karnellKNOWLEDGE

Opportunities for Marketers within Online Games

Unreal Estate

As the last news clipping that I posted below illustrates, there is a burgeoning marketplace in the sales and distribution of virtual assets within on-line games. In fact, Wired Magazine honed in on this fact in 2003 when the published the article “The Unreal Estate Boom”. It was within this article that they uncovered an academic paper (published in 2002) analyzing the circulation of goods in Sony Online's 430,000-player EverQuest - an economist calculated a full set of macro- and microeconomic statistics for the game's fantasy world, Norrath. Taking the prices fetched in the $5 million EverQuest auctions market as a reflection of in-game property values, professor Edward Castronova of Cal State Fullerton multiplied those dollar amounts by the rate at which players pile up imaginary inventory and came up with an average hourly income of $3.42. He calculated Norrath's GNP at $135 million - or about the same, per capita, as Bulgaria's (ranking this virtual community the 79th richest nation on planet earth!).

 

Castle: $2,053 (eBay resale price)

The article went on to point out that “assuming roughly proportional numbers for Electronic Arts' 225,000-player Ultima and other major online role-playing games - Mythic's Dark Age of Camelot, Microsoft's Asheron's Call, Funcom's Anarchy Online - the workforce toiling away in these imaginary worlds generates more than $300 million in real wealth each year. That's about double what the game companies themselves make in subscription revenue, a fact that poses them a single, nettlesome question: How - and whether - to grab a piece of the action?”

In-Game Marketing

However, game studios are not the only ones that should be thinking about how to capitalize on this unexpected derivative of popular online titles. Marketers also should consider where they fit into the mix. With a large marketplace for virtual goods and services, they could help players acquire expensive, new, or rare artifacts via sweepstakes or promotions. They also should consider aso how to integrate their brands within the online environments.

On Aprill 11th, 2005 Massive Incorporated, creator of the world’s first video game advertising network, announced that its network has successfully completed the beta testing phase and will expand its dynamic ad serving capability into 40 leading titles from 10 top game publishers before year’s end. Global advertisers, including Coca-Cola brands, Comcast’s G4, Dunkin’ Donuts, Honda Element & Honda S2000, Intel, Nestlé, Paramount Pictures, T-Mobile, Universal Music Group and Verizon, are utilizing Massive to reach the elusive youth demographic, particularly 18-34 year old men, a group that increasingly shuns television in favor of video games. For the first time, advertisers are implementing real time, in-game campaigns to a weekly audience estimated to reach several million gamers by the end of 2005.

Current titles in the Massive Network include Ubisoft’s “Splinter Cell Chaos Theory” and Funcom’s “Anarchy Online”, as well as “Mall Tycoon” and “Ski Resort.” Massive’s combination of leading publishers and premier game titles definitively demonstrates that contextual advertising in video games is the freshest and most effective way to reach a vast audience, allowing brand marketers to connect directly with their audience’s lifestyle.

In-Game Billboard Execution. (Splinter Cell)

Also Read: The Effect of Billboards within the Gaming Environment
Journal of Interactive Advertising, Volume 5, Number 1, Fall 2004

Massive’s pricing model mirrors familiar traditional broadcast media, charging a CPM against their gaming audience as they are reached. Massive’s technology allows for complete tracking of ads served and will provide complete, detailed reporting on audience reach on a daily basis. An ad impression is based on a minimum of 15 cumulative seconds of gamer exposure to an ad unit that meets our viewing threshold. Thus, an ad unit is not considered “served” until an individual gamer has been exposed to an ad for a minimum of 15 cumulative seconds during game play.

Sample In-Game Real Estate Tracking

Gamers reactions to this marketing approach has been so far positive. Particularly compelling is the attitude of gamers towards the ads themselves. Independent research has shown that they see real-world ads and product placements as an enhancement of a game's realism. An Independent Harvard Business School study shows that over 90% of 'core gamers' do not mind in-game advertising in their games. The attention they pay to their gaming environment translates to high brand lift and intention to buy.

