In-Game Advertising Q&A: Mitchell Davis, CEO, Massive Inc

With the GDC Focus On: Game Advertising Summit coming to San Francisco, CA on Friday, June 9th (organized by the CMP Game Group, as is this website), Gamasutra is running a series of exclusive Q&As with the heads of the major in-game advertising companies in the run-up to the summit, to get their thoughts on the past, present and future of in-game ads. The last Q&A in the series (following Double Fusion's Jonathan Epstein, Adscape Media's Chris Gilbert, and IGA's Justin Townsend) is this Q&A with Massive Inc. CEO, Mitchell Davis, discussing his company's background, current clients, his view on Microsoft's acquisition of his company, and his opinions on future consolidation: GS: Can you give us a little background on Massive Inc.? How it was started, why in-game advertising, etc. MD: I’m an avid gamer and while playing one day I noticed the fake advertisements. It occurred to me there was no particular reason they couldn’t be real. It would add more realism to the game and provide tremendous value to advertisers. That’s when I started Massive. GS: What major milestones/deals have you signed in recent months? MD: We announced in early May that Microsoft had acquired us. We will be a solely-owned subsidiary and will continue in the same vein as we have been so far, but with the great resources of Microsoft behind our business. Massive announced in April that we’ll begin serving ads into Major League Baseball® 2K6. It was an agreement between Massive Incorporated, the Major League Baseball Players Association (MLBPA), MLB Advanced Media and 2K Sports. In addition to Major League Baseball, 2K Sports also publishes highly acclaimed and popular sports video game franchises in basketball, hockey, college basketball, tennis and snowboarding. We also continue to expand our portfolio offering in Europe—we recently announced that Acony has joined the network. We’re thrilled with all of these recent developments. GS: What competitive advantages do you leverage over other companies in the in-game advertising marketspace? What sets you apart? MD: Massive is the undisputed leader in the space. We pioneered the technology and the network model for videogame advertising. Advertisers are looking for reach and frequency; a network model is the only way to bring both to the table. We have the deepest relationships with over 40 publishers (including Activision, THQ, Ubisoft, 2K Sports, Konami, Eidos, Sony Online Entertainment, and Vivendi Universal – to name a few. Our title list comprises AAA content such as Splinter Cell, Rainbow Six, MLB 2K6, Tony Hawk, And1 and True Crime. Our experience is unsurpassed, our advertisers represent the strongest and most innovative in global brands and we’ve run more campaigns than anyone else, with over 70 million game sessions to date. All of these things set our network completely apart. As we’re now a part of Microsoft, we’ll be able to do even more research and be able to provide our partners with greater information on the effectiveness of their ads and our network overall. GS: How much advertising is too much? How do you draw that line and ensure that consumers are comfortable with the way ads are served to them? MD: Massive cares deeply about gamers and the integrity of the game experience; we are gamers and our business relies upon gamer satisfaction. We know the real experts of each game are the developers and the devotees of that game; therefore developers choose where and how to place ads in their games. Each title is then tested by gamers to ensure their approval and always safeguard against any potential for over-exposure to advertising. GS: What are some of the hurdles that you expect in-game advertising to face in the near future? MD: Like any new advertising media, the biggest hurdle is scale and innovation. With our new relationship with Microsoft, we’ve addressed the scale issue, which will in turn provide tremendous benefits for developers/publishers and advertisers, alike. By the 1st quarter of 2007 the Massive network will deliver an audience of millions, on a worldwide scale. We were the first to market with 2D advertising elements as well as full sound and motion. Our premier technology team continues to innovate and develop new advertising elements that continue to tap into the unparalleled interactivity that the video game experience affords. GS: What do you think are areas of games that are, as yet, untapped by in-game advertising, if any? MD: The innovation opportunities are boundless, but everything comes back to the gamer’s experience within the game and ensuring the brand engagement delivers value back to the partner. We will monitor how gamers react to existing ads and evaluate their input in test scenarios. Then, together with our developer partners we will innovate where it makes sense, whether that be existing billboards and store fronts, 3D objects, videos, or interactive placements where you can engage with the actual brand. GS: How does Microsoft’s acquisition of Massive Inc. affect the company and your operations, deals, etc.? MD: Massive will continue to function as independent subsidiary of Microsoft. We will continue to work directly with our publishing partners and advertising customers, and deliver in-game advertising to titles across all platforms. The MSN ad sales network will provide tremendous resources to Massive and our partners, and extend our reach deep into Europe and Asia. GS: Which titles do you expect to have the largest reach over the next 12 months, in terms of major deals you've signed? MD: As your audience can appreciate, we can’t talk about specific titles that are coming onto the Network since for many publishers they haven’t been announced yet. By the end of 2006, we expect to have over 100 titles in the network. GS: How do you see in-game advertising shaking out in terms of consolidation or expansion? Will there be more companies in the market? Less? Or the same? MD: Successful in-game advertising requires sophisticated technology as well as relationships with major industry players – that’s a significant barrier to entry. We are the undisputed leader in the dynamic video game industry. There are other companies that function in more of a creative agency role or provide one-off advertising solutions. There has been a significant amount of venture capital that has been invested in the space—there will definitely continue to be consolidation in the market as those investors seek the best returns on their investments. GS: What's the biggest misconception about in-game ads? MD: People who are uninformed about the industry or the game experience can incorrectly assume that what we’re talking about is pop-up ads or other types of intrusive advertising. We’re totally focused on adding realism and entertainment value to the overall game experience. We never detract from game play, and work closely with the game creators to ensure that the every execution is flawless. Ads in games are in places where the gamer would expect to see ads in real life - and must be contextually relevant. In fact, 90% of gamers said the either like or don’t mind ads in video games, as long as the ads are contextually relevant. (Source: surveys conducted by Massive, Nielsen, & Harvard Business School)