Product Placement In Games Sizzles

When video gamers lube their cars in Electronic Arts’ “Need For Speed Most Wanted,” they don’t use just any oil. They use Castrol Syntec. And along the 337 miles of “drivable” roads in Midway’s “L.A. Rush,” billboards hawk everything from MTV to Piloti driving shoes.

The signs that litter our real-life highways are increasingly finding their way into games, and the publishers who act as urban planners for these virtual thoroughfares are very aware of the dangers even as they ratchet up their product placement efforts. Inappropriate, or too many, product placements in a game, they say, and gamers quickly let their anger be known.

Yet, at Electronic Arts, plans are to sell space in 13 games next year compared with 11 in 2005 and just two in 2002. At Midway, the company hired its first director of in-game advertising just a few weeks ago to intensify sales efforts. And the goal of at least one small, independent developer is to profit from product placement in addition to the funding developers traditionally receive from publishers.

“A properly designed game that provides lots of game play hours and high replay value can provide more bang for the buck than a favorite DVD, which might get played 3 to 5 times in a year, max,” says Jeff Greenfield, publisher of “Branded Entertainment Monthly” and executive VP at Portsmouth, N.H.-based 1st Approach, a product placement marketing firm. “And if the brand becomes a critical part of the game’s mission objective, then you’ve got a product placement home run.”

While Midway’s product placement program began about 18 months ago, the Chicago-based publisher has named a new director of in-game advertising and set in place a new, more aggressive sales program.

Steve Allison, Midway’s corporate marketing officer, attributes the energized initiative to both rising video game production costs and a maturing industry.

“Making games is getting more expensive, and we hope to offset some of that. But, more importantly, we’re just maturing as an entertainment business, and we’re finding that we have the same opportunities as, say, the movie industry. If you look at the blockbuster movies, you see that their promotional partners do very well when the movie is hot. If we follow that model, we know we can make a lot of partners happy — and generate a lot of revenue from it.”

Allison refers to the endless product placement opportunities as a sort of “Wild Wild West” — “a pizza box on a table can function the same way as a billboard in a racing game,” he says. “There are also storefronts. And, with next-gen technology, we’re at the point where we can recreate real clothing brands, dress the game’s characters in them, and sell that to the clothing manufacturers. We’re looking to do that. For companies that want to be incorporated into a game, there are many, many opportunities.”

For example, in “L.A. Rush,” the driving game released last month for PlayStation 2, Xbox, and PC, Midway signed on 40 partners, “although, with 337 miles of drivable roads, we could have done 400,” says Allison. He wouldn’t reveal what the deals netted Midway, but disclosed that, in general, “we take as little as $20,000 for a limited placement on up to close to $1 million. It just depends on how much exposure the company wants. There’s a lot of negotiating going on.”

Armor All ad in Midway’s “L.A. Rush”

But Allison recognizes that too many advertisers in a game could do more harm than it’s worth.

“When gamers pay $50 or $60 for a title and then feel that they’re being barraged with ad content, especially if it feels like advertising to them, you get some very harsh reactions — e-mails, calls to your PR or investor relations department, blogs,” Allison notes. “It’s the same thing as when moviegoers pay $10 to see a movie and then have to sit through 15 minutes of commercials before the movie starts. They don’t react positively to that stuff. So you and your ad partners have to be crafty; you have to present it in a way that’s going to appear cool.”

Julie Shumaker, too, is more than a little concerned about what she predicts will be a “consumer backlash” against publishers who “are rushing so fast that they may likely go too far.” As national director of sales/videogame advertising at Electronic Arts, Shumaker says she doesn’t want to see a repeat of the Internet boom-and-bust era of the mid-to-late-’90s. “Marketers had a very bad experience and got burned,” she recalls.

“While I believe we are doing things the right way here at EA, we are concerned that if consumers have a bad experience [with too much or too blatant advertising in games], you can bet that the advertisers will have a bad experience. And if their first entree into video games is a negative one, it will take years to get them back and try again. So my hope is that the buzz in the marketplace about product placement doesn’t transfer into publishers going too far.”

She had praise for publishers Activision and Ubisoft who she described as “doing a heck of a good job” and having “similar concerns.”

Shumaker says that EA has firm guidelines in place to prevent overenthusiastic product placement.

“I can say to a marketer that I know your tendency is to be interruptive but, at the end of the day, it’s our job to have you be seamless,” she notes. “Some marketers are going to run to a publisher and say ‘Slap my logo everywhere and make sure it’s seen and that it’s really in your face.’ My concern is that other publishers won’t be as firm in their pushback as we would be.”

