Why games and brands are a perfect match

Morgan Stanley analyst Benjamin Swinburne and his team have published a fascinating set of charts about the long, slow decline of old-fashioned broadcast and cable TV. There has been a 50 percent collapse in broadcast TV audience ratings since 2002 and the same time online video and mobile apps have exploded.

Games dominate the app usage and given the explosion of smart phones, you can reach over billion people instantly through games. Thats a bigger reach than Superbowl or most of the global media companies have. For brands games are the perfect media, since they are engaging by nature.

I´ve met with dozens of game studios and what still strikes me odd is that still only few of them see themselves as media or entertainment companies or take advantage their media-like posture. Many brands would gladly seize the opportunity to speak to an audience of hundreds of millions if given the chance. Of course it doesn´t work just by placing a logo in the game. Brands need to bring something more to the fans, not just billboards on the side of the road when you play Need For Speed, but really augment the game and have an active role in it. For example Michelin tires to make your car go faster or in-game currency handled by Visa. The level of engagement is in a whole another level so the brands should not be passive. Even with casual games that usually last minutes, the attention and focus is beyond anything you´ll get from a traditional TV ad.

But one should not limit themselves to just have an active role inside the game. Thanks to mobile gaming, augmenting can be done also in a physical place. The Angry Birds & McDonald´s campaign we did in China is a good example of this. By entering a McDonalds restaurant, Angry Birds players would unlock in-game currency called Power-Ups and hidden game modes, giving them chance to play as the pigs and use the power-ups to get a better score. These features could be unlocked three times a day, so that drives traffic to the actual restaurants several times a day.

There is also the question of should a brand develop a game by itself. In my opinion, the answer is yes and no. Yes, I you have the resources and are ready to promote and develop the game in a long run. No if you see this as a campaign gimmick, thats live for some weeks and then fades away (and the game is about using the product in a boring way). Like always, you should listen and respect the fans.

Content Wheel of Fortune

The way I see content marketing or effective distribution of any message should be done, is divided in three parts. Everyone of the parts affects the other and every part is vital. Of course when looked closely, everything comes complex, but I think this is a good way to model your content development and distribution. I call it the Content Wheel, but my colleagues call it "väkkärä", which means a crooked bunch of things, or something.

First there has to be an Understanding of the needs and motives of the audience and the state of the brand or an IP. I´ve also used the word Analytics here, but that seems to guide the thinking into gathering data instead of using all the data to develop the content. What this means is that every time content is distributed, there has to be a clear set of KPI´s as well as data gathering. Also just as important is studying the audience. The old school demographics of "urban females aged 25-44" no longer apply, we need to profile our target groups through needs and motives and keep in mind that these differ depending on time, place and economy for other things. Understanding what distribution method works for particular content gives the message a chance to get through the static.

Second comes Content, although the crucial piece of the puzzle (without it there´s nothing to understand or distribute), relies heavily on understanding and distributing. The ideal would be a steady stream of charming, exiting and emotional content, developed to engage the audience according to their needs and motives, in a format or channel of their choosing. This is something that often is overlooked. The media consumption is changing rapidly and understanding how the audience wants to consume the media is vital for any brand or an IP. Finding the balance between the brand message and audience motives is a delicate work, but no rocket science. Nobody wants to listen to a brand or a person, who goes on blabbering about their ideas instead of listening and contributing to a conversation. Basic human communications really.

Third piece of the puzzle is Distribution. The right content, in a right channel, at the right moment. Here the format of the content and the media channel play the central role. No point of showing 30 second pre-roll ads before a 60 second YouTube-video about cats unless you´re absolutely sure your message is more interesting than a grumpy cat (be honest). Good question also is should one use the existing channels or create one of its own. Creating your own media has never been so easy and although the cost of cutting through the static has risen, it´s still relatively cheap if you have content that your audience loves.

All brands should be Lost

The idea of broadcasting is deteriorating as more entertainment is distributed online and that is making an impact on advertising too. TiVo and other digital recording services offer viewers the option to skip the commercials and watch the content they want at whatever time suits them the best. Netflix has started to created their own content and are releasing it all at once to indulge binge-watching, without commercial breaks. And the experience doesn´t stop anymore to television. Shows like `Lost` let the viewers explore the islands twisted history in an online game, making the engagement more deeper. Creative storytelling has evolved into transmedia engagement where every channel takes the story forward in a way that best suits the media as well as consumers mindset.

So what happens to advertising in the middle of all this? Unfortunately brands still rely on the strategy of disturbing. Instead of continuous flow of entertainment, we get steady stream of bland commercial breaks that keep us from the conclusion of the season finale. None of the brands seem to bring anything more to my TV-experience or deepen the engagement. They just want to ram their message down my throat instead of adding value to the content. The same can been seen in almost every channel. Take in-game advertising for example. Ever so often we see brands trying to engage the fans by painting their logo inside the game or better yet, showing static banner ads while i´m trying to make a high score. Brands have a lot to learn from shows like `Lost`.

