SEPTEMBER 27, 2010 • Video game marketing is changing radically. A quick look at the traditional advertising vehicles such as enthusiast magazines would suggest that marketing budgets are shrinking. But that isn’t necessarily the case. True, some publishers will have decreased their ad spend significantly as a result of the impact on revenue.  True, publishers are releasing fewer titles, which suggests fewer dollars spent overall. The reality, however, is not so clear cut.

The major trend in game marketing is the explosion of popular platforms. In 2005 there wasn’t a significant mobile phone game business, handheld consoles were not effectively connected to the Internet, social networks were not growing game platforms, online free-to-play and strong multiplayer experiences are stretching the life cycles of games enormously, and mass-market tablet computers were still a gleam in Steve Jobs’ eye. Today publishers are faced with such a diverse distribution reality that they could throw substantially more money at marketing than in past years and that additional commitment wouldn’t be obvious.

Steve Fowler, vice president of strategy at the Ayzenberg Group, a firm specializing in advertising for interactive entertainment, says that game marketing is just getting harder.  Especially during the last 12 months.  In August, Ayzenberg hosted the third annual [a]list summit in Napa, California.  The theme of this year’s summit was The New CCCP:  Content, Conversation, Conversion and Participation and how the wall between the consumer and the marketer has crumbled.

A major focus of the conference was using social networks as marketing vehicles to communicate directly with consumers.  The biggest change since last year, Fowler tells DFC, is the emergence of social tools, and how marketers can take advantage of those tools.  They were available in limited form a year ago, and marketers dabbled with them some.  However, the last year has seen a much more sophisticated approach to using social networks as a marketing tool.  “Especially with the downturn in the economy, marketers have been looking at alternatives to get their message across,” Fowler notes.

With the maturation of Facebook, Twitter, and YouTube social networks have become not only an effective way to market products, but a mandatory way.  Fowler observes that conversations are happening all the time about brands.  As a brand marketer, you can watch it happen, or, “You can choose to take part in the conversation.”

Fowler sees that as a fundamental shift in the way products are marketed.  Formerly cost-prohibitive outreach like building community, providing content, entertaining an audience can all be done relatively inexpensively by a marketer today.

“We’ve found that the tastemakers, the content evangelists, appreciate when they have a direct communication link. They feel empowered that way, and will actually do more work for you, helping spread the word of whatever your product is to their social networks,” Fowler explains.

What’s more, these social networks are accumulating a tremendous amount of unique user data that can be used for targeted marketing tailored at these individuals.

It may sound like an Orwellian scenario, especially with the realization that social networks are starting to push for more control over what happens on their platforms.  But Fowler has few predictions here.

“We have no idea – not only what restrictions or rules the networks will place on their outlets going forward – but we also don’t know which ones will be the most important outlets,” says Fowler. “Today, Facebook is a king, but not less than two years ago MySpace was the king.  Facebook was this small emerging platform, and Twitter didn’t exist,” recalls Fowler.

The pace of change is so rapid that agencies have to be nimble, and forecast future migrations of users. Just as game developers must look at new technologies and new platforms, so must game marketers.  Fowler gives the example of the Ayzenberg Group putting together a team of coders who can write APIs to take advantage of an emerging platform like Foursquare that uses geo-location.

Social networks will very frequently up and change their API, regulations or restrictions.  The consequence is that applications created for a publishing client can be disabled. Fowler says this comes with the territory.  It’s difficult, Fowler admits, but an agency has to be dedicated if they want to stay close to how content distribution is evolving.  He discusses instances of being burned by Facebook in the past, admitting: “Their development relations have been challenging.”

One issue DFC has been curious about is how much a network like Facebook pays attention to how their service is used for marketing.  To put it more bluntly we asked Fowler if Facebook was aware of Ayzenberg.  Fowler says yes they are, because the Ayzenberg Group will negotiate with Facebook on ad dollars.  “That’s where it really comes down to money,” he says.  “And money talks to them.”

A media planner can talk to someone in ad sales, and say, ‘We have a client interested in advertising on the site, but you’ve just killed the app they’ve had running for two weeks.  I’ve got 200,000 people in the community complaining they can’t finish the campaign that we’ve done.’