The question, of course, is how much is too much advertising?

In order to determine the line of over-commercialism, EA does extensive focus-group testing, combines that with consumer feedback on current games, and then, according to Shumaker, “we pull waaaay back from that line. Also, some games lend themselves to product placement more than others. For example, in ‘Need For Speed Most Wanted,’ we sold 15 placements; in “NCAA March Madness 06″ there are only two.” And other games go ad-less — in 2005, EA published 33 games, only 11 of which contained advertisements. Fantasy games and those set in historical times tend to be inappropriate for product placement, and advertisers tend to avoid “M”-rated games (for ages 17 and older) which limit the size of the audience and may include content with which they’d rather not be associated.

The product placement process starts with the game’s executive producer, explains Shumaker, who determines how many spots are available for real-world brands. He may feel that the game requires a mobile device, and so Shumaker will ask her team to go out and talk to wireless companies to determine their interest.

Castrol ad in Electronic Arts’ “Need For Speed Most Wanted”

Or a company like synthetic oil manufacturer Castrol Syntec will approach Shumaker and ask which game is available for product placement. In fact, they signed a multi-component deal for the just-released “Need For Speed Most Wanted” — the game includes a Castrol-branded garage, plenty of Castrol oil cans, Castrol signs, and an “unlockable.”

Shumaker explains: “There is a high-performance vehicle — a hot, souped-up Ford GT — in the game that players have to go through many, many levels to access. We did a promotion with Castrol in which they delivered the code to unlock access to the car. It was a win-win situation — in effect, Castrol was gifting the gamer with added content, and was itself excited to be associated with a high-performance vehicle in the game.”

While Shumaker wouldn’t disclose what Castrol paid, she says there was a different fee for each of the four components of the deal. EA’s rates are based on per-unit sell-through.

“I guarantee that a certain number of units will be sold and then, typically, we over-deliver,” she says. “I will admit that our per-unit rate is consistently a little higher than the rest of the market.”

An alternative to product placement is what is known as “dynamic advertising,” a new technology in online games that lets different ads rotate in the same game “space” or location. While Midway has dabbled with companies like Massive and Double Fusion, which stream ads into some of Midway’s online games, EA is taking a wait-and-see attitude on dynamic advertising technology.

“We are on record as investigating various technologies and business solutions in the dynamic ad-serving space,” Shumaker says. “But, right now, we’re not using it and won’t until we have gained full confidence in it.”

She describes what EA does now as seeking out sponsorships rather than advertisers. “When Coca-Cola pays for a 30-second ad on TV, it’s usually because it wants to talk about, say, its new flavor,” she explains. “That’s time-based and it’s focused on product features. Sponsorship is really about brand affiliation. Our research has consistently shown that gamers have higher favorability for a brand that’s been in our games after they play the games than before.”

While it’s impossible to determine how much revenue video game publishers generate by selling product placements, there is at least one small game developer who is hungrily attempting to slice off a piece of that pie. After all, as production costs rise, it is the independent developer who is being hardest hit.

Devin Cambridge is managing the creation of a new video game called “Sirius Sepheroth” which features the talents of comic book veteran Mike Carey of DC Comics.

According to Cambridge, who is the CEO of Newnan, GA-based Cambridge & Smith, the plan is to incorporate real-world brands into the game, which would “not only add to the immersion of the cyberpunk fantasy adventure, but bring in revenue over and above what the game might receive from a publisher.”

The biggest challenge has been to create a game that incorporates advertising, without having closed any deals yet. The would-be advertisers, it seems, want to see the game before signing on the dotted line.

Cambridge’s goal is to sign on as many advertisers as possible at the rate of $100,000 on the low end up to $1 million, depending on their participation.

Midway’s Allison wishes independent developers the best of luck.

“The truth is that the third-party development climate is really tough,” she says. “Their costs are rising, and so I understand why they may want to do this. But I’d be shocked if any small developer will be able to pull it off.

“What we’re looking at is that, in the next two years, more and more games will take place in big city environments, where there’ll be lots more opportunities to sell stuff. The publishers who are savvy will be able to take advantage of that. In the meantime, this is all still in its infancy and a lot of advertisers still don’t get it. Educating them will be the biggest challenge.”

Paul “The Game Master” Hyman was the editor-in-chief of CMP Media’s GamePower. He’s covered the games industry for over a dozen years. His columns for The Reporter run exclusively on the Web site.