In-game ads can be double-edged sword, says analyst

Following up on his report forecasting game advertising to exceed USD 2 billion by 2012, Yuanzhe Cai spoke to GamesIndustry.biz about the potential consumer response to in-game advertising.

"It's a double-edged sword," said Cai, the director of broadband and gaming for Parks Associates.

"If the ad campaigns are executed well, there won't be a lot of resistance from power [hardcore] gamers. If the campaigns are intrusive and cause a lot of interference... Those gamers will make sure the publishers and advertisers taste the bitterness of what they experience," he continued, referring to the likelihood of blog rants and online forum complaints.

When asked about the potential response to in-game advertising from non-traditional gamers who have been drawn into gaming by the Nintendo Wii Cai replied, "I think the casual game genre is not very appropriate for in-game advertising. What are you going to do? For a card game, put your logo on the back of a playing card?

"If you provide a game for free, or subsidised by an advertiser, consumers care less about seeing the ads. If you charge for it and then put in a lot of intrusive ads, that is not going to work."

Advertisers appear to be happy with the results so far. According to Cai, game publishers have told him they are seeing a lot of repeat customers using both static and dynamic in-game advertising.

"Customers have bought into this type of advertising for three or four years now, so they seem happy with the justification," he said.

"Publishers are talking about [in-game ad] revenue streams becoming more important," Cai continued, noting that last year an EA executive estimated that Need for Speed would bring in USD 4 million from advertising revenue. "Money talks."

Cai plans to follow up a June 2006 consumer satisfaction survey later this year, with even more ad-related questions.