For close to ten years, gaming has been a bigger industry than cinema, yet until now it has been on the fringes of modern marketing. Ian Livingstone, the life president of global games publisher Square Enix, admits that the gaming industry has "always been seen as the unruly stepchild of the creative industries despite the fact that games sales have outpaced Hollywood for years".
Many marketers and their agencies have historically been content to create digital campaigns that people sit back and watch, just like cinema and traditional television advertising. Creating pale campaign microsites or uploading videos to YouTube and praying for a viral hit has been the mainstay of many brands' online marketing efforts. But things are changing.
Today, the combination of game mechanics and location-enabled social media is creating new and powerful opportunities for modern marketers.
In April, Gartner reported that by 2015, "more than 50 per cent of organisations that manage innovation processes will gamify those processes". It added: "By 2014, a gamified service for consumer goods marketing and customer retention will become as important as Facebook, eBay or Amazon, and more than 70 per cent of 2,000 global organisations will have at least one gamified application."
Those who choose to stay on the sidelines will sit idly by as others play, improve their skills and win. The victors will be those who step up and get in the game, as Heineken, Cadbury, TfL, Topshop and others are proving (see 'The work' below).
Fun factor
The value of play and progression
Gaming is essentially about play and progress. The better you play, the better you do, the more you are rewarded, and the further you go. Badges, leaderboards and bonus rounds may be nothing new to gaming, but they're pretty new to marketing, especially when wrapped around real-time social media or when driven by hyperlocal mobile experiences.
At the 2011 GameHorizon Conference in Newcastle, the best and the brightest from the gaming business gathered to talk about what's new in their industry, and progression was on everyone's radar.
Discussing game-based business models and campaigns, Rick Gibson, director of Games Investor, said: "To progress you have to get good at cherry-picking the best and applying it to the rest." Tom Chatfield, author of Fun Inc, talked about the importance of creating fun, sharable "water-cooler moments", which he considers paramount to success. He described these moments as the "critical shareable narrative relevant to you, the player".
Hilmar Veigar Petursson, chief executive of CCP Games, suggests that progression is possible by giving people the tools to play the game and letting them create the experience. "Iterate from there," he advises. Given that players run CCP's game Eve Online for an average of 27 hours a week, Hilmar is probably worth listening to. Iceland isn't the most populous country in the world, but, as Hilmar likes to tell people, "we have more people playing our game than are citizens of the country it comes from".
Social engagement
Game mechanics + social media = success
Gaming has played a role in marketing in the past, but not like today. Nectar, Amex and most airlines and hotels have allowed people to earn points as part of loyalty programmes for years, but their efforts have only scratched the surface of what is possible.
As successful as some points-based programmes have been at creating loyalty, the mechanics of their 'games' are limited, simplistic and primarily focused on individuals. Without introducing social and intrinsically shareable elements to their marketing strategy, their efforts will be constrained over the long term. People, especially younger generations, are increasingly bored with the same old thing when it comes to marketing and advertising. They want to be engaged. They want to interact and share. They want to be entertained, and they want to play.
Social networks have unlocked the true potential of games for marketers, and the numbers don't lie. There are more than 80 million active users playing Zynga's CityVille on Facebook; Groupon is the fastest-growing company in the world; and people play 200 million minutes of Angry Birds a day. And that's just the tip of the iceberg. There's a reason these operations are doing so well - they have tapped into the fundamental desire of people to play, have fun and be rewarded either socially and/or monetarily for what they do and how they participate in these next-generation social games.
In a recent interview, SCVNGR founder Seth Priebatsch said: "It feels like the next natural evolution of human-technological interaction. As we complete the social layer, we'll begin construction in earnest on the game layer."
Gabe Zichermann, author of Game-Based Marketing and chief executive of Gamification.co, says: "Long-standing marketing techniques are now failing because people are seeking more reward and engagement from experiences than ever before. The younger generation are more game-attuned than their predecessors."
So what does gaming add to social engagement? Matt Mills, co-founder of digital design studio ustwo, says: "Gaming is all about engagement and marketing is about creating awareness. Marry the two and you have something special: long-term brand engagement.
"If done right, there's massive potential, and Angry Birds Rio is a perfect example. If game-makers create games that make users feel good, the users are more likely to tell their mates about it. The game then becomes a carrier pigeon, sending a branded message throughout the world from person to person."
Don't sit on the sidelines
Tips for marketers taking their first steps
Facebook, Zynga, Gaikai, Onlive, World of Warcraft, Bunchball, Bigdoor, Badgeville, SCVNGR and Foursquare are just a few of the canaries in today's social-gaming coalmine. As these companies have grown in popularity and experimented with gaming formats and mechanics, they've paved the way for marketers to take advantage of the trend.