Gamer FeedbackGamers care about their games – and the advertising in them. The following feedback was taken directly from Massive’s Publisher Partners’ Web sites:

“I love the idea of having actual advertisements in a game instead of fake, made-up companies. I’ve always wondered why more games didn’t try to do this.”

"I would like seeing a Coke machine, or a Pepsi machine, or (in this case) one that reads Diet Sprite. That's what it looks like in real life.”

“I think the ads are cool as long as they make sense…the soda machine looks awesome.”

“I think the in-game advertising initiative is brilliant. I play quite often and find the billboards enhance the reality of the game, are completely unobtrusive and dynamic.”

The Target

Obviously, when one thinks of online games they immediately jump to the “illusive 18-34 yo male segment”. This demo is true if you are trying to reach the Hardcore Gaming set. However, it is important to note that women (not men) dominate the online gaming universe. Females make up 53% of the online game players where men only make up 47%. Women (especially those 35-49 yo) dominate the Causal Gaming Category (Kart Rider mentioned in the news clipping is considered a casual game genre). As the following graphic illustrates, the major differences between Casual Gamers vs Hardcore Gamers are gender, game genres, and time/money spent playing online.

Keep the above in mind when considering in-game marketing tactics. Bottom line, using in-game promotions to reach both men and women is a viable tactic. Now stop playing around and give it a shot.

The Internet is Seen as the Most Trusted Media Source for Consumers When Looking for Credible Health Information

The Internet is seen as the most trusted media source for consumers when looking for credible health information, according to a new study sponsored by Medical Broadcasting Company (MBC) and conducted by Nielsen//NetRatings. While research shows that consumers trust their physician the most when it comes to health information, patients are increasingly using the Internet to make the doctor-patient dialogue more informed, finds the study.

The survey adds that 42% of the 991 respondents say they trust health information they find on the Internet, compared with just 16% for information found in other forms of media. Consumers are also taking advantage of the great depth of health information on the Internet. More than 85% of respondents say that they look at two or more Web sites when searching for health information, according to MBC. The survey also finds that more than 65% of respondents say they use the Internet to research important health topics before and after they visit a doctor.

MBC adds that despite recent challenges to the credibility of the pharmaceutical industry, nearly one-third of respondents say they use the Internet to visit pharmaceutical company Web sites for information about prescription products.

source: http://www.aishealth.com/EHealthBusiness/060905.html

Neuromarketing

by Howard Greenfield

When it comes to high-tech marketing, there's always room for improvement—especially with the economy plodding, products continuing to rapidly evolve and upper management demanding better bottom-line return.

In times like these, companies rely on their top inside sales managers and turn to the best outside coaches and experts. Tech companies such as Alcatel, Genesys and SGI, and automakers Daimler Chrysler and Ford, are testing new techniques in the battle for market share.

One of those techniques is "neuromarketing," an approach based on neuroscience. Neuromarketing aims to map brain patterns and provide a more direct path to human decision-making.

The Neuroscience Claim

Already, there are services and companies that are guiding corporations and smaller businesses in understanding the powerful fundamentals of the brain. For example, Neurosense, Ltd. in the UK offers MRI scanning and psychological testing that profiles brain activity in response to products, ads and packaging.
In Chairman Michael Brammer's words:

"Accurate estimation of consumer demand and preference is vital for the success of new products [and sales]. Because so much of our thought occurs in the unconscious, traditional research methods that mine the surface are likely to miss many of the factors that influence consumer behavior."

"Bridging the gap between mind and behavior is thus one of the key challenges that face marketers today," Brammer says. "Cognitive neuroscience now offers us a means to bridge that gap."

Why are companies embracing some of these approaches, and why is the business taking off in the US and Europe? Neuromarketing claims to go beyond traditional selling techniques and claims to actually drive the decision-making process. It claims to have adapted neuroscience into a widely applicable commercial regimen.

New ideas stir controversy. And this is business. Most of us aren't looking for experimentation—we need effective tools that pay off. Let's examine how it works.

