AdAgeSPECIALREPORT 5.24.04 INTERACTIVE: GAMES

HOT SHOT MARKETING We’re on cusp of marketers throwing real money at ‘game-vertising’ as advertisers follow shops’ lead By BETH SNYDER BULIK

ick kang is the ultimate action hero.Taking on the Russian and Chinese crime syndicates in the City of Angels,Kang drives, fights and shoots his way across 240 miles of area real estate.Crime in progress? Kang is on the way.It’s a Puma N rd truck heist at the 3 Street Promenade flagship store in Santa Monica. Nick Kang kicks butt and heads back to the streets for more adventure. Kang is the virtual hero of “True Crime:Streets of L.A.,“ a videogame from .And Puma is one of Activision’s marketing partners. Kang wears Puma clothing and occasionally drives See PLAY on Page S-2

INSIDE Music labels learn videogamers’ profile matches theirs as they rush to play along with titles S-4 In search of Holy Grail: Researchers race to find ways to measure thumb power S-6 May 24, 2004 | Advertising Age |S-2 AdAgeSPECIALREPORT INTERACTIVE: GAMES

TOP 10 MMORPG TITLES That stands for massively multiplayer online role-playing games. Total sales of PC-based MMORPGs topped $57 million in 2003, according to NPD Group. The fledgling segment has only recently expanded to console games. ON THE TITLE/PUBLISHER UNIT SHARE SALES $ SHARE BUTTON Star Wars Galaxies: 16% $13.0 23% An Empire Divided IMAGINE THE ABILITY to simultaneously 1 LucasArts reach thousands of consumers who are so passionate about a mass medium that it becomes a world they virtually inhabit. Final Fantasy XI 11% $9.0 16% That’s the potential of the embryonic world of 2 USA massively multiplayer online games. These games are purchased as software and played on a console or PC. EverQuest: Planes of 7% $2.8 5% Some massively multiplayer online games Power Expansion Pack “have hundreds of thousands of people paying 3 Sony Online Entertainment subscriptions to play them,” says P.J. Ultima Online: 7% $2.9 5% MacGregor, VP-partner Age of Shadows of Starcom MediaVest 4 Electronic Arts Group’s SMG Play. “It is absolutely viable as a medium. Those numbers Shadowbane 6% $3.5 6% are only going to 5 Ubisoft skyrocket.” Currently though, MMOGs consist primarily EverQuest: Lost Dungeons 5% $2.4 4% of shooter and role- of Norrath Expansion Pack playing games set in 6 Sony Online Entertainment medieval or fantasy worlds—realms generally Dark Age of Camelot: Trials 5% $2.3 4% not considered ad- of Atlantis Expansion Pack MACGREGOR, HARRIS: See friendly. Gamers in a 7 Vivendi Universal numbers skyrocketing. fantasy role-playing game would likely be upset if the Golden Dark Age of Camelot: Shrouded 5% $2.14% Arches were plopped down into their forest Isles Expansion Pack primeval. 8 Vivendi Universal TIM HARRIS, ALSO VP-partner at SMG Play, warns marketers “don‘t belong in the EverQuest: Trilogy 4% $1.5 3% [fantasy] environment, but partnering with them Sony Online Entertainment on the movie-type angle does make sense. 9 “A couple have made a run for the mainstream [and include advertising], like Star Wars Galaxies: An Empire 4% $4.6 8% [Electronic Arts’] ‘Sims Online.’ It has up to Divided Collector’s Edition 10,000 people at a time. They are paying a 10 LucasArts subscription fee every month. It is tremendously exciting to us because an MMOG is an ever- DRESSED FOR ANYTHING: Puma sportswear is woven into the evolving experience.” —NANCY COLTUN WEBSTER Notes: Ranked by units. Dollars in millions. story line of the “True Crime: Streets of L.A.” videogame. Source: NPD Group

Coca-Cola Co., BMW of North America, says women account for 39% of computer year-old game-focused unit created by Publicis Nokia, Callaway Golf Co., Kraft Foods, and videogamers. Industry insiders maintain Groupe’s Starcom MediaVest Group, adds: Play DaimlerChrysler’s Jeep and Sony Ericsson. that many women have already immersed “At every single client we go to and say, ‘You From Page S-1 While it’s true that product placements themselves into online gaming. “It’s not just should be in this space, ’ there are always lots of past Puma billboards or benches in the have been included in several generations of the boys’ territory anymore,” says Geri nodding heads. We’re just on the cusp of people virtually real L.A. videogames, new advances in graphics and Gordon Miller, festival director of New ready to throw down real dollars for it.” Players could watch videogame trailers on online connectivity, as well as the ongoing Orleans Media Entertainment, an annual As in any mass ad medium, the ability to the Puma Web site and even buy Kang‘s desire to reach ever more elusive consumers, measure popularity will be crucial to interactive clothing or footwear on a co-branded site when are pushing game advertising even further. games (see story on Page S-6), though Julie the game was released in November. “The silver bullet is Shumaker, director-ad sales at Electronic Arts, Promotional winners could pick up Puma LINKING THOUSANDS points out that videogames represent a merchandise, and pre-release copies of “True Interactive gaming has become its own ad- really doing custom technology leap and the