According to a story on our sister site Gamasutra, research firm Parks Associates has predicted in a new report that spending on game advertising will grow 33 percent over the next five years to more than $2 billion by 2012.

The 33 percent compound annual growth rate that game ads' $370 million is forecasted to experience by 2012 is noted by the firm as being much greater than that of other major advertising media, including television, radio, print, and the internet-- with the greatest area of growth being in-game advertising. Spending on in-game ads is expected to jump from $55 million in 2006 to more than $800 million in 2012.

Says the article:

This growth mirrors, more conservatively, other similar predictions of potential revenue generated by in-game ads, with eMarketer recently reporting that such ads could generate as much as $969 million by 2011.

According to the firm, dynamic in-game ads, which represented 27 percent of game advertisement expenses in 2006, are predicted to make up the majority of all game advertising in 2012, accounting for 84 percent of advertising spending. Much of this growth, according to the firm, is pinned on the industry's ability to address "several looming challenges" such as "lack of economy, lack of industry standards, and media fragmentation."

"Advertising in electronic games had an average monthly household expenditure of less than 50 cents in 2006, while broadcast TV was at $37, meaning advertisers are not using the gaming medium to its full potential," said Yuanzhe (Michael) Cai, director of broadband and gaming, Parks Associates.

"If executed correctly, game advertising can provide a win-win solution for advertisers, developers and publishers, console manufacturers, game portals, and gamers," he added.

[Via Gamasutra]

The name of Tetsuya Mizuguchi, designer of synesthetic surreality trips Rez and Lumines, is already familiar to gamers. So is Japan's popular weekly game mag, Famitsu, which reports that Mizuguchi's agreed to collaborate with Japanese ad agency Dentsu to build a virtual Tokyo in Second Life.

No word on Dentsu's specific long-term biz plan for the virtual city, but the marriage of game design aesthetic with online architecture certainly sounds like fun. Mizuguchi was initially wary of the idea and declined, but later changed his mind, relenting, "My work all these years has been to entertain people through video games, but this Virtual Tokyo concept could be the next step and path."

Mizuguchi and Dentsu also discussed plans to open a Ski Jump Pair International contest in the heart of virtual Tokyo, inspired by artist Riichiro Mashima's Ski Jump Pairs. According to Mizuguchi, a giant ski slope in the heart of Virtual Tokyo will be the site of an international competition where users' ski-posing avatars "will compete based on longest distance, landing, comedic performance and so on. We've already been running tests in Second Life and this is quite fun. We hope to do this contest regularly."

Interestingly, rather than attempting to replicate the real-world Tokyo, Mizuguchi and Dentsu have designs on a city that, like a "museum of Japanese culture," captures its image and feel. "How do people in Tokyo perceive the city? How about foreigners?" Mizuguchi wonders. "That's what we want to express."

[Via 1Up]

Marketing and tech agency Spunlogic is now offering custom analytics tools specifically for virtual worlds to its service offering, on the heels of its development of The Place to Meet, Crowne Plaza Hotels' island in Second Life.

Spunlogic now hopes to apply the analytics they developed for Crowne Plaza to a broader client base in a range of virtual worlds, to help marketers understand specifically how and where users are interacting in their virtual space (and how many there are), and assist them in optimizing their virtual branding opportunities.

"Marketers are pulling out of Second Life because they don't know how to effectively optimize their islands and advertising campaigns," said Dr. Melissa Read, Director of Behavioral Research at Spunlogic. "We provide sophisticated analytics tools to help our clients effectively measure their user engagement in-world in order to develop targeted marketing and branding strategies."

We recently reported on how Toyota's Scion is helping kids learn about financing and fiscal responsibility in Whyville -- now, the car that just loves being virtual is launching a club in There.com, through a partnership between There parent Makena and virtual design studio Metaversatility.

