Video Game Advertising More Effective than TV Ads?

In a study commissioned by California-based gaming advertising network NeoEdge (which should lend an air of suspicion) findings show that, unsurprisingly, online gaming audiences are more inclined to remember and positively perceive brands in various stages of motion that are embedded in web-based video games.



Frank Magid Associates conducted the study, offering an explanation of the parameters and its findings:
“Consumers saw one of ten different online video advertising scenarios, which varied the number of ads seen, frequency of ads and additional ad products. Over 2,000 consumers participated in the research study and over 1 million ad impressions were used to conduct the comprehensive research.

Major players Google and Sony are already jockeying for key positions in this emerging market that, by NeoEdge’s again suspect estimate, could grow between $732 million and $1.8 billion by 2010. That’s quite a sunny estimate. But, here are a few reasons why this market will not balloon to such great proportions and why, moreover, it won’t work.

With every new mode that has been developed within digital media, most of which have relied heavily or entirely on advertising to generate revenue, the initial strengths eventually become their damning weakness.

MySpace, which was one of the first Web 2.0 sites to rise to prominence, offered advertisers infinite pages to advertise on while giving marketers valuable data for individuals, groups and entire demographics. Unfortunately, the proliferation of pages and oversaturation of advertisements had a “steel dumping” effect, meaning the value of the message, as well as the value of its mode (the site and its ad spaces) had been diminished by its surplus to such an extent that advertisers reduced the figures they were willing to pay, consequentially reducing the site’s revenue and, in many cases, their financial solvency.

This “steel dumping” effect has become more apparent during the Recession and, as ad contracts expire, will likely get worse. The problem is: information, especially ad information, has become a cheap commodity in digital media. Devalued information tends to sink its very mode of presentation: the site. Worse, sites that serve information functions (i.e. news sites, social networking sites) are actually generating more information or expanding their ad space sizes in an attempt to balance its devalued ad spaces, which is actually hastening their downward trajectory and critically damaging the ad-based revenue site’s most critical value: its quality.

What this means for ad-sponsored online video games is that, as returns diminish, the game quality will likely also diminish. And who wants to exchange their attention to a brand or company's message for a cheap product?

Ad-sponsored and ad-embedded video gaming, online and otherwise, are inevitable and will only increase to the point of ubiquity in the next few years. But, advertisers and game designers who think that this model is a sustainable one might want to take a look at other ad-based revenue sites, which suffered from a similar strand of hubris and short-sightedness and are now paying the price.

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