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How to Get the Most From In-Game Ads

Browne, who is the general manager of Xbox New Media and Franchise Development, delivered the keynote at the conference, covering plenty of stats and trends of in-game ads. While most industry figures can agree that in-game ad revenue will increase substantially in the coming years, exactly how the segment will reach its full potential isn't completely clear.

Browne tried to disperse some of the fog surrounding the growth of in-game ads by presenting where the industry stands today compared to the ideal in-game ad environment.

(The Ideal : The Reality)

Dynamic and Flexible : Mostly static advertising

Broad Reach : Requires unique integration title by title

Accountable : Effectiveness is only measured by sell-thru

Easy to Integrate : Game teams pushing back, resisting due to it being a lot of work to integrate

Agencies Drive Value : Agencies have a very limited role

Regarding the fifth point, Browne said, "We hamstring the agencies. We say, 'You can come to a certain point in the process, and then we hand the work over to the teams.' We have to do better than that."

Transitioning from the current reality to the ideal raises some important questions, according to Browne. Will developers allocate memory and system resources that advertisers are going to need to be set aside to run these rich media ads? Will engine makers make this a priority? Will agencies invest in new skills? Can we standardize on one API?

The need to standardize in-game ad components is one topic that is complicated enough all on its own. Browne cited the need to standardize signs, video, audio, 3d objects (file types, size of objects, lighting), as well as tools to enable agencies to do in-game ad work so that the teams aren’t burdened.

Estimations of the growth of the in-game ad market have been varied. Microsoft's internal estimates put in-game advertising at about $1 billion per year by 2010. The Yankee group recently pegged revenues at $732 million in the same timeframe. Microsoft estimates that 2005 brought in $56 million in in-game ad revenue.

By comparison, the total worldwide advertising market in 2005 was $378 billion, growing at an annual rate of 6 percent.

Browne also touched on the relevance of in-game ad content in relation to games. "Whenever we talk to our in-house teams about in-game advertising, we always push the issue of relevance. Inevitably, the discussion starts with them telling us that they don’t want Tampax ads in their game. We're pretty sure Tampax wouldn't be interested in 18-34 year old males.”

Later in his keynote, Browne said, "We could double the size of our industry if we found the right [ad-driven] models. Is this going to happen? I don't know."

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