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It's Playtime
Over half of Hispanics ages 18 to 34 own a video game console, but marketers have been slow to capitalize on the fast-growing number of Latino gamers
January 01, 2005
By Luis Clemens
A Mexican goose is leading the gaggle of brands marketing to U.S. Hispanics through video games. Gansito — which translates literally as "little goose" but figuratively as "Goosey" — is one of the most popular snacks produced by Mexico-based baked goods giant Grupo Bimbo.
The company's U.S. division, which owns such brands as Entenmann's and Thomas', has been distributing so-called advergames (video games where the advertising takes the form of a game) for two years.
Advertising in and through video games is an incipient market but it is poised to grow sharply. Research and consulting firm The Yankee Group estimates the amount spent on video game advertising in 2003 at a measly $79 million, but projects it will jump to $352 million by 2008. Total spending, however, is not broken down between general and Hispanic markets. This is, in part, because there are few attempts by brands to reach Latino buyers in this manner.
Marketers interested in reaching Latinos through video games still must rely on gut feeling, since there's little data about the demographics of video games users. Yet, there are some tantalizing indications about the importance and prevalence of Latino gaming. According to Simmons Market Research,
more than half of Hispanics aged 18 to 34 own a video game console and over a third are purchasing up to five game titles a year. Furthermore, the two most significant efforts targeting Hispanics through video games have been very successful at increasing sales and brand awareness with modest investments.
Jim Wexler, executive vice president of marketing of BrandGames, the New York-based agency that designed the advergame for Grupo Bimbo's Marinela product line (which includes Gansito), describes part of the payoff as "a few million kids spend[ing] a few hundred million hours" with the Gansito brand. Bimbo is tightlipped about specific numbers but a acknowledges more than 1.5 million games were distributed during a three- month retail promotion.
Advertisers and video game publishers are being driven into each other's arms by their mutual neediness. The media planners' daily dilemma consists of determining how best to reach 18-to-34-year-olds. A declining number of television viewers and continued sales of TiVo means fewer people are watching TV commercials. Video game companies, on the other hand, are in a corner thanks to increasing software development costs and downward pricing pressure. So, they are turning to advertising as a new revenue stream. The courtship between marketers and the gaming industry is still tentative, but eventually will turn torrid.
The relationship between Hispanic marketers and the gaming industry is just barely getting off the ground. But the few efforts already in place and the likely number of Latino gamers suggest it is foolish for Hispanic marketers to ignore this option.
The reason is that many young adults, across the board, are spending enormous amounts of time playing video games. An indication of the numbers involved comes from Nielsen Interactive, which studied the playing habits of 1,200 men and extrapolated that, between July and September of last year, some 11 million American males between the ages of 12 and 34 spent 900 million hours playing a single video game: John Madden's NFL by Electronic Arts, the world's largest video game publisher.
"Computer games are now, at least for young people, the most important entertainment product," says University of Southern California professor Peter Vorderer, who heads the Annenberg School for Communication's Studies on Computer Games.
Grupo Bimbo's Marinela targeted 6-to-12-year-olds, with its Gansito Deportivo (Sporty Goose) promotion. These children are big consumers of Gansitos and the brand wanted to provide many of them with their first video game. A Marinela spokesperson describes the advergame promotion as a "complement" to its television advertising efforts on such outlets as Cartoon Network and Nickelodeon.
Andrew Klein, president and CEO of video game marketing consultancy Navigame, bluntly states: "I have a TiVo in my house and I haven't watched a commercial in four years. The day of the 30-second spot is finished. Marketers have to [realize] video games are one of the next frontiers."
Video game consoles, such as Sony's PlayStation2 — the market leader — and challenger Microsoft's Xbox have become household fixtures.
"We are finding out Latinos are late adopters in terms of technology," says Justin Olivares, North American product manager for Electronic Arts' FIFA 2005 video game series. "Now that consoles are more affordable, we are seeing an increase among the Latino market."
The time that young adults are now spending playing video games was previously spent watching television. It is this still partial shift from television to video games that is motivating much of the advertiser interest in the gaming industry.
