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Google launches in-game ad for Flash web games

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After months of testing, Google publicly launches the beta version of its AdSense for games software. The product represents the company’s first push into a new, rapidly growing market – the ability to insert ads into games, either while they’re being played or right after they’ve ended.

The plan is pretty much what I reported in July, when rumors surfaced that the search giant was testing the ads. Its decision to enter the market with a public beta test is a big deal because it means the gaming advertising market is becoming lucrative enough to attract an industry giant.

“It’s a huge seal of approval for a great company to come in and say they believe in the online game advertising market,” said Jameson Hsu, Managing Director of Mochi media, a game advertising network operator in partnership with Google. “This should wake up all the big media companies. “

Google initially targets the sweet spot for its technology: games based on Adobe’s Flash platform that run in a web browser without a download. These are free casual games that feel like snacks compared to the full meals of hardcore PC games on console or disc.

The Flash market itself is a rapidly growing segment, with around 200 million games played each month for a total of billions of minutes. It’s a good way to reach younger people or those who are hard to reach because they don’t watch TV commercials anymore.

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Christian Oestlien, senior product manager at Google, said the company has been testing in-game ads for months with partners such as Game fish, a maker of casual games such as “Who has the biggest brain?” to Facebook. At the end of a game session, the Google software will play a 30 second video that includes a game character saying that the free game was offered to you by a sponsor.

Oestlien said Google advertisers can use the software to insert ads into games or videos for YouTube, which makes the ads more versatile. Game developers can use Flash SDKs to designate points in a game that are “advertised”.

“We tried to integrate this in a user-friendly way,” Oestlien said.

Advertisers participating in the trials so far include eSurance, Sprint, and Sony Pictures. Other partners include Demand Media and Boonty. Partners such as Mochi Media can help Google by providing high traffic games that can receive advertisements from the Google Advertiser Network. Google’s main advantage in this industry is its large ad sales force, which can generate more ad inventory than a single player can handle. This is why it is important that Google’s ads can be shown on various sites.

Besides Playfish, other game publishers that will integrate AdSense for games technology include Zynga, the popular social games company, and Konami, one of the largest game companies in Japan. The latter will publish a line of Flash titles – including “Track and Field”, “Frogger” and “Dance Dance Revolution” – with ads in the Google Play.

In total, over two dozen games will start using Google AdSense for Game. Oestlien said the games have millions of users and can create several hundred million ad impressions over time on sites like MySpace or Facebook.

Sebastien de Halleux, COO at Playfish, said Google’s technology fits well with his company’s social games and the pilot went well. Google takes some of the ads and the rest goes to publishers, distributors or game developers.

Oestlien declined to say whether Google will expand beyond the casual Flash game segment. But Google’s entry into Flash web games is probably just the first step. After that, you can expect to see the company switch to downloadable PC games, console games, and then mobile games. Rivals in these markets include NeoEdge Networks, Microsoft’s Massive, Double Fusion, IGA Worldwide.

It is one more advertising market where Google and Microsoft can compete. But all competitors had better beware. Google’s technology is based on an Adscape foundation, which Google bought for $ 23 million in 2007. Oestlien said it took time to make this technology compatible with the rest of Google’s advertising technology, called AdSense.

The Yankee Group predicts the market will be worth $ 971.3 million by 2011. Proponents of in-game ads believe gamers will embrace them because the ads can be embedded in storylines or environments. For example, you can put an ad on a billboard inside a game. This ad can change each time the user walks by the billboard. Of course, that’s hard to do in genres like fantasy games.

Google is a bit slow in this market. By purchasing Adscape, Google reacted to Microsoft’s initiative in games advertising. In May 2006, Microsoft acquired Massive, the in-game advertising network pioneer founded in 2004. Since the acquisition, the market has accelerated. Massive’s global marketing director Alison Lange Engel said this summer that the company has more than 200 advertisers in its network and there are dozens of games using Massive’s technology.

The company launched Powered by Google, its 3D rooms and its avatars, earlier this summer. Lively by Google would be a natural vehicle for the AdSense for games product, which could insert ads in user rooms, but Oestlien said there was no connection yet.

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