A part of the blame seems to be the advertising industry. Instead of creating engaging brand content worth the consumers time, the toolbox seems to have the same tools that were used in the 50´s (yes, there is a thing called internet, but all the banner ads are just animated prints). Same formats, same messages, none of the engagement. No connection to the consumers current mindset, motives or the media they are consuming.

But a change is coming. Hollywood and the entire entertainment industry is forced to find new revenue streams because of the declining DVD markets and the ever growing piracy. The same time brands need to start creating relevant content that engages the consumers, not just in the traditional media and not just in a traditional format. The entertainment industry has the tool box needed for deeper engagement. The IP´s, writers, directors, producers, channels, game studios and so forth. The only thing keeping them from devouring the advertising industry is their lack of knowledge and experience in traditional brand managing, but that is changing too. Couple of good recruitments will do the job. First indications can be seen in collaboration between Ridley Scott and Coca-Cola or the whole media business of Red Bull. I know, it´s easy to refer to Red Bull and yes, there are no other benchmarks, but that also tells us something. It´s possible to make money with brand content and few brands are doing it.

But it doesn´t have to be a match between Hollywood and brands, since most of the local brands can´t afford it and they already produce content - just not in a way that engages consumers. Take food industry for example. Every food brand produces hundreds of recipes every year, have their chefs, web sites and YouTube channels and appear in TV almost every night. To me, that sound like a framework for a hit cooking show and this would also have the products to back it up.

Don´t invade, engage!

According Wikipedia, the first banner ad was sold by Global Network Navigator (GNN) in 1993 to Heller, Ehrman, White and McAuliffe and the rest was advertising history. Wheather the now defunct law firm with a Silicon Valley office started what is today a multi-billion dollar industry or not, is irrelevant. What is relevant is the fact that ever since the first display ad hit the screens, the evolution of online advertising has been non existent. What makes it even worse is that it basicly animated print ads and use a much smaller space. So when James Salins, the CEO of Supersonic Ads said at Mobile Games Forum 2013, in London: "In-game advertising is twice as effective as online advertising, and four times more effective than TV advertising", I started thinking that maybe now is the time to do something different. Most of the in-game advertising are the same display ads that are used on sites, but since gaming is all about engaging, even those annoying, old fashioned banners get more attention. So we have the audience, how can we create new ad forms?

Brands should see games as a platform to engage the audience and deepen the brand experience – they need to argument the game and the gaming experience instead of invading it. Think it from the gamers perpective. You´re trying to finnish a level, beat the boss, get the high score and you have spent the better half of the hour trying to achieve all that. At the same time a local bank is blocking part of your view with ad promoting a credit card (which you don´t need at that particular moment) and the car shop trying to sell you a pair of tires (you don´t even have a car!). Feeling the love? Not likely. But what if the brand would help you to achieve your goals or added a new level? What if the brand was a part of the gaming experience and would tell its story through the game? That would benefit the brand, the game company and most importantly – the fans.

We, at TBWA\Gamelab, recently did a campaign for McDonalds China with Rovio Entertainment. Rovio´s Angry Birds has over billion downloads worldwide, making it one of the biggest media platforms on earth. And to be honest, the campaign included display ads and TV ads, the traditional ad formats and we even had paper posters, POS materials and toys (it´s Angry Birds, you got to have the merchandise), but we also created something unique. McDonald´s would offer the fans something extra, using a new ad space within the Angry Birds game and the GPS available in every mobile device these days. By entering a physical McDonald´s restaurant, customers would be able to unlock new levels and game modes (you could play as the pigs) and get in-game currency called Power-ups. McDonald´s was offering this to anyone who had Angry Birds installed in their mobile phone and was at the restaurant. The campaign was a success both in advertising metrics as well as business.

Moving away from display ads to new ways of engagement also creates new challenges for gaming companies. Game engines need to be designed from the beginning to offer the tools to create augmented brand experiences and there should be sufficient amount of data about the gamers. No brand can invest if they don´t know what they are getting. And to calculate the marketing ROI, we need to understand what is the value for in-game brand engagement and that requires new metrics and measuring tools, since the current ones are still based on the 1990´s display ads.

Pay attention to retention

Game Connection 2012 in Paris had a lot of interesting presentations. I sat through most of them and one word kept repeating in almost every presso I saw, retention. Retention rate, churn and duration all measure the same thing: how effective are you at getting users to come back to your game. It really doesnt matter how many downloads you have if the users forget you after first session and move on to the next one. Retention has become `The KPI` for the freemium model.