According to Makena's press release, the latest in-world marketing campaign around the Scion involves "a large-scale, interconnected 'tower'" of the Scion xA, xB and tC car models that have been transformed into nightclubs -- users'll be able to explore the car's interior features via the ladders and walkways inside an "urbane and modern" party spot that features music, dance floors, fog effects and even a hot tub. Interactive kiosks will be available to users looking for more info about the Scion product and lifestyle.

"Club Scion is an excellent example of how There.com works closely with marketers to develop concepts that enable consumers to interact with products and brands in ways that have never been done in other mediums,"said Michael Wilson, Makena CEO. "We're well beyond banners and text ads. These are truly immersive marketing programs."

Taking a page from the likes of paper-doll avatar site Stardoll, H&M stepping into TheSims 2, and fashion designers in Second Life and other virtual worlds, PR firm Ketchum's new unit Fashion Interactive 2.0 will focus on helping established design brands reach the current generation's crop of fashionistas, reports ClickZ.

Ketchum's previously served less glamorous companies like FedEx and Kodak. With fashion's rapid rise in the virtual worlds space -- virtual clothing outposts as popular hotspots for making avatars look hip -- it's a good call for Ketchum to anticipate that fashion brands will need the resources of a tech-savvy PR agency. Manish Chandra, the CEO of the Kaboodle social shopping site, recently told ClickZ that the fashion category "is now the growth leader on e-commerce and comparison shopping sites."

The press release explicitly mentions social networking sites alongside "online relationships" and "experiential marketing." From the release:

[Roy] Edmondson, Senior Vice President, Global Brand Marketing Practice, and [Jeff] Danzer, who joins Ketchum to launch this offering as Vice President and Group Manager, Apparel, will direct communications campaigns designed to reach and engage today’s digital consumers. Using Ketchum’s newly developed proprietary program that proactively harnesses the power of social networks, such as MySpace and Facebook, the group will provide a completely measurable communications platform that encourages consumers to become brand evangelists as never before.

[Via ClickZ]

A neat new BrandWeek article talks about major brands' efforts to move into the online social networking and virtual worlds space, and why some have succeeded -- along with why others have failed. It mentions appeal for niche audiences and perks for invested members -- using BarbieGirls as an example, with content that becomes accessible with the purchase of the BarbieGirls' MP3 player. From the article:

With brands ranging from cars to tequila to retail setting up community hubs, The Coke Show joins a growing list of cautionary tales, including Wal-Mart's ill-fated social network The Hub and Anheuser-Busch's Bud.tv, showing it is far from easy to tap the same kind of sharing vibe that's fueled the rise of MySpace, YouTube and Facebook.

Those that have succeeded either tap into the existing passionate audience of a niche brand or offer some functionality that cannot be found already on popular social media sites.

"There's been a me-tooism on the social-networking front of 'I need to create a MySpace of my brand,'" said Pete Blackshaw, CMO at Nielsen BuzzMetrics. "Every brand needs to do some element of it, but do they need to go all out? It's not clear."

PSFK UK has some goods on the highlights of the Ypulse Tween Mashup held recently here in New York. Speakers from Stardoll (shown), Cartoon Doll Emporium and Whyville all had one thing in common -- their young 'tween users actually demand branding in their virtual worlds.

Apparently, Stardoll now features "StarPlaza," where its users can shop for designer duds for their paper doll-like avatars. Although Whyville features user-generated designs, not brand labels, Whyville CEO Jim Bower recounts how some even feature the influence of brands like M&M.

All of the eyes and ears of kids' virtual worlds notice that kids actively want to flaunt their favorite brands to their friends in virtual worlds, and providing more in-world branding opportunities to marketers is just as much providing a service to its users as it is offering ad space to the clothing labels or snack food brands. It makes sense -- that age group behaves that way in the real world, experimenting with new ways of expressing and defining themselves, and sharing that with others.