Science or Voodoo?

Neuroscience has been around for many years. Often misunderstood (and sometimes denounced as voodoo), its principles are being tested in business by its ability to affect the bottom line.

Neuroscience's increasing visibility in medical and social science circles has provoked sharp debate about its merits. Skeptics, such as renowned author Tom Wolfe in his essay "Sorry, But Your Soul Just Died," characterizes it ambivalently, as derived from "techniques for watching the human brain as it functions, in real time."

Recent corporate financial scandals have drawn greater attention to business practice standards, and critics of neuromarketing say outright that its techniques are manipulative, "simply a more efficient form of brainwashing."
Organizations such as Commercial Alert claim that MRI technology is being used "not to heal, but to sell products"—to deviously create a "foundation for loyal, long-lasting customer relationships."

Research scientist Richard L. Peterson, MD, of Market Psychology Consulting, who is a Stanford neuroeconomics researcher, counters: "Concerns like those raised by Commercial Alert are not sound because at this point these techniques haven't been able to predict or change behavior. There's no evidence of being able to change people's preferences that make those complaints valid."
Dr. Peterson's eclectic background as both a doctor of psychiatry and an experienced financial consultant provides an uncommon perspective. He coaches companies seeking practical understanding of primary motivational systems.

The science is fascinating, as Peterson details: "The average human brain has 100 billion neurons with 100 trillion connections among them, and we neuroscience researchers have only just begun to understand the structure of the brain and the mental life that arises within its mysterious workings."

"When we, our customers, or our competitors perceive a potential gain in the environment, the brain's ancient system of reward approach motivation is set into action," Peterson says.

"Scientists have shown that this 'reward approach system' exists even in life forms as primitive as amoebas. It is the most basic motivator of activity in the brain, and potential gains appeal to it in specific ways."

Desperately Seeking Sales

Another company focusing on sales applications of neuromarketing is SalesBrain. Five years ago, Christophe Morin and Patrick Renvoise left their day jobs as veteran US and European high-tech marketing executives to develop a distinctive new sales approach. It resulted in a book and a sales method that is making a growing industry impression.

CEO Christophe Morin says that SalesBrain's approach is simply highlighting key elements of the customer communication process and providing a road map to getting through to the decision-maker. As he puts it, "The assumption...is that the decision-maker is a person, when in fact it is an organ!"

SalesBrain's premise is that recent neuroscience research has spelled out the mechanics of the human decision process. When we understand that the human brain can be categorized into three separate parts that act as separate organs, with different cellular structures and different functions, we can communicate more effectively.

As they see it, the three brains process information differently:

• The new brain is responsible for research, logic and deduction.
• The middle brain "processes emotions and gut feelings and also shares its findings with the other two brains…."
• "The old brain decides." The innermost—and oldest—part of our brain is responsible for keeping us alive. This is the brain our ancestors, the first humans used millions of years ago for survival; over the past few years, studies have proven that it is the ultimate decision-maker.

So, the principle is that if you can reach the old brain and get your point across in no uncertain terms, you have a strong likelihood of winning your case. As Morin puts it, "Reaching the primitive part of our brain is actually a straightforward exercise as long as you know the path to do it."
No Need to Be a Brain Surgeon

SalesBrain asserts that successfully reaching the decision-maker boils down to a formula:

Selling Probability = Pain x Claim x Gain x (Old Brain)3

Morin contends that four steps govern the process:

1. Pain Research: Assessing the nature and intensity of the customer's "pain"
2. Claims Coaching: Developing the highest, compelling reasons why no competitor can provide a better alternative than your solution
3. Gain: Demonstrating beyond reasonable doubt how the customer will benefit
4. Old brain training: Adopting the best techniques for delivering the above points in a powerful, memorable message

As marketing psychologist Dr. Clotaire Rapaille, consultant to Ford, GM, Kraft, and Proctor and Gamble, remarked recently on 60 Minutes, it is this "reptilian brain" that makes consumers choose what will make us survive. For instance, in the case of the popularity of SUVs, Rapaille explains: "Why? Taller. Stronger. I mean, the elephant—the bigger you are, the more chance you have to survive."
Rapaille says: "Now, we know that the higher you are, more chance you have to roll over. And we know that SUVs have a higher rate of accident for rollover than other cars."

