular the payment of sizeable advances to publishers, which was never going to be sustainable, is a thing of the past now the market is established.
The industry is much more stable now. There is a standardised common currency for advertisers and agencies, a good understanding from developers and publishers on what is required regarding inventory generation in their games, and the market continues to make headlines and break records which gives brands confidence that they are involved with something which has longevity and reflects positively on their products.
Q: So, what's next for you? Can you give us any detail of your next ventures in the videogame space?
Ed Bartlett: I can't say too much except that I plan to get back closer to my roots in development again. It's been incredibly inspiring working with so many of the leading developers and publishers, however it's hard sometimes not to get frustrated with the missed opportunities. I also still really miss the buzz of putting out a new game. Things have taken a quantum leap forward since I was last involved in development, and frankly I'm like a kid in a candy shop at the thought of getting stuck back in.
Ed Bartlett was co-founder of IGA Worldwide/Hive Partners. Interview by Matt Martin.