In-game advertising is a fast-growing industry. Spend is expected to more than double between now and 2012 in the US alone to $650m from $295m at 2007 levels. Even Barack Obama spent $44,500 during his recent US presidential election campaign to have his ads appear in a number of games played in key battleground states.

NMK spoke to Ed Bartlett, Vice President of Europe, Middle-East and Africa for in-game advertising network IGA Worldwide, to ask why firms should look at this technology and how they should implement campaigns. IGA enables advertisers to target consumers playing games across a number of gaming platforms and genres.

In-game advertising is doing rather well at the moment. What do you put this down to?

It’s a wide ranging combination of factors, but primarily it’s just natural sector growth. Most of the key clients and agencies in the US and main European countries have been through the test budget and research cycle now and are starting to assign dedicated budget to the sector, which generally involves considerably larger and more frequent spend. Also, as brands start moving their money into more measurable media, in-game advertising is particularly attractive since it is primarily delivering above the line (ATL) messaging, which traditionally has been very difficult to ‘measure’ or accurately target. Of course there have been other recent developments in the market which have helped to spike growth, most notably Sony opening up the PlayStation 3 platform for ads which brings an increasingly mainstream demographic and a direct route into the living room.

What’s the unique selling point of in-game advertising?

There are several, however the primary strength has to be effectively offering proof of viewership for above the line messaging. There is so much wastage with traditional ATL mediums, but brands have to keep investing a significant percentage of their budget here since it’s such an important part of the media mix. In-game really does offer the best of both worlds building brand image and generating significant awareness among a very targeted and hyper engaged audience with practically zero wastage.

If I’m a company looking at its marketing budget for 2009, is in-game advertising expensive? Isn’t it just for the big boys with big money?

If you look at product integrations for example - often referred to as ‘static’ in-game advertising - then yes, you are typically looking at entry points ranging from £100,000 up to £1,000,000 for a single campaign. However, the mainstay of the industry now is dynamic advertising where brands can buy impressions and reach on a cost per thousand (CPM) basis from individual games, genre ‘verticals’ or even run of network. Dynamic campaigns can run regionally for as little as £5,000 so it is definitely accessible to clients of all sizes.

In-game advertising is very intuitive and international nowadays. Can you talk a bit about how that works?

This is really down to the growth of dynamic advertising. Previously advertisers would have to get involved in the game at an incredibly early stage, and deals would typically need to be international. However, with the TV network approach of dynamic advertising the technology not only allows campaigns to be updated and changed in real time they can also be localised so that French consumers will see French advertising, whereas German consumers would see German advertising even if two people from the different countries are playing together online. With well over 100 dynamically enabled games worldwide across platforms including PlayStation 3, PC and Xbox 360, this amounts to a very significant aggregate audience even when sampled by country and by demographic.

How do you measure the success of an in-game advertising campaign?

One of the biggest misconceptions around in-game advertising has been that it is comparable to online advertising whereas actually probably the most accurate analogy is ‘virtual out of home’. There is no click-through in games, we are not driving response we are a brand building and awareness medium. If you look at the uplift in key brand metrics from the Nielsen research released earlier this year, the results speak for themselves. Having said that, we have also been testing the ability for in-game advertising to drive response through unique URLs included in the creative, to equally positive effect. If we can eventually close the loop and show that in-game advertising not only generates awareness and builds positive brand image but also drives response through to purchase, then I think those industry growth forecasts will need to be dramatically revised upward.

What are the key five initial steps to a successful in-game advertising campaign?

Context, context, context, context and context. Break that rule and you break the spell. You can get your demographic targeting spot on, have perfectly balanced delivery and coverage and be in all of the latest and greatest games, but the power of in-game advertising comes largely from the fact that over 80 per cent of consumers actually like to see real brands and advertising within their game environments providing it is contextual and non-interruptive. The second you throw irrelevant creative at people or mismatch a campaign with a game you risk losing impact and effectiveness. However the chances of this actually happening are virtually nil if you are buying from one of the reputable networks as their in-house planning teams exist to serve precisely that function.