Robert Nashak, executive vice-president, digital entertainment at BBC Worldwide, believes that games "extend the brand cycle beyond promotional spikes".
"The power of games gives you the opportunity to meet and have relationships with characters, and that creates a very strong and lasting bond," says gaming theorist and designer Jesse Schell. He believes that big companies often make the mistake of listening to their customers too often when developing technology. "They're not the experts and very quickly change their minds. When people refuse to buy that new thing, companies are often shocked; their reaction is: 'How can you not want this? I just asked you!'"
When it comes to developing these new experiences, Renate Nyborg, digital director at Edelman UK, advises that, especially on mobile, "it's important to find out what people do rather than want they want". He recommends that marketers try working with brands and agencies to create sponsored interactive experiences.
"Try to approach the customer journey in the same way that a gaming company would: that means integrating a series of levels into the campaign that keep your customers engaged and coming back for more," recommends Stardoll Media general manager Chris Seth. "Think about how the game experience and the rewards from participating can be shared across the wider social web, to further amplify your brand reach and, ultimately, your customer base."
You have to be fast, and you have to be willing to think on your feet. "It's about speed," says Zynga vice-president of studios Louis Castle. "Imagine the fastest decision-making process you know. That's not fast enough."
Level up
It's not as easy at seems
"For every Angry Birds, there are a lot of dead birds. Discovery for games is key," says Livingstone. The same holds true for marketers, who should be unafraid to experiment with new models in order to discover what works for them. As with most things, there's no magic formula for success, and not everything is going to work.
At the GameHorizon conference, Chatfield talked about the "beautiful seams" of games and emphasised the necessity for them to do things designers did not intend. It's a lovely concept and perfectly describes the need for intense experimentation with concepts and campaigns to achieve long-term objectives.
Adam Kleinberg, the co-founder and chief executive of interactive agency Traction, says: "Gamification can be leveraged to drive adoption, engagement, loyalty, sharing, even sales. While all of these are worthy business objectives, don't get all worked up just yet - as you'll see with any marketing plan, the devil is in the detail."
Mills says: "Just because you make a game, that doesn't mean it will do well. To do well, it needs to be special, targeted and applicable to the brand in question. Users are not stupid."
Insert coin
Emerging commercial models and ROI
It's still the Wild West in terms of commercial models, and there are differing opinions as to what works and what doesn't. But that doesn't mean people aren't making serious cash from games today, both from standalone efforts and as part of integrated campaigns.
Castle says entertainment today must be "social, free and consumable". He adds: "It has to be free. I'm a freemium convert. It's the only way it will work. Once people find something they like, then they'll pay for it. Some won't pay at all, but others will."
Not everyone agrees. When asked about the new trends in game design, Mills says: "Sadly I don't see game designers focusing on pioneering new techniques. Instead, too much attention is placed on creating psychological touchpoints designed to create an addiction, where money must be spent to satisfy it. In other words, freemium and virtual currency product warships ... yuck!"
There's always been an obvious tie between brand loyalty and game mechanics. Airlines, hotels and financial institutions have long used points-based reward programmes to achieve customer loyalty. Early examples such as Green Shield and McDonald's Monopoly promotional campaigns also offer valuable insight into loyalty marketing.
However, these early efforts benefitted neither from the network effect nor from positive word of mouth through social sharing. In other words, the potential gain from leveraging the reach offered by social media should not be underestimated. In terms of measuring the ROI from social gaming campaigns, the Net Promoter Score - which measures the propensity to recommend to a friend - is a critical factor in a digitally distributed world.
Beyond the buzz
Is it real? What's next?
Gamification is a great buzzword, but beyond the hype, where are things headed? Borrowing a line from hockey legend Wayne Gretzky, Castle told GameHorizon delegates: "I'm going where the puck is going to be."
He continued: "We haven't figured out what to do with this space (digital distribution) yet." That's an incredible statement when you consider how many millions of people are playing Zynga's games.
The BBC's Nashak backs the idea of exploring "snackable ARGs" and lightweight storytelling for non-addicts. For marketers, one implication of this idea is that smaller efforts can be successful. You don't need to create a global phenomenon, just something that appeals to players.
"Characters in games will become popular like movie stars," says Schell. "They'll have a following and move from game to game. It won't surprise me if game characters become a primary interface to the internet, an interface to everything."
