From SEGA to VR.
A Brief History of Ads in Video Games
Adsider explains the history of video game advertising and recalls how Coca-Cola, McDonald's and Nike communicated with customers through the virtual world

February 19, 2021

Lubomyr Shkil

Mad 80s: the birth of ad games
The first ad integrations in video games emerged in the early 1980s when the popularity of consoles and slot machines exploded.

In films and TV shows of those times, product placement was already commonplace. A dozen brands appear in Robert Zemeckis's film Back to the Future: Nike, Pepsi, Texaco, JVC, Miller beer and others. For the first two, the appearance on the screens has become a cult phenomenon. When the movie came out in 1985, Pepsi's integration reduced the gap to Coca-Cola to a minimum. And fans of the trilogy have been waiting for more than 30 years for Nike to mass-produce sneakers with automatic lacing, like the ones Marty McFly wore in the movie.

Brands hoped that just like the movies, games would also become a platform for advertising, but the technologies of the 80s did not allow to integrate product placement seamlessly. In the movie you see many details from everyday life on the screen simultaneously, so you can organically place a branded product among them. While in the game for the SEGA console, McDonald's burger would have to be made much larger than the rest of the elements so that the player could see it.

Therefore, developers and publishers came up with other ways to collaborate with brands. This is how the term Advergame appeared — a game made exclusively for advertising purposes. Here, the brand is not integrated into the gameplay, the whole plot is built around it.

In 1983, Johnson&Johnson launched Tooth Protector, a game where the player had to protect their teeth from a snack monster. The dog food maker Ralston Purina has released a game where a dog makes its way through a maze to a cart. The game was a continuation of the brand's advertising on television, where the pets ran to a similar cart.

Coca-Cola used games to play tricks on competitors. Together with Atari, they redesigned the shooter Space Invaders, popular in the late 70s. According to the plot of the original game, the player controls a laser weapon and kills aliens approaching in rows. In the adapted version, the approaching aliens formed the letters PEPSI, so the player had to “shoot” the brand. The game was presented to participants in the Coca-Cola sales convention in Atlanta.

For the beer brand Budweiser, the arcade Tapper was developed, where the player poured beer to customers and collected empty glasses in a virtual bar. The game was planned to be installed only on slot machines in bars, but users liked it so much that owners of ordinary gambling halls began to buy it.
Apart from Tapper and a few other ad games, Advergame hasn't had much of an impact on the industry. In the late 80s, the market was in crisis due to a large number of low-quality games. They repeated each other's plot and looked more like bad copies. Promotional games were mostly free and did not involve making a profit, so they were often made in a hurry.
After the appearance of the game product placement
In the 1990s, developers and businesses were still learning to communicate with customers through gameplay. However, the integrations of that period look more interesting today than the straightforward advertising of the 80s.

In 1991, the game James Pond Robocod was released, with an ad for McVities Penguin chocolates integrated into the splash screen. With the release of the game, Penguin was able to overtake its rival KitKat, giving brands another signal that video games are an effective advertising platform.

Advertisers experimented and made their mascots the characters in the game, sometimes even avoiding direct product mentions. In 1993, McDonald's released the McDonald's Treasure Land Adventures platformer . Starring Ronald McDonald, who travels through levels like Super Mario, killing enemies along the way. There is no hint of burgers or other McDonald's products in the game.

This year, the game Cool Spot was presented, the main character of which was the mascot of the sweet water manufacturer 7-UP. There is a brand identity here, but there is no direct advertising of soda.

In 1999, Crazy Taxi was published, where the developers departed from the classic rules of Advergame. This is one of the first cases in the history of the genre where the brand is not the center of the gameplay, but only one of the details. In addition, Crazy Taxi has integrated ads for several brands at once.

The essence of the game is to pick up a passenger in a virtual city and take him by taxi to his destination, for example, to Pizza Hut, KFC or Levi 's stores. Also, vans with logos of other companies drove through the streets. The players liked this approach, because copies of real shops and establishments added realism.
Car manufacturers tried to advertise certain models in auto racing as early as the 80s, but it wasn't until the late 90s that technology made it possible to recreate the model in detail. Then advertising appeared in the games Colin McRae Rally, Need for Speed and Driver. In most of them, virtual cars did not show any damage, because brands believed that this would badly affect their reputation.

In the 2000s, the first agencies dedicated exclusively to advertising in video games appeared, and the market began to grow at a rapid pace. At this time, the gameplay went beyond the limits of one computer: players could play over the Internet or download updates. The development of online has opened up more advertising opportunities for developers.

In 2005, Splinter Cell: Chaos Theory introduced the so-called "dynamic advertising". Banners from AX, Airvawes, Nokia and AMD appeared in the gaming world. In addition, companies could change the content and appearance of ads, showing players relevant offers. Splinter Cell developer Ubisoft was the first to segment audiences. Players saw ads based on time of day and region.
Research into the gaming industry has shown that young audiences are spending more and more time in front of personal computers or consoles and less time in front of the TV. Following brands, political strategists began to communicate with young people through games. In 2008, the Xbox 360 game Burnout Paradise was released, where political ads for Barack Obama appeared on banners.
Modern advertising in games
In the past ten years, game advertising has not undergone significant changes. Product placement remained the main tool: game characters wear branded clothing, use copies of real gadgets and cars. They started talking about the second breath only in the late 2010s.

Today, advertising in games is being rethought. The online game developers Fortnite show players movie trailers and host virtual concerts. Last year, a copy of the American artist Travis Scott appeared on one of the cards. The virtual rapper gave five concerts, and his performance was watched by 48.8 million viewers.
Netflix claims that online games like Fortnite are becoming competitors for their business because they have reached a large audience: 183 million users on Netflix versus 350 million on Fortnite.

According to researchandmarkets.com, the in-game ad market reached $128 billion in 2019 and will continue to grow by about 20% annually. The key factor is the growing popularity of smartphone games. It is a mobile Advergame that will become a key trend in the future.

In 2019, revenue from mobile games worldwide grew, according to Newzoo estimates, to $68.5 billion. However, there is little in-game advertising in this segment. Mobile games are monetized by displaying banners and in-game purchases. Native advertising can be found in sports simulators such as car racing.

More often brands are turning to virtual and augmented reality technologies in advertising using smartphones. According to research by App Annie, by 2022, the number of annual installs of AR and VR apps will grow by 45% compared to 2017, and the market for in-app purchases will increase by 92%. For example, Volvo has created an app that uses VR glasses to test drive their XC90 SUV.
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