In-Game Advertising Heavies Up on Fixed Placements

Massive Inc., which pioneered the “dynamic” in-game advertising business, is becoming a bit more static in its approach. The Microsoft subsidiary recently began selling fixed product placements in videogames—commonly referred to as “static” ads—as they are baked into games during their production. That’s something of a departure for the company, which made a major splash in the industry back in 2005 when it introduced dynamic ads, i.e. ads served into games as they are being played, much like traditional online advertising.

Massive executives, while acknowledging the dynamic business didn’t explode as fast as some had predicted, said that the company’s broadened portfolio is being driven by advertiser demand for a more comprehensive in-game ad offering. “Now, we can help advertisers reach that gaming audience with deep integration in a game,” said JJ Richards, Massive’s general manager, who emphasized that static and dynamic are complementary.

Earlier this year, Richards brought on Aaron Lassila from rival in-game ad firm Double Fusion to serve as Massive’s national manager of fixed product placement. It was Double Fusion that in the past year or so first started expanding beyond dynamic ads into both static placements and casual games.

Double Fusion CEO Jon Epstein said that offering a broader portfolio is wise, since some brands need timely awareness messages, while others are drawn to games’ immersive qualities. “I can’t dynamically insert you into a storyline,” he said. “I can put a car in a game and park it there. If you really want to demonstrate, say, a new car’s speed attributes, that stuff still requires deep integration. There is a real role for static business.”

However, some perceive Massive’s move as a sign that dynamic ad spending has dried up during the economic downturn. That perception may stem from the recent news that competing in-game ad firm IGA Worldwide was in need of emergency funding or a possible white knight buyer in order to survive (executives at IGA were unavailable for comment).

Sources claim that IGA significantly overpaid for several of its game publisher deals and also vastly inflated its revenue estimates for recent years. The company is also said to have brought in roughly $3 million in revenue each of the past few years while burning through close to $18 million.

So is the recession driving down interest in dynamic in-game ads, or is it just bad forecasting that is hurting IGA?

“I don’t think that Massive’s interest is reflective of the fact that dynamic isn’t doing well,” said Paula Cuneo, Massive’s director, fixed product placement, who previously founded Activision’s in-game ad business. “We want to deliver against the needs of advertisers every time we go to them. This is easier for advertisers and publishers.”

Also, JJ Richards added “[Massive] just signed a seven-figure deal…We’re still growing. The overall tide isn’t. The independent dynamic strategy is having a tough time right now.”

But Dave Winding, director of network advertising for Sony, which employs both IGA and Double Fusion to deliver dynamic ads in 11 PlayStation3 games, remains bullish. “We are committed to both our ad distributors,” said Winding. “The only thing holding us back is a lack of inventory.”

Buyers note that many brands still find dynamic ads too passive for such a forward-leaning medium. “Dynamic ads need to evolve and increase the level of engagement in order to fully offer the opportunity that videogames present,” said Matt Story, leader of the gaming expertise at Publicis’ Denuo. “The importance of dynamic ads to brands will be limited until added functionality is present.”

Gaming consultant Alex Kakoyiannis theorized that dynamic in-game ads may have had some of their thunder stolen of late by newer, sexier digital media opportunities like video or social networking, which are easier for traditional brands to execute on. “In the past few years for nonendemic advertisers, there are so many other cool things out there that fit better in their box.”