A Porsche is less vulnerable to rollover than an SUV, Rapaille says, adding, "That's at the cortex [new brain], which means people know it but they don't refer to it because there's something stronger which is the reptilian: the bigger, the tallest, and more chance to survive."

Regardless of your interpretation of business psychology and the fine art of deal closing, bankable technique is key. Is there a pure path to the inner decision-making button? That remains unclear.

But the neuroscience approach is gaining traction. The American Marketing Association nominated SalesBrain as "the next big thing in marketing." You may judge for yourself whether that assertion is accurate. However, it's hard to argue that, as Einstein put it, "unexpected connections" between the product and the mental process are what hold the key to winning in the marketplace.

source:
http://www.marketingprofs.com/4/greenfield1.asp

The biggest broadband game you never heard of

In the most connected country (Korea), Kart Rider recently dethroned the venerable Starcraft as the biggest online game. The company that makes it, Nexon, has also achieved something far more significant: it has cracked the money making formula as well. By selling cute digital upgrades to the player's kart-racer avatars, the company pulled in $110 million last year and expects $250 million revenue this year.

When Koreans were recently polled for their most impressive automobile, a Kart Rider premium entry even crept in at #2, just behind the Porsche Carerra GT.

Over 25% of the entire population admits to having played Kart Rider, a remarkable performance that cannot have escaped the eyes of online game-designers world-wide. Although Kart Rider is only slated for asian expansion (the company is keen to launch a Chinese edition), if you want to see what it is like to buy your way to the top, perhaps you can look into a sailing the Doubloon ocean at Puzzle Pirates (another quietly popular game you never heard of), or, just join a US MMORPG such as World of Warcraft, and then shop for pre-levelled avatars on ebay. Gamers racing (or fighting) their wallets is definitely here to stay.

More on Kart-Racer can be found in the english edition of the Korea Times and an admiring Business week article is here.

The center of the Kart Rider universe, and the all-important upgrade shop, is its korean site kart.nexon.com.

source: http://www.dslreports.com/shownews/64953

The Future of Marketing

Three trends that will change marketing and advertising forever

Three trends in marketing and advertising are converging to forever change the landscape of professional marketing services firms. The maturing of addressable media, the decline in the traditional notion of brand and branding strategies, and the rise in marketing accountability are collectively forcing marketers and the agencies (that support them) to rethink traditional, creative led, one size fits all approaches.


1. Addressable Media Matures

No one would argue that the most significant event that occurred in marketing in the last ten years was the opening of the internet to commercial access. Having endured a boom and bust cycle where the channel was revered as the nirvana of marketing to a passing fad and a lost cause, digital marketing has emerged as an integral (if not central) component of today’s marketing mix, bringing new levels of reach, targeting, one-to-one messaging, and accountability. In fact, there is growing evidence that the attributes of internet marketing are setting the standard for other marketing channels.

Numbers back up the above observations. In September 2004, IAB and PricewaterhouseCoopers reported that digital ad spending in the U.S. totaled $2.37 billion in the second quarter, a 42.7% increase over the same quarter in 2003 and the seventh consecutive quarter of growth. Overall, the market today is growing at more than 20% per year, with researcher eMarketer predicting digital ad spending will reach $9.1 billion in 2004, $1 billion more than at the height of the Internet boom. Digital media already has displaced outdoor media as one of the so-called “Big 5” consumer media and is closing rapidly on the other four: radio, magazines, newspapers and television. The IAB/PWC report detailed how online ad spending today is bigger then national radio ad spending, national newspaper ad spending, and the syndicated TV and business to business marketplaces. Furthermore, they went on to predict the market to grow to $11.4 billion in 2008, a number that eMarketer has revised up to $18.5 billion.