Unilever's Axe, a male deodorant, recently placed ads in such games as Burnout 3 and Def Jam Fight for New York. "Why [do we advertise in] video games?" asks David Rubin, senior brand manager for Axe. "Because guys play them. Simple."
Less simple, though, is determining the sales impact of in-game advertising. "As large as the business is, [video game publishers] do not have the more sophisticated market research tools," says Michael Dowling, general manager of Nielsen Interactive. "They don't know who is buying [their games], who is playing them."
The situation is no better with "advergames," such as the one promoting Gansito. Marinela did not move forward with it based on reams of research. It couldn't. There just are not any metrics detailing sales impact. "It remains anecdotal. We stopped trying to convince marketers," BrandGames' Wexler says. "They know they need to find new ways to connect with young people. They can appreciate ... that kids will spend hours and hours with [the brand] in an interactive way."
Wild, wild West
For the media buyer who cares only about measurable reach, frequency and impact there is little to appreciate about video game advertising. "If you always have to have ROI and CYA (cover your ass)," Klein concedes, "then video games are not right for you yet."
"It is still so much the Wild, Wild West," adds Nielsen Interactive' Dowling.
The "Wild West" phrase is repeated often by so many different executives that it is almost an industrywide mantra. Decisions must be made on gut feeling rather than hard data.
Activision, the second-largest video game publisher, is well aware that the lack of metrics is limiting ad buys and it approached Nielsen to "build a case for in-game advertising," Dowling says.
To that end, Nielsen has performed a survey and recall study based on a sample of existing television homes. It is now in the midst conducting a test in sample households where it inserts a unique aural watermark into the video game for each ad in an effort to measure how long the game is played and how players see the ads, the length of time they tune in, length of play, etc., says Dowling.
The ultimate goal of the partnership is to measure consistently the reach and frequency of in-game advertising. In other words, an attempt to tame the Wild West.
The Nielsen study provided some feedback on the effectiveness of product placement in video games. More than a quarter of gamers said they remembered the ads that appeared in the last game they played, and one-third said the ads influenced their purchasing decisions.
According to The Yankee Group, in-game ads can cost anywhere from $50,000 to $200,000. For example, Electronic Arts charges advertisers $0.35 per unit to place ads in its popular Sims games. Electronic Arts received a combined $2 million in advertising revenue from McDonald's and Intel for product placement in Sims Online.
Klein estimates there are approximately 50 brands presently advertising in and around video games. One industry source who routinely buys ads in video games placed the cost as low as $5,000 for many games, and several mentioned barter is often an option. Despite the low cost, no one of more than a dozen people interviewed for this article knew of any Hispanic brand already doing product placement in a video game.
Sponsorship opportunities in the form of product integration, on the other hand, intuitively seem much more attractive. But, again, there is no research to substantiate the gut feeling. Product integration is limited only by the marketer's creativity and the plausibility of inclusion in the game. These sorts of arrangements have one important downside: They require planning close to a year in advance in order for the brand to be integrated into the design of the game itself.
Not surprisingly, BrandGames' Wexler is critical of this approach: "When you do product placement in a game you are interrupting the gaming experience," he says. "Product placement is competition for us [and] for the client's gaming dollar." Marketers do not have to swallow Wexler's pitch to realize that there is something ruthlessly effective — and uncompromising — about advergames. As the name implies, the ad is the game and the game is the ad.
The first benefit is that the consumer is never caught off guard or unaware. They expect and choose to interact with one long advertisement on the premise that the advergame will be engaging. The gamer willingly plays in a brand-soaked and completely controlled environment. No wonder, then, advergames take the lion's share of the advertising revenue for video games. In 2003 in-game ads generated $10 million while advergames generated $69 million, according to The Yankee Group.
In the case of Marinela's game, Gansito Deportivo was distributed on a CD and inserted in the family pack of Gansitos sold at supermarkets from July to September of last year. The ad-game consists of the brand-mascot running, swimming, cycling and kayaking against the clock and through an obstacle course. It is available with instructions in English and Spanish.