The gaming audience is widening and snack-type spending pattern (both money and time) keeps getting stronger as social gamers become increasingly comfortable in spending. 6waves showed internal data that suggests that casual gamers have higher retention rate than core gamers. in 30 day period, the retention rate for casual gamers is 20% compared to the 10% of the core gamers. According to flurry, for iOS and Android apps, 24% of customers continue using after three months. After 6 months, this percent shrinks to 14%, and, by 12 months, only 4% are left.

Retention as a KPI is something that every product or service should measure. Customer retention is not achieved by giving the customer what they expect, it’s about exceeding their expectations so that they become loyal advocates for your brand. In a world where every product is a copy of the next one, putting the customer value to the center of business strategy is the key differentiator for companies. Customer retention has a direct impact on profitability too. According to research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers, while having engaged employees and engaged customers returns a revenue gain of 3.4 times the norm (gamesbrief.com).

If companies would concentrate more on retention than the upper area of the purchase funnel, they would see that the purchase is only the beginning of the customer relationship. Anyone can drive traffic with big enough marketing budget, what makes the customers return is the experience they had while buying and value they get for using the product.

Tablet is the new console

Just got back from Slush2012 which will be remembered for the breakthrough of SuperCell, the Finnish game company. SuperCell´s games are mainly published on tablet, but you can play them on mobile phones too. CEO and the current gaming rock star Ilkka Paananen mentioned that one of the key things that a start-up entrepreneur must master is the ability to stay focused and say no to all those ideas that are out of scope. And it seems to work for SuperCell. Company is now valued at amazing 600 million and is producing revenue of 750K per day.

SuperCells decision to focus on tablets is a smart move. 67% of the time spent on tablets is games, compared to the 39 % on smart phones (Flurry Analytics, sept 2012) and users already spend more time with apps than web. Tablet users are also older, more female and more affluent. Compared to 3-5 million units that good console games sell, tablet based games outnumber them in millions. Take Rovio´s Angry Birds, they have already over billion downloads. One might argue that freemium model doesn´t muster the same amount of revenue that the console games do. Well, according to Accel Partners, the paying user lifetime value in casual games is 25-35 dollars. That plus billion downloads is..well, you do the math. Moreover, in Q1 2012, the independent game studios´ share of game sessions of was 68%, so not only the tablet opens the competition for the consumers time to a new breed of independent game makers, it also broadens the target group for gaming and increases the value of the market.

As the games on tablets keep getting better and capturing wider audiences, it seems that the "traditional" consoles have to start working hard to maintain their status as the gaming center of the living room. Although the controls and the gaming experience is better on consoles for some titles, rest assured, the growth of the tablet gaming will keep on amazing us all.

New Entertainment Ecosystem

By publishing good quality games about the movie or TV IPs, studios and production houses engage an audience that might not be interested otherwise. Hollywood studios spend millions of dollars to promote the upcoming movies with TV ad campaigns but seem to forget that the cost of creating a good game is only a fraction of that. Not to mention that if the game becomes a hit, the studios can earn more money. But of course not every game becomes a hit, just as not every ad campaign brings results. Before in order to get the attention of the 15-25 year olds, the studios have to advertise in TV with millions of dollars. What the new entertainment companies have realized, is that by releasing an IP as a game as well as a TV series or a movie, they reduce the need to market with bought media. In fact, the IP ecosystem can be used as a platform to market other brands more efficiently than with traditional bought media. The game drives engagement and grows awereness and monetizes the IP. The TV and movies grow the awereness even further and keeps on monetizing (the long tail is of course the DVD release and the TV rigths). 

Game IP´s on the other hand, need the TV/Movie adaptations and licensing of their games to reach a wider audience and to build depth to their story. This is needed especially with casual games, that have to be simple enough to engage the widest audience possible which often means that the story behind the game is minimal. TV/Movie adaptations bring depth to the game characters and open up the game world which deepen the relationship between the fans and open more possibilities to licensing.

Merchandising and licensing is the third and equally important part of the new entertainment ecosystem. If for some reason the IP hasn´t reached all of its potential audience, the merchandising and licensing will. And will also monetize the IP even further. In order to support the new entertainment ecosystem however, the M&L must be done with the same dedication to quality in mind as the game and the TV/Movies. Again the devil is in the detail and nothing can screw the IP like a bad product and the risk of that happening is high, since majority of production is usually done by third parties.

Rovio´s Angry Birds is a prime example of the new entertainment ecosystem. The company has hundreds of millions of fans that connect with the Angry Birds brand through games, videos, products, theme parks and more. Even Disney has noticed the change, they released Wreck-It-Ralph as a game and a movie simoltaniously and merchandise is sure to follow. But just releasing a game and a movie doesnt make hits. As the saying goes, the devil is in the details. At the end of the day, fans decide whether or not an IP makes it and the fans are well equipped to see through scams. That means that the game and movie studios need to evolve in to entertainment companies that sustain immemerers brand experience through the different touchpoint, be it games, movies or merchandising.