Like it or not, the worlds of advertising, marketing, and the ARG are tightly braided together. We've
already discussed the ARG's utility in marketing movies, but that relationship also reaches to other products like
automobiles,
video games,
TV shows, and even
perfume. Many of us are actively exploring the possibilities for making a living by making ARGs with our own intellectual property; but even some of those
rely on marketing dollars to succeed -- as the flip side of the ad coin: the main event content, and not just a lead-in to something else.
So it's fair to say that the fortunes of the ARG are vulnerable to the same invisible forces that turn the tides of the ad world. But how do those fortunes do in bad times, traditionally? How have they been doing, and how are they projected to do?
Well, if we look backwards, what we get are bad news. Typically during a recession, ad and marketing budgets are the
first cuts a company makes (despite the
questionable wisdom of making cuts like that -- hey, a business is only as rational as the people who run it). And that's
exactly what's happening right now. I won't sugar-coat this: It's ugly out there.
Or is it? It turns out this is one of those topics where experts can't seem to agree on what's going on, or how bad it is.
The Economist has a fairly rosy take on the future of online advertising, considering the gloom and doom found in other industries:
This week eMarketer, a market-research firm, predicted that online-advertising spending in America, which makes up about half the global total, will increase by 8.9% in 2009, rather than the 14.5% it had forecast in August. The firm thinks search advertising will grow by 14.9% and rich-media ads by 7.5%, whereas display ads will grow by 6.6%. In short, online advertising will continue to expand in the recession—just not as quickly as previously expected.
That doesn't sound too bad at all. But let's not forget that "online-advertising spending" can cover a lot of categories that have not a whole lot to do with ARGs: banner ads, Flash microsites, search engine optimization.
The Wall Street Journal digs a little deeper and tells us:
Areas like mobile, virtual worlds and widgets are expected to be hit particularly hard, as it remains unclear what kind of impact ads in these media have. These campaigns often reach a small number of people, and standard measurement systems have yet to be developed.
Ouch. That's the truth, folks, and boy, does it hurt. So what's the takeaway here for the ARG studio or the budding ARG developer (and, of course, for freelancers like me)? The studio will have to fight a little harder and talk a little louder to get a piece of marketing budgets, for one thing. As for me -- do I need to sell my house or go back to school to get my DBA certification? Is the well dry?
My answer: Don't panic. There's still hope for us in the ARG world. But it isn't going to come at the hand of juicy marketing budgets. If we want to thrive in this risky financial climate, it's clear we're going to have to forge a path for ourselves away from that comfortable marketing symbiosis. Let's look on the bright side; the golden handcuffs have broken off and we've been set free to find our rightful place in the world. Next up: Video games, another close cousin and maybe -- just maybe -- our role model for salvation.
This is the second part of a three-part series. Part 1. Part 3.
Tuesday, December 9, 2008 at 4:45AM
Reader Comments (3)
While ad budgets are going to shrink tremendously, they are going to shrink most aggressive for those channels that are part of a "frequency" strategy (so content publishers and media buyers should fear the most.) The counter-trend, towards "engagement," will shrink at a much smaller rate, but only if there are good methodologies for tracking and proving the ROI. ARGs, sadly, are great at producing engagement, but piss poor at measuring and proving the ROI. Result is likely: ARGs will be smaller budgets but more abundant.
ARGs, as a niche, are likely a historical artifact, devalued almost as much as the phrase "going viral" has devalued the real result (which is socialization of evangelization). For a freelancer, that means either expanding your skill set of what it is "you do" or finding ways to feed in the above-mentioned "smaller budgets, measurable ROI" in ways that larger studios won't or can't.
In the last Internet bubble collapse, which this will resemble but will be more expansive than just that space, the biggest trend was a shifting of the risks of results away from the advertiser and towards the content creator. Examples of high-risk-to-advertiser models: sponsorships, branded-entertainment-for-hire, CPM based advertising. Examples of high-risk-to-content-creator models: performance marketing, affiliate marketing, CPC advertising. In general, we'll see this same pendulum swing again -- sponsorships and WFH branded entertainment will take longer to close for smaller budgets as the emphasis moves towards "web as direct marketing" medium with the publisher-risk models. Upside of that: more ARG developers will, at the end of the day, own their content, but will see less money coming in while they are making it and more of it coming in along the "long tail".
I absolutely agree with you on the formula ARG as historical artifact. The kinds of things I'm wanting to do look like the Beast less and less... I just haven't found a better name for the kinds of things I'm trying to do that don't sound like I just strung a bunch of buzzwords together. O_o
I read what you write mere days ago on shifting risk to content creators. It's an interesting concept, and I'm not sure how it fits in yet with where my train of thought was heading. I'm sure we'll talk about it when I'm done expounding, prob. tomorrow morning (would have been today but the paying work is more pressing... you know how it is!)
But if you could actually PROVE that ARG-X would produce ROI for Brand-X by selling xWidgets ... then why not ask for no money up-front, but a percentage of every sale? Cost-per-sale, cost-per-lead, cost-per-click ... the advertisers that embrace those will take "as many as you can give me" because they are pre-priced to be an acceptible ROI. Throw in some negotiations to get them to pre-pay some of those "commissions" and you have something that would look remarkably like the royalty+advance system that we see in (almost) every other artform.
In the '90s, we made a free web service to show people where you were ranked in the search engines primarily out of frustration that people were selling those reports for thousands of dollars. It became extremely popular extremely fast, but any advertiser who bought space on it that strayed too far from that core topic (search engine positioning) didn't get many clicks. So we signed up for the affiliate program of a "buy it" software tool that did the same thing: their FAQ even listed our site as a competitor and had a question, "Why is WebPosition better than Rank This?" But they also offered 40% of the $295 to $495 sale price. We made a killing recommending our competitor and taking a piece of the action (and thought we were pretty clever when five-digit checks rolled in each month like clockwork, with a revenue stream that scaled as traffic did.) That revenue also established how the site was valued when we sold it six months later.
That's the kind of revenue solution that isn't going to be hit as hard in the advertising recession because every sale was, by definition, ROI positive from the "sponsor's" perspective. That's the kind of thing that ARG creators should be putting their smart little brains to. If Halo 2 had offered 40% commissions on the sales of the game generated by ilovebees, would the developers have made as much money in the long run? If we'd gotten 5% commissions on the sale of every Audi A3 we generated?
Not an easy nut to crack, but the genre (at it's core) is ideal for motivating that kind of behavior.
Can't wait for part 3.