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In-game ads in the console space didn't make games cheaper for consumers, they just opened up a new revenue stream for publishers. Mobile in-game advertising company Greystripe is hoping to change that dynamic in the mobile space.

Justin Davis, Blogger

September 29, 2006

7 Min Read

TitlecardMobile in-game advertising is a touchy subject for many. Phones are intensely personal devices, and many fear that consumers will resent advertising intruding into that personal space. On the other hand, advertising-subsidized gaming is a real possibility in mobile markets. “Free mobile games” is an attractive proposition for gamers, just as it is a very disruptive one for established mobile publishers.

We recently sat down with mobile in-game advertising start-up Greystripe to discuss the space. Company Founder & CEO Michael Chang discusses why the ad dynamic is so different for mobile games, the early success of the company’s consumer portal GameJump.com, and where mobile advertising is likely headed.

GamesOnDeck: In the console space in-game ads didn't make the games cheaper/free for consumers. They just created another revenue stream for publishers. You're doing free games with GameJump, but do you expect others that license your technology to do the same? Why?

Michael Chang: At Greystripe, we believe that advertising in mobile gaming and console gaming are for completely different reasons. Advertising in mobile is going to be the catalyst to drive a brand new, alternate form of distribution - free ad-supported. In console, like you said, advertising is for 'additional' revenue on their products which already have great distributions channels (Gamestop, Walmart, etc). What is revolutionary in mobile is that ad supported will become the total revenue stream for the publisher and the consumer will never have to pay. Yes, we are currently working on partnerships to bring our free, ad-supported distribution system to more gamers in addition to GameJump. Stay tuned for some big announcements before the end of the year.

GOD: Many companies report that they have been treading lightly around mobile advertising, because phones are so much more personal than TV or websites - they're seen as as very personal extensions of their owner. How does GreyStripe respond to these concerns? Do you disagree?

MC: We think that mobile advertising is so effective for exactly the reason that you mention, it is personal. People have been treading lightly because existing mobile marketing have been campaigns through SMS which is more like SPAM if it is unsolicited. What is great about pairing advertising with free games is that we have created a model that is inherently opt-in. The user downloads the game for free and they know that they are a going to see a couple of unobtrusive ads at the beginning and a the end of the game. This is a fair trade off. I think that model's like mobile in-game and mobile search advertising are going be the big winners because the are opt-in and ad value to the experience.

GOD: How are these ads being monetized/sold? I understand they can be loaded in front or at the end of game sessions, but what other options are there?

MC: Greystripe sells pre and post roll full screen ads. Like you said, our full screen ads are presented at the beginning and at the end of the game session. Because of our proprietary AdWRAPing technology, which can add our advertising software to any JAVA application and game, we have the ability to insert ads anywhere into the game play. We can show ads in between levels or as interstitials. We will do this once the game player becomes more comfortable with our ad model. We have been very careful with the gaming experience for both the consumer and for the publishers sake. The worst thing that we could do is to "interrupt" the game players experience. We believe that pre and post is a good balance for now.

GOD: Has it been difficult to sell advertisers on this new format? How do you even decide the baseline value of a 5-second "pregame" mobile ad relative to a billboard in a console game, an online ad banner, or a 30-second TV spot? It seems there would need to be a lot of research & documentation to decide the value of various types of mobile ads...

MC: It has not been hard to get advertisers excited about full screen mobile in-game ads. Advertisers know that it is the early days for our medium and the ones that are more cutting edge totally understand the value. Mobile CPM rates have been hovering around $35-40, so the market is used to our ad rates. In terms of research and data, because we have a centralized ad server, we have great insight and measurement into our users behavior, ad effectiveness and demographic information.

GOD: Are they just passively viewed, or can there be calls to actions that take consumers to a WAP page, or elsewhere? If so, how does that work with the game session? Does it end it?

MC: Our ads are active and have actions. We have three actions:

Click to WAP, like you mentioned, which forwards on to a mobile web site or a deep link to a carrier deck. Zagat and Modtones are examples of advertisers that have Click to WAP campaigns.

Click to Call, which initiates a phone call. An example is Progressive insurance in which the user can call for a car insurance rate quote.

Click to Jump Page, which is basically a 2nd page to the ad and "loads" immediately because it is cached as part of the ad, in which the user can fill in a survey, email address or view more text. It is similar to a preloaded mobile web page.

Depending on the phone model the game session could exit for Click to Call and a Click to WAP. Click to Jump is nice because it is shown as part of the ad and then the player goes on to the game.

GOD: For the 3rd party developers you work with, how are they able to subsidize development of their ad-supported titles? It's true there is a lot of potential upside, but right now, today, I have to assume they would make back their development costs quicker selling their title for $7, rather than waiting for their title to generate $7 in ad revenue, after Greystripe's percentage.

MC: It is a good point, and most publishers will be distributing existing titles with us. I see this turning around as we are starting to show publishers some significant revenue. We are in talks with two publishers right now to launch their titles exclusively through GameJump. This is very exciting for us because it tells us that publishers believe in what we are doing.

GOD: Why is Greystripe willing to whitelabel this solution to other companies, since you run your own portal? Isn't there a concern that it could hurt GameJump.com?

MC: We will whitelabel our solution because it is totally in line with our goal to get our publishers the widest distribution possible. Stay tuned for some big announcements here.

GOD: GameJump seems like a marketing challenge - how and where is this being communicated to consumers? How has pick-up since launch, been? Or does it serve really as more "proof of concept" to potential whitelabel partners that something like this isn't pie-in-the-sky, but is in fact feasible?

MC: GameJump.com has really exceeded our expectations. We are getting thousands of downloads and new users a day. To be honest, word of mouth has been amazing for us. Who doesn't want to tell their friends about free mobile games!

[This interview was produced in association with Modojo.com.]

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