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Oct 23, 2008

NeoEdge Networks introduces way to splice ads into the middle of the action

NeoEdge Networks introduces way to splice ads into the middle of the action

Most casual game ads are predictable. They run a 30-second video in between levels in a game, or roll the video after you’ve finished. But NeoEdge Networks has introduced a way to make those the placement of ads much more flexible — and possibly quite annoying to gamers.

NeoEdge Networks allows game companies to insert ads into their downloadable PC games and it finds advertisers who want to put ads into those games. Today, it is announcing that it will be able to insert ads — dubbed NeoEdge Brand Overlays — into any part of a game. It can thus be just like a TV advertiser that sticks ads into shows just after a cliffhanger.

Nolan Bushnell, chairman of Mountain View, Calif.-based NeoEdge, says this isn’t about maximizing annoyance for gamers. Rather, it is about making the ads as effective in games as they are on TV.  There is potential here, since the amount of time spent with games is approaching that spent with TV, yet the ad dollars associated with TV are far greater, Bushnell said.

“Advertisers are figuring out they’re getting screwed with TV ad rates,” Bushnell said.

Chief Marketing Officer Ty Levine says that it’s an innovation that will help set the company apart from the pack. That’s important because NeoEdge is surrounded by giants.

While NeoEdge dominates the market for ads in 20-minute casual downloadable games, competitors are moving in around the edges. Google last week entered the market for in-game ads for casual Flash games, which take a shorter time to play. NeoEdge also plays in the Flash in-game ad market.

There are rumors the online advertising giant plans to expand into NeoEdge’s market. With new technology, NeoEdge could offer more opportunities for advertisers to get their message across in each game. It will face competition from others, including IGA Worldwide, which just announced it has reached 30 million gamers with in-game ads, as well as Double Fusion, Microsoft’s Massive, and Mochi Media. (The latter does Flash in-game ads.)

Levine said that game developers don’t have to plan on having ads in sections of the games. Rather, NeoEdge wraps its own proprietary layer of interactivity around the game so that it can insert ads anywhere it likes. The good thing is that NeoEdge doesn’t need game developers to do anything to their games in order to add the NeoEdge Brand Overlays. This is significant to advertisers, since it means they can wait until after a game comes out before they decide to do an ad campaign with the game. The advertiser can wait to see if the game is a hit first; if it is, the advertiser can launch a NeoEdge Brand Overlay campaign quickly.

The action of the game doesn’t pause unless the gamer clicks on the ads. Testing shows that well-placed ads inside the action of the games can have significantly higher click-through rates, Levine said, while there is no measurable impact on gamer satisfaction.

“We realize that we can’t have ads intrude on the intensity of the action, but there are many parts in games where the action is arrested,” Levine said.

Sometimes the pauses in the action aren’t long enough for a 30-second spot, so a shorter ad has to suffice. Levine said there are usually about six regions of a screen where it’s OK to put an unobtrusive window for a logo, product, or other kind of ad in a game screen.

This makes the ad model even more viable, since the ads are more effective and more plentiful. That’s important because there is a flood of casual games being launched, but the revenue associated with those games is being stretched thinner and thinner.

NeoEdge has the ability to insert ads during game production. But so far, NeoEdge isn’t going to take its technology to console games or to games where the game developer has to bake the ad into the game ahead of time. That turns out to be costly and it has yet to pay off in spades, Levine said.

NeoEdge rolled the new ads out to its advertisers a few weeks ago, and almost every advertiser has responded positively, Levine said.

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