With the sometimes instantaneous, almost sure-fire popularity of many of today's virtual worlds for kids, many marketers are, quite reasonably, seeing a lot of advertising and branding opportunities. When we talked to eMarketer's Debra Aho Williamson, she theorized that while adults seem to use virtual worlds to experience, to some extent, a fantasy life, kids are far more likely to use them to be themselves, to express their own interests -- and that includes the brands they want to consume. Recall one of the highlights of the Ypulse Tween Mashup, where representatives from Stardoll and Cartoon Doll Emporium said that their users were practically begging for name-branded clothing for their virtual dolls.

Which does beg the question that CNET asks in their latest article on the subject: Are kids ready for ads in virtual worlds? From the article:

"This kind of marketing is designed to operate at a subconscious level. And kids don't know how to think critically about how someone's trying to get them to be loyal to a brand or buy their products," said Kathryn Montgomery, a professor in the School of Communication at American University and author of Generation Digital: Politics, Commerce and Childhood in the Age of the Internet.

Montgomery said the purpose of ads in 3D worlds is often to blur the lines between content and product marketing, and that that's not a new concept. Product companies creating branded content to appeal to kids is as old as the first days of television. But Montgomery and others say virtual worlds and related games change the equation for brand marketers because a child's interaction and emotional engagement is so high.

It's true that virtual world play is often built on, or inspired by real-world environments; avatar technology is progressing and environments are developing in such a way that realism, or at least the approximate impression of a living, breathing world is currently desirable -- even fantasy, such as a futuristic planet, should appear and behave in a lifelike, physically consistent way. Could it be then, that users want brands to be a real part of their virtual lives, just as they are unavoidable in our real lives?

Kids are exposed to branding from the point of entry into this world, from their first McDonald's toy to their favorite cartoon properties. It's tough to imagine that a virtual playspace for kids could be any more damaging than a real one, especially if the trend continues of forming ad properties that contribute to a virtual world and mesh well with it, rather than simply bombarding users with banners.

[Via CNet]

Technology and media services company Exponential Interactive, which is owned by ad network Tribal Fusion, has released a report examining online advertising trends for 2008, with the aim of identifying some top trends. Among key marketing opportunities, unsurprisingly, Exponential's highlighted the virtual worlds space, and also credits "the massive proliferation and adoption of social networks."

Dilip DaSilva, Exponential's founder and CEO, noted that "Focus on issues such as transparency and privacy will continue to be a consideration," but feels "industry credibility has now been achieved and advertisers are embracing all of the possibilities for online marketing."

The report says that the popularity of virtual worlds will increase in 2008 -- "but it won't be Second Life," it adds."Instead, users will increasingly shift towards specialty worlds more closely associated with their lifestyles or interests. For Marketers, this means an opportunity to create whole worlds around products, or to customize environments inside specialty virtual environments."

Exponential parent Tribal Fusion claims Neopets and Coke Studios among worlds in its network. DaSilva added, "These are a few of the key topics we think will be consistently discussed during the conferences and industry events in 2008. We look forward to engaging our industry peers and business partners in the discussion; and to the ways these shifts and innovations will impact the next phase of online advertising."

A California-based company called Pure Verticals is developing a product it calls MUGC -- which stands for Monetizing User-Generated Content, and they've announced they're seeking to have it patented. It also plans to showcase the tech by Q1 2008 with a new website.

So what is it, exactly? It's a platform, that much is clear from the announcement -- and it promises to enable any virtual community or social network to offer its members control over how product placements and ads integrate with member content. As opposed to providing ad space alongside content for ads generated automatically or by a third party, users can select the products to promote and apparently tailor how the ads are displayed.

It also incorporates feedback and "reputation management features" designed to help user-generated content consumers decide whom to trust. Says the company, "MUGC users and the users of their content will no longer think of advertising, but of communities sharing important information about products and services that enrich their lives."

The company also says MUGC integrates proprietary page code with a kind of online shopping cart. Pure Verticals co-founder and COO Theresa Klinger explains, "The vast majority of social network sites do not provide their members shopping services, yet they have a clear need to buy and are only a click away. Ninety percent of the typical horizontal social network is comprised of interest groups, such as do-it-yourself, cooking, and travel."