When analyzed by annual growth rates, last year’s 20.9% increase can be viewed as the first year of double-digit gains, continuing through the rest of this decade. The 25.2% growth rate in 2004 represents the peak of that climb, with a moderate leveling off in the four years following. Behind this phenomenal growth in online ad spending is the sustained and deepened acceptance of the Internet as an integral part of daily life among companies and individuals alike. Furthermore, it is now viewed by most marketers as the model to judge other channels by as it relates to its global reach, consistent consumption at work and home, flexible and performance-based media compensation models, hyper-targeting, dynamic messaging, and real-time reporting. As more traditional channels become addressable, especially iTV, firms with a solid command and control over the unique and demanding nuances of digital marketing will thrive.


2. Traditional Brands and Strategies Erode

“We must accept the fact that there is no ‘mass’ in ‘mass-media’ anymore.” -Jim Stengel, CMO, Proctor & Gamble.

Over the last 10 years, there has been an onslaught of new brands introduced to the marketplace. Furthermore, advances in computing and telecommunications have swept away traditional media distribution barriers, releasing a Pandora’s Box of new content corresponding with aforementioned rise in goods and services. Since 1991, the number of brands on US grocery store shelves has tripled. Last year, the U.S. Patent and Trademark Office issued an incredible 140,000 trademarks, 100,000 more then in 1983. The average American sees 60% more ad messages per day then when the first President Bush left office.

Marketers may consider the explosion of new brands to be evidence of branding’s importance, but in fact the opposite is true. Despite all of money over the past decade that has been dumped into brand building efforts, consumers today have become less loyal. A study by retail industry tracking firm NPD Group found that 50% of those who described themselves as highly loyal to a brand were no longer loyal a year later. Another study found that just 4% of consumers would be willing to stick with a brand if its competitors offered a better value for the same price[1].

The single biggest explanation for fragile brands is the swelling strength of the consumer. There has been a pronounced jump in the amount of information available about goods and services[2]:

The crush of new media outlets that have become available, especially over the past decade, have had two significant impacts on marketing. First, it has empowered buyers with knowledge from trusted third parties and fellow consumers regarding any product or service they are interested in. As a result, consumers have become far more willing to experiment with less known brands because the amount of new information out their makes their experiment less risky. Studies conducted by AC Nielsen, Consumer Electronic Association, and Consumer Reports confirm this trend.

For Example:

The premium price big name brands can command is plummeting.

Once dominant Sony has lost its lead in a crowd of no-names.

Consumers are more comfortable with store brands.

The second impact that media fragmentation has had has been on the marketing and advertising industry. For consumers, the balkanization of media is straightforward --more content and more choices. For the marketing and advertising industries, the ramifications are more complicated and more taxing[3]:

When media fragment, audiences do, too. By the 1980s, cable TV had shattered network audiences. Now the web is raising the stakes, encouraging consumers to scatter their time across thousands of media niches, from specialty Net radio stations to the latest political blog. The upshot: monolithic blocks of eyeballs are gone. In their place is a perpetually shifting mosaic of audience micro-segments that force marketers to play an endless game of audience hide-and-seek.

Fragmentation spawns inefficiency. In response to fragmentation, many marketers and agencies have adopted a carpet bombing mindset. Saturation can compensate for fragmentation, but only at a tremendous cost, because any given message will inevitably reach some of the intended audience too often -- and other not at all. No surprise then, that the cost to put 30 seconds of TV in front of 1,000 SuperBowl viewers has nearly doubled between 1996 and 2004.

Clutter impairs message recall. Scorched earth marketing strategies comes at a price. The percentage of total TV content devoted to advertising has increased 39% since the early 1960s. Moviegoers suffer though 12 minutes of previews before seeing a film they paid $10 for. A relentless stream of pop-up ads, spam, and now product placement drones away in the background. For consumers, the effect is numbing -- for marketers, it is self-defeating. Adding insult to injury, growing consumer affinity for multitasking, most notably in the form of simultaneous PC and TV use, further devaluates attention.