metric will eventually Crime” were available at Puma stores. supported mass medium. Interactivity ranges be there. What’s more important is finding “Companies are starting to understand from a gamer being able to compete against solutions” linking marketing partners that want to be involved in the power of this medium,” says Dave the game itself, to several players competing games and get the right fit, she says. Anderson, Activision senior director- against one another, to the new world of marketers, games Think outside the product-placement box. business development. “They’re realizing games that are inspired by the MMO Beyond such tactics as simple contextual videogames are not only mass-market initials—for massively multiplayer online— convergence conference for the advertising, product placement, advertisers can build an entertainment that reaches an elusive male which have the potential to link thousands of gaming, film and music industries. entire level for a player to pass or create a demographic, but can be done in an players on the same game. “Videogames are starting to steal time and whole game around one product. integrated ... way without bludgeoning the While any true mass medium must appeal attention from other media. Advertisers want “Signage and product placement are consumer with message.” to both genders, videogames have been to be where the viewers are,” says Michael certainly valuable executions of advertising, Forward-thinking marketers playing in traditionally associated with young men. The Goodman, Yankee Group senior analyst. but that’s not the whole story,“ Mr. Harris this field include Levi Strauss & Co., Nike, Electronic Software Association, however, Tim Harris, VP-partner at SMG Play, the See PLAY on Page S-7 May 24, 2004 | Advertising Age |S-4 AdAgeSPECIALREPORT INTERACTIVE: GAMES Music world hits new high note fierce competition for plum exposure like of media with a very defined demo and There will be further opportunities there for Videogamers’ profile MTV have made the record labels look culture. It’s more and more important for us record labels to embed their products. elsewhere for promotional boosts. And then to find those music placements.” For now, it’s the software—games like EA’s ‘exactly the same’ and there’s the current malaise in the music The vast majority of gamers currently play “SSX3” and Sony’s “WipEout”—that get all industry, still grappling with illegal on consoles like and Sony Computer the musical action. Online gaming, which labels learn to play along downloading and slumping sales. Entertainment’s PlayStation 2. But in their offers multiplayer potential, accounts for only “It’s another distribution medium for their next generation, these will evolve into all-in- about 5% of the total gaming world but is By T.L. STANLEY content,” says Rob Sebastian, an agent at one entertainment centers with multiplayer growing quickly, and could be the next frontier Endeavor who specializes in the videogame and TiVo capability and MP3s along with for digital music delivery. As technology rammy-winning R&B artist Mya industry. “It’s a promotional platform.” their already built-in DVDs and CD players. progresses, music industry executives expect steps up to center stage on “The It’s also an invaluable selling tool. Music they will spend more time marrying their Tonight Show With Jay Leno” and executives now synch up their record releases product with the online gaming experience. Gbelts out a jazzy number, but it’s not to coincide with street dates of highly “There’s a lot of potential there for the the single from her latest record. anticipated videogames in hopes of landing user to create custom versions of the music,” Instead, it’s the theme song from some songs on a huge seller like EA’s Mr. Hill says, “and to buy the music online as Electronic Arts’ new James Bond videogame “Madden NFL” franchise or Rockstar Games’ they’re hearing it in the game.” “007: Everything or Nothing,” in which the “” series. Record labels have grown to love sultry 24-year-old singer stars as a character, “The videogame business outsells the videogames for the licensing fees and alongside Pierce Brosnan, Willem Dafoe and music business,” says Mack Hill, VP- awareness they generate. And, importantly, Judi Dench. Mr. Leno, ever the promoter of commercial, videogame and international for the security. It’s nearly impossible to copy his guests’ new projects, holds up a copy of synch licensing at Warner Music Group’s music from a videogame. the game before and after the singer’s Warner Strategic Marketing. “It’s a new area performance. SPECIFIC GAME TRACKS So intertwined now are the worlds of Videogame publishers, meanwhile, want to music and videogaming that the two couldn’t “Growth in games add value and relevance to their products by be pried apart with the best Bond-esque infusing them with the hottest music. Music gadget. is astounding—it’s in games used to be an afterthought, Mr. Where just a few years ago, videogames Schnur says, with games mired in “a Good were stuck with somewhat unsophisticated where consumers Humor, Casio kind of sound.” Not