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Online Gaming Sites


Overview
Online gaming sites are quickly becoming one of the fastest and most efficient ways for companies to advertise their products without spending a good deal of money. Companies such as Electronic Arts, Face book and AOL have proven how lucrative the market is for casual online gaming sites as they have all created websites dedicated to free online gaming. Sites such as Pogo, AOL Games and Face book games target consumers with addictive social gaming such as Farmville, Mafia Wars, Bejeweled and even the original Black Jack to allow gamers to quickly interact and play other users across the country. All the while being exposed to banner and pop up ads from various companies. One of the fastest rising trends on the Internet, online gaming is a lucrative industry right, and in years to come its expected growth is tremendous.

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Notice banner ads on top and sides of game screen


Advantages

The first and probably most important advantage for online gaming is that because of companies advertising on their website the games are free to play. With this the consumer can play a game and be introduced to ads in a number of different ways that tend to be seamless with the gaming experience. This way the player is not forced to pay for the games and then be saturated with advertisements, the ads pay for the game so they are seen as a necessary part to playing the games.

Ads appear on these gaming sites in a variety of different ways, some good some not so good. The most common known ad in the online gaming industry is the banner or pop-up display ads. “Display ads surrounding game play on browser-based games are fairly straightforward, though sometimes advertisers overlook the potential of keeping the messaging contextually relevant- there are many themed games, and puzzles are extremely popular. Customizing display ad messaging based on various game contexts can be a worthwhile investment.”(Lovinson, Josh. Getting In the Game). these ads are very cheap to produce and are able to reach tremendous amounts of users multiple times.
Another type of ad technique often used in online gaming sites are interstitial ads. “Interstitial ads are similar to Web video placements where 15 seconds of video loads in a pre-roll, mid-roll or post-roll spot. These units are common in ad-supported downloaded games, usually with mid-roll spots during level loads.” (Lovinson, Josh. Getting In the Game). These ads are great because the player is forced to watch the ad while waiting for their game to resume. These ads can often be more effective than the banner ads, because sometimes people tend to zone out information around them and focus on the game. These ads break up the gaming experience and are able to have the full attention of a possible consumer.

Another less talked about advantage for advertising in online gaming sites is the word of mouth and brand recognition these games help create for these companies. If a game is good users will continue to come back and invite other people to come play, thus introducing these players to the advertising message (Guarino, Mark. “Four ways advertising will change in 2010)”. If a player sits down and plays a game for a half hour, while at the same time being shown numerous ads for a product the hope is the brand sticks with the player and the next time the player goes to the store they are more likely to purchase said product.

Disadvantages

The major disadvantage to placing advertisements in online gaming sites is that the target market tends to be skewed, as businesses report a large proportion of both male and female playing online games (Lovinson, Josh. Getting In the Game). Who is actually seeing this message, and is the message appealing to that particular audience. With online advertising the main problem is keeping the user interested in your message, and if that message is not exactly appealing then the player could sub consciously tune that message out.

Costs/ Scheduling

The cost of advertising on these online gaming sites is one of the most appealing features for the companies to invest. There are a few different payment models used in placing these ads on the website and according to Game Advertising Online, a company that specializes in creating and maintaining the ads, these are the four most widely used price models.

CPC - Cost Per Click - online advertising pricing method whereby the advertiser pays for each click on their advertisement. For example: $0.05 CPC or 5 cents per click. Note: GAO operates on CPC basis but does not charge advertisers for multiple clicks on the same advertisement by the same visitor in a 24 hour period.

CPM - Cost Per Thousand Impressions (1000 impressions is represented by roman numeral M) - online advertising pricing method whereby the advertiser pays for each thousand ad views / impressions of their advertisement. For example: $1 CPM or $1 per 1000 impressions. Note: GAO does not run ads on CPM basis, but provides average CPM statistics for campaign analysis.

CPA - Cost Per Action - online advertising pricing method whereby the advertiser pays for each action (for example player signup or game client download) resulting from their advertisement. For example: $1 CPA or $1 per action. Note: GAO does not run ads on CPA basis, but provides detailed CPA statistics using the Action Tracking System.

CTR - Click through Ratio - the percentage of ad views / impressions that result in a click. For example: 1000 impressions that generated 10 clicks is 1% CTR. The most common CTR values are between 0.2% and 2%.

Conv - Conversion Ratio - the percentage of clicks that result in an action (for example player signup or game client download). For example: 100 clicks that generated 75 actions are 75% Conversion Ratio. (Game Advertising Online. “Frequently Asked Questions.)”

All these methods basically charge the same way and it works on a click to pay model which really helps keep costs down, but also create a lot of reach and frequency for these companies.
There are a couple of interesting ways that these ads are scheduled and placed inside these gaming sites. In the most traditional sense certain companies pay for a certain number times shown at a premium spot around the web browser. In other cases the ads are randomly selected on a rotating basis throughout the week and circle around back to one another. One of the more interesting ways these sites determine when and where an ad will be placed is called the bidding system. According GAO the bidding system in essence is what these companies are willing to pay extra in order to get the most exposure. “When launched on a new ad zone, a banner will be marked as "new" and needs to run through 10,000 views before being assigned a display chance. Display chance represents the chance that this banner has of being displayed on this ad zone. For example: display chance of 25% means that this banner will be displayed approximately 25 times out of every 100 banner views on this ad zone, with approximately 75 views out of every 100 allocated to all other banners currently running on this ad zone (Game Advertising Online. “Frequently Asked Questions.”)