If true, that's good news for brands, as they've been creating branded characters for decades. The challenge for marketers is to create meaningful consumer interactions with these characters that go beyond the one-dimensional and brand-centric universe they often exist in today. Pairing up brand experts, interaction designers and game designers to create these experiences could be a worthwhile endeavour.
THE WORK
Star Player, Heineken - 5 out of 5
Heineken's Star Player lets you "prove your football instincts" live online. By anticipating the outcome of live match moments during televised UEFA Champions League games, users score points and compete against friends or in league tables on Facebook.
Chromaroma, Transport for London - 2 out of 5
Chromaroma lets Oyster card users turn their journeys into a city-wide competition. Unfortunately, TfL has changed the way it delivers the data needed to power the game, and now the project is on hold.
Dove Go Fresh, Stardoll - 4 out of 5
This is a great example of an old marketing technique - in this case, a 'fan club' CRM programme - being adapted to play to the strengths of the core Stardoll gaming experience. Users are rewarded for joining Dove's Beauty Club with virtual clothes and currency.
Qwak Smack, Cadbury - 3 out of 5
Cadbury's on-pack campaign is based on a game accessed by pointing your smartphone camera at a chocolate bar. Ambarish Mitra, co-founder and chief executive of Blippar.com, says location-based AR gaming will deliver further unique experiences.
City of Chicago, Foursquare - 4 out of 5
One of the better 'early' examples of a gaming-based social network. Foursquare's Chicago-based game based on Ferris Bueller's Day Off demonstrated the power of combining location-based marketing, social media and gaming.
Topshop, SCVNGR - 3 out of 5
This location-based app encourages users to rack up points in exchange for a discount at Topshop. SCVNGR, created by Seth Preibatsch, was well-received at this year's SXSW Interactive conference in Texas, among a very discerning crowd.
THE PLAYERS
JESSE SCHELL - THE MAD SCIENTIST
Name: Jesse Schell
Company: Schell Games
Title: Founder
jesseschell.com
Biog: Jesse Schell started games studio Schell Games in 2004 and has spent his career creating online games, internet-enabled toys and virtual worlds for brands around the globe.
"It won't surprise me if game characters become a primary interface to the Internet. An interface to everything."
FLORIS COBELENS - THE BRAND
Name: Floris Cobelens
Company: Heineken International
Title: Manager, digital global commerce
heineken.com
Biog: Floris Cobelens devised Heineken's StarPlayer game, based on the UEFA Champions League. He heads global digital marketing for Heineken and is working on several developments that will see it become even more of a 'gaming brand'.
What's the first game you remember playing as a child?
Goose on the Loose
What's your favourite old-school video game?
Frogger & Decathlon cost me lots of joysticks
When asked what gaming adds to social engagement, Floris replies: "Shouldn't the question be the other way around? That's what's really interesting today. Gaming has a huge impact on society and by definition on marketing as well. It offers another opportunity to prove relevancy for brands."
CHRIS SETH - THE NETWORK
Name: Chris Seth
Company: Stardoll Media
Title: General manager
stardollmedia.com
Biog: Chris Seth is head of teenage social network Stardoll, which has a heavy gaming element. He is tasked with building the global commercial team and is responsible for Stardoll Network brand revenues.
What's the first game you remember playing as a child?
Space Invaders
What's your favourite old-school video game?
Pacman
"Incentives and rewards are at the heart of what makes a good game great, and the same applies to the business of marketing. Whether it's a completion score on adding more information to your LinkedIn profile, or the promise of a free bottle of wine courtesy of your Nectar Card, gaming techniques have enabled companies to grow engagement and loyalty for many years now."
MATT MILLS - THE PUBLISHER
Name: Matt Mills
Company: ustwo
Title: Co-founder
ustwo.co.uk
Biog: Matt Mills is co-founder of ustwo, a digital design studio that creates multi-platform experiences across mobile, tablets and TV for brands such as Sony, Intel, H&M and the BBC.
What's the first game you remember playing as a child?
Jet Set Willy
What's your favourite old-school video game?
Gauntlet
"Gaming is all about engagement and marketing is about creating awareness. Marry the two and you have something special: long-term brand engagement. Games have the potential to be massive if it's done right."
DENNIS CROWLEY - THE INNOVATOR
Name: Dennis Crowley
Company: Foursquare
Title: Founder
foursquare.com
Biog: Dennis Crowley is co-founder of Foursquare, the service that combines social networks, location awareness and game mechanics to encourage people to explore the world around them.
"Let's change the way people experience physical space. Can Foursquare create serendipity? That's something we're exploring. We want to build things that help people have experiences. We want to help people make sense of the real world."