 

Media buying gets more expensive. From a media buying perspective, fragmentation means more vendors and more contracts, and thus higher purchasing, administration, and measurement costs.-This partly explains media consolidation efforts like Comcast-Disney, AOL-Time Warner, and Tribune-Times Mirror. Suppliers are simply responding to what marketers are asking for -- efficient access to large blocks of consumers.

In summary, value is shifting to the customer interface as there is both more choice and greater market transparency. The interconnected nature of today’s marketplace also allows for growing concentrations of buying power from consolidations and share shifts. However, many marketers are ill-equipped to deal with this changing landscape because:

Companies have few systems/processes for responding to customer unique demands

· Companies are unsure which customers are strategically important

· There is no clear business system to capture value from customization through premium pricing, volume commitments, or cost savings

· Differentiation is easily matched by competitors which fuels a profitless arms race

3. Accountability is Marketing’s New Mantra

The economic cycle that markting has gone through over the last decade increased the executive focus placed on marketing, thus giving rise to the number of CMOs in the FORTUNE 1,000. They in turn have been tasked with aligning to the growth objectives set by CEOs. Subsequently turning spotlight on marketing programs that deliver tangible results.

After nearly five years of budget slashing and decline, marketing is making a comeback. CMOs are leading the way, crafting strategies to leverage marketing resources, programs and budgets for bottom line benefits. An ANA/Booze Allen study confirmed that marketing has grown more important to corporate success -- not less -- over the last 5 years.

The brands below serve as a small sample of those who created the CMO title over the last three years[4]

· Visa
· Hill & Knowlton
· Siemens Mobile
· Equifax
· MetLife
· Revlon
· GE
· Symantec
· JPMorganChase
· The Bank of New York
· Home Depot
· McDonalds
· CharlesSchwab
· ServiceMaster
· Cigna
· PitneyBowes

Currently, 47% of FORTUNE 1000 Companies have CMOs

Regardless of the increased demand for CMOs, many are struggling to find a seat at the table with their CEO and CFO counterparts. This is mainly a result of many CMOs, until recently, have not being aligned with the objectives of the CEO.

To make matters even more difficult for the CMO, marketing (known more as an art than science) has been the last of the corporate functions to develop and adopt processes and standards that can be tracked and measured quantitatively. Marketing functions and activities that have traditionally gone unmeasured are now subject to the rigors of ROI calculations.

Based on a survey conducted by the CMO Council[5], CMOs now universally understand and believe that measurement of all elements of the marketing mix is critical to their personal success and the success of the company. Marketing Performance Measurement (MPM), according to their survey, is now considered a significant priority and imperative by over 90% of the marketing executives. This motivation is divided between the CMO wanting a seat at the executive table, improved marketing resource allocation, departmental effectiveness, as well as financial and corporate accountability.

However, most of the CMO Council survey respondents have yet to ‘crack the code’ on building an approach that is complete and comprehensive, understood by the executive team, and enjoys their full support. Over 80% of respondent companies are not happy with their ability to measure marketing performance. Only 17% reported that they had a comprehensive system to measure marketing.

Nearly 60% of the survey respondents intended to increase the amount of money they spend in solutions to marketing performance measures (MPM). This will entail a combination of professional services agencies, marketing automation solutions, CRM and sales force automation solutions. Many have begun the transition already -- with massive shifts in their marketing budgets to more measurable/addressable media channels. In the past year alone, Procter & Gamble, Coca-Cola, and General Motors have threatened to cut mass-media TV budgets and promised to bring more accountability to their marketing programs.

[1] “The Declining of Brands,” James Surowiecki, Wired November, 2004. Pg.205
[2] “Left Brain Marketing,” Eric Schmitt, Forrester Research, April 2004
[3] “Left Brain Marketing,” Eric Schmitt, Forrester Research, April 2004
[4] ANA/Booz Allen Analysis 2004
[5] Measures and Metrics: The Marketing Performance Measurement Audit. The CMO Council. June 9, 2004