Adrian Chiu – Advertising in the Game Console Re-Imagined

Adrian Chiu, Senior Product Planner, Microsoft

Thirty-plus years ago, few people would have even considered advertising within a game console.  But over time, game consoles have evolved and grown to encompass millions of people.  Console audiences have moved from the stereotypical teenage boy playing shooter games to families watching the latest episode of their favorite TV show.

This transformation has not gone unnoticed by advertisers.  In fact, I can tell you definitively:  Yes, there is advertising within games, within console environments like the dashboard, and other connected TV devices.

This wasn’t always the case.  A lot has changed in gaming and in the role of the console.  Here are just a few things I consider to be pivotal advances in technology:

  • The Connected Device:  Connecting a game console to the Internet brought fellow gamers together through multiplayer scenarios, but it also gave console companies a dynamic way to deliver new content and better understand the needs of users on their platform.  Before the connected device, ads were static, embedded banners or product placements in games.  Now, consoles have real-time delivery of ads tailored to the interests of users and methods to measure user engagement and interactivity.
  • Third-Party Applications:  The gaming console was always best experienced when connected to a TV.  So it was no wonder that console manufacturers started to ask whether it could do more.  Content partners like Netflix and Crackle (among others) gained greater distribution by offering their own, branded, video/TV/movie apps within consoles.  Suddenly, the console didn’t simply represent gaming; it represented something larger – Entertainment.  Video ads (e.g. pre-roll) are a core component for many of these apps, and for advertisers, they represent a familiar advertising medium akin to TV.
  • Mobile Computing:  Mobile computing created a paradigm shift in gaming and advertising.  Mobile gaming became mainstream and new business models like free-to-play/freemium relied heavily on advertising for monetization.  The resulting audience fragmentation is forcing advertisers to rely on more than one screen for their ad campaigns.  In particular, we now see multiple devices within close proximity to each other.  In fact, according to an IAB study in May 2012, between 52%-65% of people surveyed said they were “somewhat likely” to “very likely” using another device while watching TV.  Xbox SmartGlass is beginning to explore how companion devices enrich the entertainment experience.  How advertising weaves into that experience will be a key question in the coming years.
  • New Interaction Models:  How we interact with our consoles has changed dramatically.  We’ve moved from wired controllers to voice and gesture.  This natural user interface has changed how people interact with their content.  And in similar ways, these new interaction models offer advertisers amazing new opportunities to engage and influence people’s opinions about their brands.  Think: when was the last time an advertiser was able to get their target audience to say their product name, confirm that it was spoken, and do that at scale?  It’s happening today.

These advances have transformed the role of consoles in the household from pure gaming devices to broad, entertainment platforms.  Advertising becomes more important because it enables console manufacturers and publishers to cost-effectively bring compelling content to their customers.

The future of advertising will be characterized in three ways:

  • More ads will be engaging and native experiences.  Native ad experiences (i.e. those that are seamlessly built into the user interface and that leverage a device’s core capabilities like touch or voice support) make for great consumer experiences.  A couple of examples:

a)     Advertisers take advantage of console interactivity through branded micro-sites where consumers can play mini-games, win daily prizes, and even download clothing for their avatar.  Reese’s “Have a Perfect Halloween” campaign is a great example of consumer engagement: Nearly 70% of Xbox members in the study took at least one post-ad action – such as going to a local shop to purchase Reese’s candy.

b)     However, even with today’s fun and engaging ad units, new interaction models like voice and gesture are going to change how advertisers define “engagement”.  Seemingly basic ad formats will no longer be passive, lean-back experiences.  Instead, they’ll draw people to lean-forward and get involved with the ad.  One example of this type of innovation is NUads™, which transform standard 30-second TV spots into engaging and actionable experiences using the power of voice and gesture controls of Kinect for Xbox 360.

  • Consumers will have greater control over their ad experience.  I won’t speculate on potential industry regulations, but consumers clearly want more choice and control.  Perhaps at the heart of it is the question of value exchange: “What am I getting in return for viewing your ad or letting you track me?”  I believe advertising in the future will need to provide better value-exchange for the consumer.  Advertising will need to invite and not interrupt.  And perhaps most importantly, advertising will need to be much more relevant in spite of potential limits on what data is used and how it is used to inform marketing strategies.
  • Ad campaigns will extend to multiple screens more easily.  Today, multi-screen advertising is incomplete in many areas (e.g. reporting, frequency management, targeting) and can be prohibitive due to high creative production costs.  But many of these issues are getting resolved.  For example, using creative assets across multiple devices will help drive down creative costs and turn-around time – something that Microsoft Advertising calls Polymorphic Ads.  The launch of Xbox on Windows 8 has shown how gaming and entertainment is extending from console to the PC.  The key to these great, immersive experiences is a platform that understands who the Xbox user is and transitions their preferences/content from device to device.  This opens up a variety of opportunities for advertising as devices need to synchronize and coordinate more effectively to ensure a seamless experience.

Like other types of entertainment, from print to radio to TV to Internet, advertising has followed media consumption.  It’s where the eyeballs are!  So as we think about the evolution of gaming consoles into the center of entertainment in the living room, advertising is a core component of that change.  The next decade of advertising will be more engaging, relevant and cross-platform than ever before.