anymore. kinds of sound—retro, but not in a good Some of the most popular rock, pop, rap and way—they now sport exclusive, customized have gone” techno artists create tracks specifically for music from the hottest pop and urban artists, games or break a song there ahead of its radio and tracks from the most sought-after up- debut. and-comers. Multi-platinum artists ranging from These artists’ exposure will only increase as Blink-182 and Korn to Snoop Dogg and DMX massively multiplayer online games gain in have done so. Icons like Trent Reznor of Nine popularity. For example, Microsoft Corp.’s Inch Nails have composed original scores for Xbox Live online service allows multiplayer games. Some musical artists also get gaming and in less than two years has themselves into the game, like Mya, Snoop, attracted 750,000 subscribers worldwide. With Method Man and Ludacris. the potential to simultaneously link thousands “It’s a qualitative value-add to the of players for hours at a time, MMOGs could consumer,” Mr. Sebastian says. “It creates a become a medium akin to radio for a pop artist. TUNED UP:Singer Mya is among a number of characters bigger, bolder, higher production value “Videogame companies and record labels appearing in James Bond games. experience. It hits the senses.” have realized they can forge cooperative It’s important for videogame publishers to relationships that benefit both,” says Steve be ahead of the curve—in effect, Schnur, Electronic Arts’ worldwide executive programming the radio station of the future. of music. “The core consumer of both our A recent deal between Vivendi Universal’s products is exactly the same.” Universal Music Group and game publisher Atari will put the label’s percolating new act, GROWING UP GAMERS Dropbox, in a game called “Transformers.” The musical artists themselves are part of the Gamers who solve problems will hear the gamer nation, and for the first time in history, band’s music as a reward. The band is using there’s an entire generation of contemporary, footage from the game in its music video, and mostly young male musicians who grew up both companies will continuously cross- playing videogames. As Nielsen Media promote each other’s product in advertising, Research and others have reported, that events and other communications. demographic is increasingly turning away For an established artist, videogame from traditional entertainment like TV, and exposure is “a feather in their cap,” says Mr. spending more time online and with other Holt, “a way to show that they’re still media. The videogame business in the U.S. relevant.” For a young band, videogame alone pulls in some $10 billion a year. exposure could mean the difference between “The growth in videogames has been success and failure. astounding—this is where our consumers “There are examples of songs that have have gone,” says Courtney Holt, head of new made such a big impact in a television media and strategic marketing at Universal commercial that they can launch an artist,” Music Group’s Interscope Records. “It’s a says Dave Curtain, founder and creative tremendous marketing opportunity for us.” director of DeepMix, which pairs music with There are a number of reasons, advertisers, films and videogames. “It’s demographics being the most obvious, that happening now with videogames. If you’re the music and videogame businesses are trying to launch a band, videogames have to collaborating. Consolidation in radio and be part of your plan.” I May 24, 2004 | Advertising Age |S-6 AdAgeSPECIALREPORT INTERACTIVE: GAMES

Games Committee for the Interactive Advertising Bureau. One platform involves in-game product placement on software purchased at retail and Now down to business: used with game consoles or personal computers. Many of these games, such as Electronic Arts’ “Madden NFL” franchise, can be played interactively against remote competitors. The second ad-friendly platform consists of Internet-based games that sell a traditional Counting gamer thumbs form of online advertising not integrated into game content. Examples of such “casual TOP 10 ONLINE-CAPABLE VIDEOGAME TITLES gaming” sites include Pogo.com and Yahoo! Billion-dollar question: Games. U.S. retail sales of online-capable console videogames climbed 167% in 2003, accounting for The third platform is custom-published How to measure with TV, more than $1 billion of the overall $7 billion videogame software market, NPD Group reports. games that appear on marketers’ Web sites, Unit sales of online games soared 182%, exceeding 23 million. More than 33 million units have such as the soccer game that Wild Tangent print models’ accuracy? been sold since the category was created in 2000. Sports games represented 51% of the created on Nikefootball.com or the race game market, while shooter games claimed 22%; role-playing games accounted for 4%. on Kraft Foods’ advergaming site By NANCY COLTUN WEBSTER Candystand.com. TITLE/PUBLISHER INTRO DATE UNITS arketers find themselves on a Madden NFL 2004 Aug. ’03 3.2+ CONSOLE CHALLENGE challenging hunt in the jungle of Electronic Arts Of the various platforms, console-based