Banners in each ad zone are ranked in real time according to their eCPM. eCPM = Click-Through Rate * Cost Per Click Bid. Banner with the highest eCPM will have the highest display chance, followed by the banner with next highest eCPM, etc, with lowest eCPM banner having the lowest display chance. Display chance is therefore relative to other ads currently in rotation on a specific ad zone, and may fluctuate according to "market forces".” (Game Advertising Online. “Frequently Asked Questions.)”

Impact

The impact of placing ads in online gaming sites and allowing players a chance to play these games for free all the while being exposed to advertising has been tremendous. Today the online gaming industry is booming and is said to be worth over 13 billion dollars right now with the chance of growth only increasing those totals (PRnewswire. “Online Games Casually on Target for Huge Growth & Profits in 2010.”). The new aspect of social gaming via websites such as Face Book is currently the fastest growing aspect of online gaming and is set to bring in more than 1 billion dollars alone in 2010 (PRnewswire. “Online Games Casually on Target for Huge Growth & Profits in 2010.”). In the United States, as well as, the United Kingdom there are over 100 million registered users on various online gaming sites. This huge data base of people can allow the advertiser to share his message with numerous amounts all the while doing it at a relatively low price.

Audience Qualities

This is one of the more interesting topics concerning online gaming advertising. The traditional target market for the gaming market is 12-17 year old males as some studies show close to 90% of interviewed subjects saying the participated in some sort of online gaming experience. However, the target market is very fragmented for online gaming today as the creation of social gaming has created new audiences to play (Lovinson, Josh. Getting In the Game). In a recent Delloitte study 51% of people aged 43-61 report playing online games frequently and 48% of people aged 62-75 visit online gaming sites frequently (Lovinson, Josh. Getting In the Game).
According to another study the Nielson/Net Ratings 30.5% of people playing these games are between the ages of 35-49 with 16.6% of 25-34 aged people participating in online gaming. Another interesting aspect is that according the Nielson study 41% of players at online gaming sites are actually female (Obringer, Lee Ann. “How Advergaming Works).”

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Another company based in Reston, Virginia called Score Networks is a firm that tracks online gaming use. They concluded in a recent study that “On average, 8.9 percent of players at the Top 10 gaming sites are African American, 4.2 percent are Asian and 79.3 percent are white. Also of importance to marketers, they’ve found that about 35 percent of players on those sites earn $50,000 to $100,000 annually, while 16.2 percent earn more than $100,000. Being able to target those with higher levels of discretionary income (i.e., money left over from disposable income that is often used for "luxuries") enables marketers to sell higher dollar items such as cars and electronics. (Obringer, Lee Ann. “How Advergaming Works.)”

On one hand it is an advantage to have such a wide open market, but the advertiser must be able to create ads that are appealing to a wide range of target markets and run the risk of secluding a certain aspect of the market.

Interesting Facts

Online gaming has seen a huge boost in popularity in the prior years, but in some cases companies are doing a lot better than others. Face Book is slowly becoming the leader in online gaming because of their merger of social networking and gaming. According to Andrew Lipsman analyst for comScore "For many people, Face book is their home base, It makes sense that other online utilities and functions move there. (Shields, Mike. “Gaming moves from casual to social).” People are more inclined to play games on Face book and still be able to interact with friends and family on a competitive basis, and because of this some online gaming giants report a loss of cliental over the past few years.

In another study done be Nielson ,Online Yahoo games has seen it audience fall from 14 million users to 9.9 million users a 30% drop off in just one year’s time. MSN has reported a drop from 8.4 million users to 5.3 million unique users in the past few years. Other sites such as Pogo and AOL games report a 16% drop in users over this period (
Shields, Mike. “Gaming moves from casual to social).” Face Book is causing these other sites to offer more than just free gaming, they have the added social networking built in and in order for these companies to attract some of these gamers back their challenge is going to be coming up with an answer to Face book’s ultimate online gaming package which has seen more than 80 million people play the game Farmville since its creation. (Shields, Mike. “Gaming moves from casual to social).”

Advertisers Successfully Using Online Gaming Sites As a Platform

· Electronic Arts
· UPS
· LEGO
· T- Mobile
· Warner Brothers
· Netflix
·
Kellogg


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References
· PRnewswire. “Online Games Casually on Target for Huge Growth & Profits in 2010.” 2010. http://www.prnewswire.com/news-releases/online-games-casually-on-target-for-huge-growth--profits-in-2010-87102592.html. 03/23/2010.
· Lovinson, Josh. Getting In the Game. “Marketers can reach a wide range of key demos with
early forays into casual gaming.” 05/25/2009. http://www.adweek.com/aw/content_display/community/columns/other-columns/e3i9659c5aa3ebf280684f7bbc36376cfd4?pn=1. 03/16/2010
· Game Advertising Online. “Frequently Asked Questions.” http://www.game-advertising-online.com/?section=doc&action=faq. 03/23/2010
· Guarino, Mark. “Four ways advertising will change in 2010.” 12/29/2009. http://www.lexisnexis.com.www.libproxy.wvu.edu/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T9050193572&format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T9050193576&cisb=22_T9050193575&treeMax=true&treeWidth=0&csi=7945&docNo=14. 03/16/2010. Retrieved from Lexis-Nexis data base.
· Shields, Mike. “Gaming moves from casual to social.” 03/08/2010. http://www.lexisnexis.com.www.libproxy.wvu.edu/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T905019357. 03/23/2010. Retrieved from Lexis-Nexis data base
· Obringer, Lee Ann. “How Advergaming Works.” http://money.howstuffworks.com/advergaming2.htm. 03/23/2010.