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By Joseph Lieberman | Published Aug 09 2013 10:41 PM in Business and Law
Peer Reviewed by (jbadams, Prinz Eugn, Dragonsoulj)

Advertising has always been a rough market. Not only is it extremely competitive, expensive, and risky, but it also changes as fast as any market. If I had written this article a few years ago, let’s say 2005, it would have been all about how to use Google Adwords. Today, while Google can still provide a good outlet, it’s not your one stop shop for advertising glory any longer.

So where do you turn? Well, the sad reality may be nowhere. Games are a low margin, low conversion business and when you are competing with spyware and big business it’s pretty clear who gets the most revenue per user. There are, however, some terms and descriptions we can go over that apply to all advertising models and methods. If your game falls into the category where you could benefit from one of these approaches, by all means use it and try to get some positive return on investment (ROI) on your ad spend.

Note:
This article was meant to revise and conclude a marketing series published on GameDev.net back in 2004. In 2008 it was included in the book Business and Production: A GameDev.net Collection, which is one of 4 books collecting both popular GameDev.net articles and new original content in print format.

In order of importance these terms are:
1) Bulls-Eye Targeting
2) Competitor Targeting
3) Horizontal Targeting
4) Vertical Targeting

Competitor Targeting: This leads us to the next group, people who are interested in similar games to yours. I’m not talking about people who like Risk also liking some board-strategy game; I am talking about the people who have cloned another game in part or in whole. This is where Google and other contextual/search ads come in most handy. Advertising on the keywords of your competitor’s products gives you an opportunity to piggyback on their success. Nothing in advertising is easy though, and what you’re going to find is that most of the people looking for a specific product are not looking for an alternative. This means you’ll be bidding less than everyone else and won’t be able to pull big volume even on a popular game. Still, if you have a hidden object game and put an ad on every other hidden object game’s name you’d probably do enough volume to make it worthwhile.

Horizontal Vs. Vertical Targeting: Before we dive into the next two an explanation is necessary about the difference between them. This applies to all industries, so it’s a rather useful concept you are certain to run into again some day. Vertical and horizontal are both all about getting into the mind of the consumer, which makes it a rather tricky thing to define. Vertical refers to drilling “down” into the sub-divisions of human interest. Creepy as it sounds, it is best described by example. A vertical chain looks like this: I like games. I like sports games. I like strategy games. I like sports games. I like sports strategy games. You can move up or down this chain to increase or decrease the targeting. Each level of vertical “down” is a better target, but as you may suspect – a smaller one as well. So far we’ve been very far “down” the vertical chain, so the next area we’ll go up the vertical chain a little, making things less targeted but still within the vertical area.

Vertical markets are all the rage these days, probably because they clearly make sense. Horizontal is in reference to the “breadth” of the interest level of a particular group. This makes a whole lot less sense, and you’ll find tons of different definitions of a horizontal “market” out there. One person I know defines a horizontal only as a product with near-universal appeal. Spreadsheet software or games as a whole could also qualify. An ad targeting to anyone who enjoys games would be a horizontal ad, this ad could appear in any website and because of its universal appeal, attract attention no matter what. I say that’s a load of bunk and I simply call these things universal products/ads.

So how do I define it horizontals. Visualize a point-down triangle. Draw 3 horizontal lines in that triangle. The top and broadest area in our example above is “I like games” while the bottom is “I like sports strategy games.” Where we said “I like sports games” we’d draw a vertical line and also write “I like strategy games.” This is an example of two different horizontals occupying very close proximity. Not mentioned above is the very high likelihood of this person saying “I like sports.” Here we have a completely separate triangle (vertical). It would appear horizontally across from “I like games.” In that triangle “I like soccer” would be below it, horizontally across from “I like soccer games.” This is where I derive the idea of a “horizontal” target. Because games are a universally enjoyed commodity (Yeah ok, let’s just say it is), then you can clearly advertise in a vertical market connected to your horizontal chain! Time for a shoddy picture!

Horizontal Targeting: So here is the big error people make. The next recommendation I would have is aiming at the horizontal niche of your game, assuming you have one Let’s say you made a World War 2 clone of Risk. You’ve exhausted aiming ads at Risk players. The horizontal target after that would be to aim at people interested in World War 2. This is where most people make the most common mistake of thinking that their next target is a vertical niche, for instance targeting people interested in board games. The horizontal niche often has so much less competition that it is cheaper and more effective to focus on horizontal positions. So in this example, my next place to go would be to World War 2 websites. Not all games have a clear horizontal niche, however. If your game is about WW2 you’re in good shape. If your game is about cute balls of fluff you’re outta luck. If your game is about fairies you may be able to find some fairy websites, but odds are you’re not going to see much volume.