She continued, "These members buy group-related products from other sites or off-line because they are not offered the opportunity to purchase within the social network site. It’s widely known that users will choose to buy products recommended by fellow consumers/members – so the ability to purchase right from the UGC offering the endorsement is a powerful – and completely missed – opportunity. Vertical networks are larger versions of these horizontal social network groups, but with the ability to deliver specialized services for their niche industries."

Explained Klinger, "The MUGC shopping cart allows any number of merchants to sell their products. While site operators will benefit from having many merchants participate, brand specific social networks may opt to act as the sole merchant."

Even when you factor in the fact that the userbase of sites like MySpace and Facebook continues to grow, that growth rate is slackening. And what's it worth when they're spending less time?

In our recent interview with Makena's Ben Richardson, he pointed out that one of the big draws of these new formats for advertisers is the fact that the level of user engagement -- translating to time spent viewing ads -- is much higher in virtual worlds and social media than it is with traditional ads. Numerous other folks we've spoken to who are doing work in this space have told us that the era of measuring impact in clicks or "impressions" is over in this arena, and minutes-per-user is the new benchmark.

"What you have with social networks is the most overhyped scenario in online advertising," Specific Media CEO Tim Vanderhook told Business Week in the article. If users, as the article says, can get bored with profile-swapping and tired of ad proliferation, what might that mean for virtual worlds? Given that the latter is still in its formative stages, generally, and many companies are still experimenting, it's not clear that this resistance has quite reached virtual worlds yet -- but we can look to social networks, perhaps, as a barometer for the issues that can be expected to reach our space shortly thereafter.

[Generation MySpace Is Getting Fed Up | BusinessWeek]

Online youth entertainment and media network GoFish Corporation has announced its first quarter results, reporting an increase in revenue to $657,150, as compared to $24,074 for the same period in the previous year. GoFish attributed the year-over-year increase to higher sales from advertising sold across its network of owned and affiliated publisher websites.

GoFish is the exclusive brand advertising partner for its network of youth-focused sites, including WeeWorld, Magi-Nation: Battle for the Moonlands, Whyville, and other properties targeting the six- to seventeen-year-old demographic and their co-viewing parents. The company launched its youth-targeted online media network in February and signed several new publishers in Q1 2008, growing its audience reach from approximately 10 million unique users to over 20 million unique users as of April 30, 2008.

GoFish also expect to realize greater revenue in subsequent quarters as the sales cycle matures and its network continues its expansion, reporting its full-year revenue guidance projections between $8.5 million and $11 million.

Said GoFish president Tabreez Verjee: “In only a few short months, we have successfully refined our business model, engaged top-tier industry professionals, secured dozens of leading brand advertisers, and built our network to be a leader focused on the youth demographic and the third largest opportunity for advertisers behind Disney Online and Nickelodeon. We are confident that 2008 will be a strong year for us. We continue to secure new relationships and grow our existing ones. We have built a strong foundation, and we are well-positioned to take advantage of favorable trends in the market.”

Speaking with media business news site Exchange4Media, Mumbai-based MMO operator discussed the company's future plans and its intentions to exploit India's rapidly growing in-game advertising space with its games.

Said Kreeda Games CEO Quentin Staes-Polet: “Currently, there is no in-game advertising in India... We are in the process of signing up a few [advertisers] in early June. The first campaign will break on in-game advertising around that time.” He added, "This medium is different from other conventional medium, as it is an immersive medium. The ads are totally immersed in the virtual world and are weaved into the game, so it is not intrusive to the viewer."

Funded by IDG Ventures and SoftBank Bodhi Investment, the company plans to release 2-3 online games every year and previously referred to subscriptions, hourly charges, in-game advertising, and in-game item sales as possible revenue sources for its future games.

