Microsoft is Okay with In-game Advertising, Says it Will Continue to Thrive

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They’re there. You know they’re there. And they aren’t going away. Certainly not if Microsoft has a say. “They” are in-game advertisements, which have been steadily creeping into the on-line gaming experience. And right now they are generate buckets of cash for Microsoft, and show the potential of generating buckets more.

Massive, the on-line gaming advertising arm of Microsoft, uses a dynamic process to inject ads that “enhance” the online gaming experience. According to JJ Richards, at the Microsoft Advertising Blog , “Our research indicates that most gamers like advertising in the game because it adds to the realism. Imagine playing a Major League Baseball game with no ads behind home plate, next to the scoreboard or on the outfield wall - not very realistic. Now imagine the outfield with up-to-the-minute ads you just saw on television or read in a newspaper - the latest movie release, television show, or a new car model. That is much more realistic.” Massive’s objective is to place ads where you would expect to see them in everyday life, while taking care not to degrade the game-playing experience.

On-line gaming is a logical step for advertising because of the audience: 18-34 year old males, who spend a lot of time gaming (and have become harder to reach by traditional means). Richards claims that Massive is able to reach “40 million Xbox and PC gamers in 31 countries worldwide.” And apparently in-game advertising works. Microsoft reports that 72% of gamers recall seeing the ads, and 65% say that such ads standout more than traditional advertising. Whether this translates into actual sales Richards doesn’t say.

Bucking overall Internet advertising revenue trends, Microsoft reports that its revenues are up, with first quarter sales targets exceeded by 100% just a month into the fiscal year. Screen Digest expects in-gaming advertising revenues to reach $1 billion by 2014.

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