interactive games. There’s no doubt 1 games may offer the greatest challenge to Mtheir quarry—the gamers—are out measuring users. “In the online space, there in ever increasing numbers, but the Madden NFL 2003 Aug. ’02 2.7+ everything is extremely accountable,” Mr. challenge is finding and counting them. Electronic Arts Madden says, but it’s much too early to offer The geography of this gaming landscape 2 an industry perspective on software-based ranges from videogame consoles to personal console interactive games. computers, from software to the Internet, NPD Group plans to conduct a study to with a total population of millions of gamers. Need for Speed: Nov. ’03 1.6+ determine how often people play games Counting gamers with the precision that Underground online or try to gauge how many of the 3 Electronic Arts Nielsen Media Research tabulates a TV gamers are actually going online, says NPD audience, and the ability to promise analyst Richard Ow. advertisers results with the precision of a Tony Hawk’s Pro Skater 4 Oct. ’02 1.4+ “It is a niche market; it is growing, but it is magazine rate base, are dreams that will need Activision still niche,” he says. “From an advertising to become reality to make interactive gaming 4 standpoint, based on what we have, the best a viable mass medium for advertisers. we can do is to try to understand what kind of “What’s intriguing—and it all needs to be market it is and what kind of gamer is going validated—is that you have this group [of Socom: U.S. Navy Seals Aug. ’02 1.3+ online. more than 86 million PC gamers worldwide] (with headset) “It is a very select group of people, and 5 Sony Computer Entertainment and they are watching less and less there are obstacles. Broadband penetration is television,” says Scott Levitan, general one of the obstacles. Many are teenagers or manager of Philips Mobile Infotainment of Tony Hawk’s Underground Oct. ’03 1.2+ younger. A lot of these services entail pay to North America. “It’s becoming tougher and Activision play. How do teenagers play if they need a tougher to grab a hold of this group [with 6 credit card and don’t have one?” conventional ad media]. And they are “The media opportunities are the spending a hell of a lot of money. “ videogames sold at retail that reach millions and “Measurement is important because as they ATV Off Road Fury 2 Nov. ’02 1.1+ millions of people,” says Julie Shumaker, EA get more data, it becomes a much more 7 Sony Computer Entertainment director-ad sales. “By nature, the online will attractive medium for marketers because they’ll come. If you get into a videogame that is online- know who the audience is,” says Michael enabled, you reap the benefit both ways.” Goodman, Yankee Group senior analyst. Medal of Honor Rising Sun Nov. ’03 1.0+ “Within paid-for games—bought in the Coming next October is new technology Electronic Arts store—you can set up a server and the site that will not only insert specific brands into 8 administrator will know exactly how many videogames via the Internet, but also track people are playing at any one time,” says their exposure to gamers. Richard Skeen, VP- NCAA Football 2004 July ’03 1.0+ Forrester Research analyst Paul Jackson. advertising at Massive Inc., says the in-game Electronic Arts “[Players] have a user ID or password, but advertising company’s technology for new PC 9 may not represent their true identity. The titles from Atari and Ubisoft will place issue is really the coordination of gathering marketers’ brands into a game when the those numbers and getting people to release player connects to the Internet. NBA Live 2004 Oct. ’03 1.0+ those numbers when you have 10,000 sites Electronic Arts around the world. People who are running ADS CAN BE CHANGED 10 those sites know, but gathering the data and The ads can be changed over time and remain amalgamating those numbers is a tricky task.” in the game after the player goes offline. Mr. Note: Ranked by units, January 2000-January 2004; units in millions. All top 10 are for Sony’s PlayStation 2. Measuring videogame usage will mean Source: NPD Group Skeen says the technology also offers new challenges to ad agencies. “It is difficult to accountability to the advertiser by tracking ads fit into their ROI analysis,” Ms. Shumaker viewed by the game player. time, videogamers will be tracked to provide complicated. says. “They know how to buy online media Tim Harris and P.J. MacGregor,VP- advertisers with a standardized measurement. SMG Play was the first major in-house on a cost-per-thousand basis; on the flip side partners of Starcom MediaVest Group’s “It will validate and measure and sell the agency unit to focus on gaming last year. In they know how to buy gross rating points.” games-centric SMG Play, say they’re importance of this sector,” Mr. Harris says. early May, WPP Group’s Young & Rubicam EA builds “relationships with top clients encouraged by the recently announced “A lot of folks believed it on their own, and followed suit when it opened Bounce and agencies,” she says. “If I’m talking to initiative by Activision and VNU’s Nielsen those who were skeptical have been given a Interactive Gaming. Gatorade—they are continuing X factor Entertainment to attempt to measure wake-up call.” There are three main game platforms for around competitive male-focus sports—we videogame audiences. The plan is to measure Marketers think of videogaming all as one advertisers, says Dave Madden, exec VP- would talk about the Madden game and NFL everything from ad exposure to audience recall thing, says Mr. Harris. However, it’s a sales, marketing and business development street game. Are we going to work on an ad for console-based videogames. For the first complex virtual world and getting more for Wild Tangent, as well as chairman of the See MEASURE on Page S-7 May 24, 2004 | Advertising Age |S-7