“They’re starting to listen to those things,” Fowler says of Facebook.  But with such a new and fast-growing company, who is responsible for what at Facebook can be somewhat of a mystery.  “Sometimes it’s hard to find who is the person I need to talk to internally there,” he reports.

Fowler remains pragmatic, saying the problems are offset by the opportunities.  The rapid change in technology on social platforms gives his firm an advantage if they can act quickly or adapt to a new feature or new function.  “The big agencies are a little bit slower than us,” he admits.

As the Facebook platform gets closer to establishing how best to monetize its operations, Ayzenberg becomes more relevant, continues Fowler.  Earlier on the platform was an experiment, still in development, and profits weren’t a priority.  That’s changed as Facebook attracts more investors and becomes a topic of M&A speculation.

But Fowler doesn’t see social marketing supplanting traditional advertising, “We always preach that you want to surround your consumer.”   Instead of placing everything on television spots, it’s better to split television with web coverage, achieving what Fowler calls the exponential effect of placing in multiple mediums.  “It’s not going to work if you’re just advertising on Facebook,” Fowler concedes.

Fowler describes every outlet as a potential way to communicate with people.  “It comes down to marketing fundamentals of surrounding your consumer,” he explains

The nuance of social marketing that everyone is trying to perfect, according to Fowler, is the question of how you contribute to the ongoing discussion.

Fowler views budgetary planning as still relatively the same compared to what he’s seen from publishers in the past. Which means the financial commitment has remained stable. The social spend so far is coming from experimental budgets.

Therefore, Fowler reports that game marketing budgets on the whole – calculated as a percentage of projected revenues on the product – have remained relatively unchanged year-over-year.  Which also means that game industry spending is still fairly well behind other industries.  Movie budgets will spend 20%-to-40% of forecasted revenue, while game budgets spend 10%-to-20% of forecasted revenue on marketing.

“We do see that the game industry is still not as aggressive, when it comes to marketing products, as some of the other industries in the entertainment field,” Fowler notes.

But the approach of game marketers will change over of the next twelve months, prompted by the challenges and differences in marketing digital products versus boxed goods, says Fowler.  “Since that’s very much where our industry is headed, as retailers become less and less relevant.”

Game marketers need to think less about the “fire and forget” blockbuster movie approach to marketing, and to figure out how to better sustain brands, Fowler advises. Especially as digital distribution becomes more and more relevant.

“It’s going to be less about the two-week window that you have to sell 60% of your sell-in. That really is an artificial restriction that retailers put in, based on the lack of shelf-space, and the lack of ability to create end-caps,” Fowler points out there is no lack of shelf space with digital distribution. “Now you don’t need to take ninety-five percent of your budget and spend it in two weeks.”

What publishers must do now with digital distribution is to figure out how to sustain a marketing campaign and give more life to a brand.  Even with full-featured next-gen games, downloadable content lessens the downtime between product iterations – making titles feel more like a subscription based product. On the plus side, Fowler notes that these extended cycles give marketers the chance to test several different campaigns to find the message that works for a certain group of consumers.

“Even traditional, packaged-goods publishers are going to change the way they approach marketing products – especially when more and more of those dollars come from digital,” predicts Fowler.  But having a persistent campaign isn’t easier, he warns.  “I would say it’s harder.”

There is a certain satisfaction in firing all your guns at once, and then evaluating how a massive launch campaign went.  But if your salvo missed its target, that satisfaction turns sour.

In talking about the changing requirements of always-on game marketing Fowler admits, “It does require a lot more maintenance, a lot more attention to data, and it is not quite as glamorous.”

On the plus side, Fowler concludes the results from always-on efforts are potentially more effective from a return-on-investment perspective.  And that’s exactly what’s necessary for game publishers to leverage social network marketing opportunities.

In the end, it is all a part of the emergence of games as an ongoing service.  Historically it was develop a product, do a big launch and move on to the next product.  Going forward, when a product launches to consumers the hard work is just getting started.