Gansito Deportivo is cutting edge for the Hispanic market. In fact, Wexler estimates there have been less than a half-dozen advergames made for Latino consumers — even though, according to him, for every Latino under 35, "[the] one thing they all have in common is ... playing video games."
sponsorship opportunities
Developing an advergame costs a few hundred thousand dollars and distribution costs vary whether it is distributed through a brand's existing Web site, a game's Web site or on CD as part of a retail promotion.
Another option is to advertise around video games. Sponsoring a video-game-related concert series or championship is straight-forward event marketing. Purchasing ads in video game magazines is a simple way of associating a brand with video games. The same is true of television shows, such as the syndicated show Gamer.tv, which began airing on Telemundo's Mun2 in October.
Yolanda Foster, vice president of programming for Mun2, says she would have preferred to develop a gaming show that would have been unique to the Hispanic-targeted network. But, she opted to purchase a syndicated show after being unable to generate financial support for an in-house production. "We sent out 120 letters to software developers [and] we received one response. It was extremely ignorant [of them] to diss this network this way."
deliberate ignorance
Video game publishers know little and care less about Hispanics; their buying or playing habits. The exception, however, is Electronic Arts' FIFA video game series, which is scoring sales goals with modest efforts targeting Latino soccer fans.
"We had a hunch," says Olivares, of the FIFA 2005 video game. "There is a huge Latino community in the United States. What is their number-one sport? Well, they love soccer."
The initial Hispanic marketing efforts in 2003 consisted of magazine ads, sponsored use of the cyberstrator on Univision broadcasts of soccer matches, and public relations campaigns targeting Hispanic media, which was implemented by Project 2050 (formerly CultureSpeak), a New York-based Hispanic marketing agency. As a result, week one sales doubled, and total unit sales jumped to 4 million from 2 million.
Like the film industry, the game industry is a hit-driven business where the first week's sales often indicate success or failure. The Canadian-born Olivares figures the bulk of the sales increase (between 50 percent and 60 percent) is directly attributed to increased targeting of Latino buyers. Half of all the customer satisfaction survey cards completed and sent back to Electronic Arts that year came from Hispanics and the most frequent request was a petition to include the Mexican football league in the game.
In response to those requests, EA purchased the rights and included the Mexican football league in last year's version of the FIFA game. Mexican soccer star Oswaldo Sánchez is now on the game cover. The game features music by Clorofila, a DJ and member of Tijuana-based music group Nortec Collective.
Raúl González, marketing manager for Project 2050, says the best results have come from handing out demos at Major League Soccer matches. Together these initiatives represent a cost, but Olivares says, "You don't need to spend a lot of money delivering the game [to the Hispanic market]." And, the resulting return on investment was a sharp increase in sales.
Even given the success of the FIFA and Gansito game promotions, there does not appear to be a mass rush among Hispanic media buyers to move into this space.
The prevailing question among video game publishers, according to González, has been, "Why should we go after the Latino market if they are going to buy it anyway? To some extent it is true that the general-market efforts will spill over into the Latino market, but the brand loyalty is not there in video games for the Latino market. That is not going to happen with just the spillover from the general market. By incorporating Mexican teams, by having Oswaldo Sánchez on the cover … Latinos then have that as a cultural possession."
The scarcity of Hispanic advertising in and around video games soon may end. Xbox recently launched it first Hispanic advertising advertising campaign, created by Irvine, Calif.-based Casanova Pendrill LLC.
Yolanda Foster, of Mun2, says a number of brands, including Red Bull, Coca-Cola and NBC Universal (parent company of Mun2), have come around and now see the value of buying ads on Gamer.tv and targeting young Hispanics through their interest in video games. "It is an opportunity to make people feel more a part of their franchise," she says. "[It is] certainly a market they never explored before."
To be sure, the few marketers targeting Hispanics in this niche share a sense of the enormous but still unrealized potential of video games.
"We are just scratching the surface with Latinos and gaming," Olivares says. "We are just opening our eyes to it really."
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