Video Games Serve Up Targeted Advertising

A new kind of highly targeted advertising is popping up in video games. Advertisers are taking advantage of new technologies to deliver targeted ads in real time to game players. Some critics find the practice intrusive.

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STEVE INSKEEP, host:

On Monday's we focus on technology, and today we'll report on ads inside video games.

So if you're one of the millions and millions of people who play video games online, maybe your virtual alter ego enters a subway tunnel as part of the game, and there you see a billboard for coffee and a donut. But across the Atlantic Ocean, a young man playing that same game with you sees a completely different billboard: one tailored to his time zone and demographics.

NPR's Wendy Kaufman takes a peek at a new kind of advertising where highly targeted messages are delivered in real time.

WENDY KAUFMAN reporting:

Advertising inside video games isn't new. For years, advertisers have worked with game designers to get their products or messages into games. They were written into the code and stayed there for the life of the game. But now advertisers are using the Internet to put up-to-the-minute and ever-changing ads inside video games.

(Soundbite of video game)

In one of Tom Clancy's Splinter Cell games, super agent Sam Fisher runs through New York City. On route, he passes a billboard for the Honda Element, and a poster for a soon to be released movie. The ads are quite deliberately part of the game's landscape, explains Nicholas Longano, a senior executive with Massive Incorporated. Massive is an industry leader in dynamic in-game advertising.

Mr. NICHOLAS LONGANO (Massive Incorporated): I think it's important to understand that when a game ships out to retail, when it's sitting on those shelves, there are no ads in that game at all. There is only a game that's been tagged in many locations within the game to receive advertising once it's connected to the internet.

KAUFMAN: Massive is currently serving ads to 75 titles, with the expectation of serving twice that number within a year.

Longano is not eager to explain exactly how this advertising system works, so we turned to Shar VanBoskirk of Forrester Research. She says just as you serve an ad to a website you can serve an ad to a game.

Ms. SHAR VANBOSKIRK (Research Analyst, Forrester Research): A user logs on to a game. The game realizes, hey, this user's logged on. We know a bit about her profile and we know the time and the location where she is. And there's a tag that's all of the available inventory in the game that she's playing, and that tag calls the Massive database.

And so when I show up and I'm playing my Grand Theft Auto and I'm driving by a billboard, it will call that database. The database will say, oh, this profile is driving by my ad, and it will send an ad that's related to that profile.

KAUFMAN: For now at least, the ads are not targeted to individual gamers. Rather, ads are served up to games based on the game's demographic profile. Because the system for installing the ads is dynamic, the ads can be targeted or changed daily, even hourly. They can also be targeted by geography, using one's IP address.

Mr. JEFFREY COLE (Director, Center for the Digital Future, Annenberg School, U.S.C): From an advertiser's standpoint this is extremely clever and makes a great deal of sense.

KAUFMAN: Jeffrey Cole, director of the Center for the Digital Future at U.S.C's Annenberg School, says it makes sense because young gamers are hard to reach with traditional advertising. They don't watch a lot of television, and they're fairly resistant to ads in any case.

But that doesn't mean that Cole likes what he sees. He's troubled by the blurring of the line between content and advertising.

Consider, for example, an ad for the brand new Toyota Yaris that ran last month in the game Anarchy Online. As Kim McCullough, a Toyota marketing executive explains, the game contained a billboard which had the Yaris sub-compact covered with a shroud.

Ms. KIM MCCULLOUGH (Marketing Executive, Toyota): What happens is you have to go up and interact with that, click on it, to reveal the Yaris. And that's kind of the door to allow you to continue playing the game, to get to the next level.

KAUFMAN: That's right. You had to click on the billboard to continue playing the game. Toyota is now assessing whether gamers like the ad or if they found it too intrusive.

In general, advertisers see these real-time and ever-changing ads as a new market. Game developers see them as a new revenue stream. But consumers, suggests U.S.C's Jeffrey Cole, get shortchanged. He says ordinarily when there's advertising consumers pay less. But that's not happening here.

Mr. COLE: If we're going to put ads in games, then charge me $30 or $40 for the game, not $50 or $60 or $70. Let me benefit as well.

KAUFMAN: The field of dynamic video game advertising is relatively new, but it's growing quickly and becoming big business. Massive Incorporated, which formerly launched its advertising services a little more than a year ago, was just bought by Microsoft. The reported price: between $200 and $400 million.

Wendy Kaufman, NPR News, Seattle.

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