Polet also discussed marketing plans for Kreeda Games' first release, danceMELA, a free-to-play, Bollywood-themed dance and music online social world: “We have done content integration with Saroj Khan for Nachle Ve on NDTV Imagine, where she promotes our game danceMELA. Gamers who play danceMELA can get a chance to meet the well-known choreographer, who would teach them how to dance like the stars. We [also plan] below-the-line activities, POPs, peer-to-peer activities, web ads on the Internet, and events in colleges.”

Ad agency Tribal DDB CEO Matt Freeman has resigned from his Omnicom Group position to work as CEO at online ad network GoFish, according to advertising news site Ad Week. Paul Gunning, formerly president of Tribal DDB East, who take over Freeman's position as CEO of Tribal DDB.

Based in San Francisco, GoFish is the exclusive brand advertising partner for its network of youth-focused sites, including WeeWorld, Magi-Nation: Battle for the Moonlands, Whyville, and other properties targeting the six- to seventeen-year-old demographic and their co-viewing parents. The company launched its youth-targeted online media network in February and signed several new publishers in Q1 2008, now boasting 66 million users per month for its network.

Handpicked to head the Omnicom Group's digital arm, Freeman helped build Tribal DDB Worldwide towards a 40% annual growth rate. The company's clients include Pepsi, Johnson & Johnson, and McDonald's.

Said Freeman: "What attracted me to [GoFish] is I saw all the other ad networks are chasing CPC and direct-marketing dollars. Their average user engagement is five times [that of] the other ad networks. I saw an opportunity for an ad net that focuses on brand advertising."

Online youth entertainment and media network GoFish Corporation has added financial virtual community MinyanLand to its advertising network of sites, expanding GoFish's reach to over 23 million unique visitors domestically and 71 million unique visitors globally per month.

Launched in February and claiming over 100,000 registered kids, MinyanLand is a free virtual world for kids put together by media company Minyanville Publishing and Multimedia. The community seeks to "engender financial literacy in young people, so a new generation better understands the concepts of basic economics and finance on a real-world level."

GoFish is the exclusive brand advertising partner for its network of youth-focused sites, including WeeWorld, Magi-Nation: Battle for the Moonlands, Whyville, and other properties targeting the six- to seventeen-year-old demographic and their co-viewing parents. The company launched its youth-targeted online media network in February and signed several new publishers in Q1 2008, growing its audience reach from approximately 10 million unique users to over 20 million unique users as of April 30, 2008.

Through its new partnership, GoFish will aggregate and distribute age-appropriate, blue chip advertising across MinyanLand. The firm believes that this agreement will enable finance and consumer brand advertisers to build awareness and influence brand preference among the virtual worlld's youth demographic.

Said GoFish vice president of publisher development David Fisch: “MinyanLand is an ideal addition to our network, which is currently comprised of other virtual worlds including Whyville, Cartoon Doll Emporium, and WeeWorld. The time spent per visit on MinyanLand is characteristic of the sites in our network. The immersive experiences available through our publishers enable advertisers to reach youth and their co-viewing parents in a uniquely engaged mindset.”

Virtual goods sales and distribution system Virtual Greats has announced that a content distribution agreement with virtual world platform operator WeeWorld (recently investigated as part of our Online World Atlas).

WeeWorld, is one of the most popular interactive avatar communities, with a particularly strong basis in the youth/teen market and over 23 million of it’s "WeeMee" avatars worldwide.

Virtual world/platform operators such as WeeWorld connected to the Virtual Greats system can distribute virtual clothing, animations, catchphrases and other virtual assets inspired by celebrities, such as Elvis Presley, Justin Timberlake and Snoop Dogg. Further virtual goods associated with entertainment properties are to be be launched by Virtual Greats in future.

"WeeWorld's sizeable and active user base makes it among the most desirable virtual goods marketplaces for our partners in the entertainment industry," said Dan Jansen, CEO of Virtual Greats. "We also think that our entertainment properties, in turn, are going to bring significant value -- and most importantly, fun -- to the WeeWorld community."