Social Gaming and the Enormous Advertising Opportunity Within

Social Gaming and the Enormous Advertising Opportunity Within

Nicole Sorochan

Social gaming is hot. The number of internet users playing games on social networking sites has surpassed the number of gamers on consoles and PC’s.

Zynga, the #1 social game developer has more than 45 million daily users playing titles such as Farmville, CityVille and Texas Holdem Poker. Rovio’s Angry Birds has surpassed 140 million downloads and 50% of Facebook’s 800 million users play social games.

Large console game developers like Electronic Arts and Xbox are re-designing their entire publishing strategies to become more social with direct integration with Facebook, Twitter and the social graph. Needless to say the social gaming industry is exploding and for good reason –social games are in high demand, highly addictive and portable. And, they’re proving incredibly effective for direct response and brand marketers alike.

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So how do digital marketers, brands and businesses capitalize on this explosive market, and it’s highly engages user base, to drive qualified traffic and conversions from social gamers glued to their Facebook account iPad or smartphone? Read on and we’ll show you how.

Who’s playing and how often?

Social gaming is a female dominated pastime. 55% of social gamers are female with an average age of 43. 41% of these women work full time, 13% are retired and 11% are homemakers. Gender aside, one in five Americans has played a social game on the internet, and 35% of those users aren’t gamers otherwise. In other words – 35% of social gamers are not playing console or PC based games.

2010 research study conducted by Pop Can Games revealed that one-third of social gamers in the U.S. earn less than $35,000 a year.  17% earn between $35,000 and $49,000 and 21% of social gamers make between $50,000 and 75,000. 21% earn more than $75,000 a year.

The same study also concluded that:

  • 60% of social gaming sessions lasts more than half an hour
  • 10% last 3+ hours
  • 35% of social gamers say their consumption has increased over the past three months
  • 80% of social gamers state that “that playing social games strengthens their relationship with friends, family and colleagues, social gaming reinforces the core appeal of social networks.

It’s clear that social gaming is a fast growing market as an enormous part of the US adult population participating in social networking and game play –and they engage often!

So what platforms are they playing on?

Facebook dominates as the #1 platform for social gaming. 50% of Facebook’s 800 million users login specifically to play games and the average Amercian’s spends more time on Facebook than Google, Yahoo, YouTube, Bing, Wikipedia and Amazon combined.

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Although web is the primary medium for social game play via mobile devices is catching up fast. The Facebook developer API and HTML5 has opened the door for forward-thinking game publisher to develop mobile games that connect to Facebook and the open graph while offering the convenience of mobile game play. Companies like Moblyng.com andSibblingz.com are betting big on the convergence of mobile social networking and games.

Mobile is huge, and all developers on Facebook realise that,” says company founder of Sibblingz Ben Savage. “On Facebook, growth seems to have slowed down, but mobile’s going to blow that away. There are two billion people with mobile devices, and gaming is one of the biggest things. It’s going to be an enormous market, and Facebook developers have realized that’s where they have to move.

 

After Facebook, 24% of social game play occurs on MySpace, 7% occurs on Bebo and 5% on Friendster. Google+ has yet to add applications but when it does expect social gaming to be a large portion of all app engagement.

Ad models for social gaming

Typically in-game ads fall into one of three categories; in-game, around-game and product placements.

In-game advertising is the largest revenue driver for most game publishers. In-game advertising consists of interstitial video and IAB banner placements that load between levels or during game play in addition to lead generation offers. In-game ads are often connected to social currency –watch this sponsored video by Mars and receive $10 in Farmville credits. CPMs for in-game video placements start around $35 with the a qualified impression consisting of a completed video view.

 

Around-game banner ads are placed above or below the gaming environment and are typically ever present. These ads are served by third party ad networks such as Google AdMob and iAd, or directly by the game publisher. Response rates for around-game ads are quite low which makes them a primary vehicle for brand advertisers. At $2 CPM you can buy a lot of cheap targeted inventory but don’t expect the click through traffic to rival any of your other channels.

Sponsored placements are for larger brands and agencies that cut sponsorship deals directly with the game publisher. Sponsored placements are hard coded into the game environment and pure brand plays. Examples include in-game signage and product placements. Sponsored placements run between $350K-$750K depending on the type of placement and the popularity of the game.

Social Currency Drives In-Game Advertising

Social games have two revenue models; around game advertising (banners) and social currency. Social currency is akin to game credits that are earned by users as they view videos and complete lead generation offers.

While some users are content to pay $2 to download Angry Birds from iTunes, or purchase in-game upgrades, the reality is only 5% of social gamers actually pay for games. The remaining 97% (500 million + users) world wide play the free versions using a system of social currency to unlock features, levels and virtual goods within the game. This social currency takes the form game credits which are earned by viewing ads, interstitial videos and completing lead generation offers while inside the game environment.

But what value do advertiser derive from these incentivized leads and video views? According to a recent research study by KN Dimestore and SocialVibe 90 percent of users “pay active attention to the brand message when interacting with incentivized engagements, and brand perception rises an average of 38 percent after completing the engagement.” Users exposed to an incentivized advertisement or video inside a social gaming environment are 161% more likely to visit the brand’s website and 36% more likely to shop for the brand at the store location after the engagement. This response rate is profound when compared to other incentivized advertising practices such as online surveys offer sites and cash-back ecommerce programs.

According to Radium One (a demand side ad platform anchored in social gaming) in-game videos have a 99% view rate when linked with a social currency. 70% of users will conclude a full video view inside a social game with post-view interaction rate as high as 25%. These response rates are un-paralleled by any other digital channel.

As it turns out in-game social advertising is incredibly effective. Ad targeting by age, gender, geography, content category, mobile device and behavior ads even more appeal to in-game advertising.

How to buy media in social games

If you’re looking for a piece of the social game advertising action there are a number of networks and agencies that facilitate ad placements into social games. Ads can also be purchased through larger game publishers.

Around-game advertising is purchased on a CPM or CPC basis. In-game advertising is dominated by video and lead generation which command a CPV and CPA pricing respectively. Sponsored advertisements are baked into the game and purchased with a one-time integration fee.

If you’re looking to buy media in social gaming here are some options to consider when planning your social gaming media campaign:

AgenciesGame PublishersDemand Side PlatformsWeeworld.comZynga

Admob (Google)Medialets.com

RockyouiAd

PlaydomRadium One

If you want to study the most popular social games on Facebook head on over to AppData.com for weekly updates on application rankings and developer profiles.

Need Help?

If you’re looking for some help venturing into the social game space One Net Marketing has expertise and experience negotiating media placements via our Display advertising service. We also have extensive experience develop social media engagement strategies including gamification and interactive web applications all designed to increase traffic, sales and engagement with your brand.