innovations in gaming and As the videogame medium at EA. “Our philosophy is very much focus on original games tied closely advertising. For example, a wireless evolves, both software publishers about the integrity of the gaming to specific consumer brands. His Play marketer might run a downloadable and marketers will have to be wary experience. If we stick to that, we’re company is currently working with From Page S-2 game contest on its phones where of the fine line between advertising not going to oversaturate.” a wireless carrier, a sports company says. “The silver bullet is really the top 10 scorers for the month win that makes sense and advertising Mr. Brambilla has put the and a retailer on doing just that. doing custom solutions for clients.” free phone minutes. that alienates gamers. priority on game before advertising “What if you could download a One way to take the well- “When this thing matures, there by coining the term “game- videogame and play in a universe traversed idea of product placement will be the opportunity to launch CAN’T ANNOY CUSTOMERS vertising.” Unlike the commonly that’s very much about the attitude further is through dynamic brand products in videogames,” says Craig “We’re never going to overblow the used “advergaming,“ game- and style of the brand?” he says. placement. Similar to product Rechenmacher, director-global advertising opportunity, because the vertising denotes that the “It’s very much akin to what BMW placement, but with connectivity to brand management at THQ. “I don’t last thing we want to do is annoy our entertainment experience comes did online with BMW Films— the Internet, this emerging technique know if it’ll be songs or music videos consumers,” says Carolyn Feinstein, first. Mr. Brambilla believes the next branded entertainment as part of can be used to update, change and add or clothing lines, but it will happen.” VP-marketing and communications step in advertising and gaming will the experience.” messages with any frequency desired. Connecting to the outside, “real” world is another popular developing idea. On There.com, gamers can try on Levi’s jeans or Nike shoes; on Ubisoft’s console game “Tom Clancy’s Splinter Cell,” players can use a Sony Ericsson phone or camera. But the use is limited to the confines of the game or online environment. Breaking through to the sale or offline use is still limited. One tactic is to reward players with product or points. General Motors Corp.’s Cadillac ran a game that rewarded the winner with an Escalade SUV. But as gaming expert Marco Brambilla says, that concept is more of a lottery approach. It should really be “more about creating an award that everyone can attain,” says Mr. Brambilla, creative director of Medium, a venture AttractAttract between commercial and music production house HSI Productions and Immaterial focused on CUSTOMERSCUSTOMERS LIKELIKE Measure From Page S-6 opportunity to integrate branding or go deeper and have product as some interaction in the game? That leads to pricing.” O TTH As a pricing strategy, Ms. M O HS Shumaker offers the example of M S EA’s “Sims” title. toto aa “We are charging [the advertiser] 35¢ a unit and we know the average gamer plays that game a minimum of 45 times during the ownership of that game and we give [the advertiser] a million-unit guarantee—even though we know we’ll sell millions. They have three integrations into the product—like . a soda can, a billboard and maybe FFLLAAMMEE. their product in a convenience store. That’s three exposures in the They become mesmerized. They’re unable to resist the allure. And they come swarming in by the thousands. game; 180 million unique AAdvantage® miles draw customers to your products from every direction. It’s one of the reasons AAdvantage impressions for a million unique programs are some of the most powerful marketing tools available. Find out how we can tailor one for you. people. And then you back it in based on 35¢ per unit based on what the net CPM would be.” Wild Tangent’s Mr. Madden likens the evolution of the interactive gaming business to the maturation of broadcast and cable TV, saying, “Everyone from software publishers to platform providers to portals are all trying to figure out ‘What’s my value in the 1-800-777-3442 • aadvantage.com food chain?‘ “ AAdvantage® and AAdvantage MarketingSM are marks of American Airlines, Inc. CONTRIBUTING: BETH SNYDER BULIK