Vertical Targeting: The place most people want to put their ads for some reason is the vertical niche. If I made a board game, I would want to advertise on board game sites. The fact is I have almost never found this to be an effective method (ROI-wise) for advertising a game. You can still try it - focus on running ads on game sites or sites related to the exact genre of your game. The closer you can get to your game’s look, feel, and genre the better. I wouldn’t bet much money on it though, the simple fact is competition is too high and that drives prices up.

So that is the overall strategy of where to run ads. There are a few items that are very common questions and concerns left though, so we’ll focus on a few corner case questions.

Probably the most common question is “How does X company turn a profit when they are spending Y dollars on ads!?” The answer may be that they don’t. Not all ads are run for a positive ROI. Sometimes it is smart to employ a loss leader strategy. If you can spend 21 dollars to make 20 dollars but attract 1000 people per dollar “lost” then it may be to your advantage to lose a dollar simply to gain the attention, e-mail addresses, and name recognition of those thousand people. However, in the realm of an indie or small time development studio a loss leader strategy is rarely an option. So let's focus on getting a positive ROI.

Here’s another interesting one. “What is the most effective form of online ads?” The answer to this varies widely with how good you are at creating ad copy (good text, good graphics, interesting sales pitch, etc.). However, if I had to pick one I would actually say e-mail newsletters have the best bang for your buck, just be careful that you aren’t working with a spam company. If, for instance, your WW2 Risk clone found a WW2 website with a newsletter that offered an ad spot (advertorial preferably) I would be on that like white on rice. Don’t be put off by the fact the CPM is going to be high ($5-$25 is not unheard of for a newsletter).

Finally let’s define some terms/acronyms you’re bound to run into – in case you’re a total noob at this.

CTR- Click Through Rate – What % of people click on an ad. A standard banner ad should range between .5 and 2% depending on position, quality, targeting, etc.

CPM- Cost Per Mille – How much 1,000 displays of your ad costs. An ad that costs \$1.00 CPM and has a 1% CTR means you are paying 10 cents per click.

CPC- Cost Per Click – How much you are paying per click.

CPA- Cost Per Action – Payment is made only when the user performs an action, such as signing up for an account, newsletter, or making a purchase. Also known as PPA, PFP, and CPL.

ROI- Return on Investment – Mentioned above, but also keep in mind ROI factors in future value of visitors as well. If the average purchasing user buys 1.2 games all of that value should be factored into the ad buy. Keep in mind, however, ad based visitors are not equal to the average visitor and should be tracked separately. An ad based visitor may convert half as likely and make only 1.1 sales per purchase.

RPM- Revenue per Mille- RPM typically refers to a single page view and all the ads on that page. So if you had 3 ads paying 1.00 CPM you’d say your page RPM is 3.00.

IAB Ad Sizes- IAB is the Interactive Advertising Bureau – They defined the ‘standard’ ad sizes that we see. If someone asks for IAB sized ads they probably mean 728x90 (superbanner / leaderboard), 160 or 120x600 (Sky and Wide Sky), and/or 300x250 (Box) sized ads. Other very common IAB sizes include 468x60 (Banner), 88x31 (Button), and 125x125 (Square). In games we also see a fair number of 100x100 ads, but those are not IAB standard.

RON/ROS– Run of Network/Site – This refers to buying or selling an ad across an entire network or site with no special targeting.

And so what can you take away from this? Hopefully your takeaway is this: Advertising is really freakin’ hard! If you’ve planned your success around an ad budget rather than a stellar product you’re in deep brahmin waste. Also other than giving you a good dose of pessimism, there are a lot of terms and concepts flung around the ad world. The reality is people will be impressed if you can fling terms and concepts back at them. Finally, if you do decide to advertise using the targeting model I went over will give you the best fighting chance for success.

"Advertising on the keywords of your competitor’s products gives you an opportunity to piggyback on their success."

But advertising using your competitor's name or their product's name as keywords opens you up to lawsuits. Just something to be aware of.

Epic advice. I will definitely take this into consideration for my upcoming RPG

Interesting read.. iam in marketing for 12 years now..and  i can say i agree with writen but it needs to be brushed up, there are ups and downs  mising..

This is based on online marketing..and thats not nearly enough...

But to have an effective campaing , online is one drop in a sea..of clients..

If i was.. more literable..i would write you a game marketing campaign..but it would have to many grammar errors.. english not my native..but if someone needs advice feel free to ask..

Note: Please offer only positive, constructive comments - we are looking to promote a positive atmosphere where collaboration is valued above all else.

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