In game advertising started in the Chinese market back in 2007 with a few game operators casually slipping a bit of code into some of their games, with a modest $8.77M ROI.  While this might seem a pretty decent take on an ‘experiment’, according to iResearch, it accounted for only four percent of the market’s total revenues of approximately $2B.

Fast forward one year later, with Chinese IGA revenues topping out at $19M.  Still a relatively small number in the overall scheme of things, but other Chinese firms started to take notice, with several independent third-party IGA providers popping up like daisies.

Two of China’s largest IGA providers, In-Game Media and Bihu.com both believe that the solid foundations laid over the past few years, combined with the current global economic downturn have prepared the market for explosive growth.

Bihu.com

Established in 2004, Bihu previous provided in-game value added services, i.e. in-game messaging, etc.  In 2008 they decided to regroup and refocus, turning the torchlight on in game advertising.  Back in April, Bihu announced their own independent IGA system with allows game developers and operators to insert advertising code into a game without altering the core technology.  Apparently, this was a wise move on Bihu’s part, as their client list shot up from 2 to 10, with major players Dell, Samsung and Intel among the roster.

“With 10 game firms accounting for over 20 online games, we have formed an online-game advertising network, which is a basic step toward attracting advertisers,” says Li Liujun, founder and CEO of Bihu.

Li says that the IGA market in China has been partially held back by the success of virtual item sales, and convincing gaming companies to form IGA relationships to diversify revenue streams.  “China’s game firms mainly earned money through the sale of virtual products, which has been very profitable. This means they were lacking in motivation to find new revenue models,”.  He also points out that a number of developers were a bit skeptical, as inserting IGA’s would require an alteration of the core code of the game, potentially having a negative impact on the game itself.  “Our independent system that can insert adverts without changing a game’s code helps drives our business,” says Li.

Li views the global financial downturn as a time ripe to harvest the benefits of IGA, as many companies will seek to lower costs, and invest more of their advertising budgets in the emerging online media.

In-Game Media

Echoing Li’s statements, strategy director at In-Game Media, Johan Wong says, “People will likely cut down on consumption and stay at home this year, which could lead to an increase in the number of game players,”

Given the global tightening of the collective belt, Wong predicts the Chinese market will see a notable increase in the overall average age of those playing online games.  This ‘raising of the bar’ will open a number of IGA opportunities for Chinese firms ranging from high(er) priced consumer goods and real estate.

Still a relative newcomer, opening in January of 2008, In-Game Media, a subsidiary of Chinese online giant Shanda Interactive Entertainment Inc. had only been delivering IGA to Shanda’s own titles.  But in December 2008 the company opened it’s doors to further expansion, signing contracts with 20 games companies across China.

Over the course of 2008, In-Game Media developed a number of IGAs for Shanda, their most successful involving the Puma brand in Shanda’s Crazy Kart racing game.  In-Game Media was responsible for the Puma branding of virtual characters clothing, which offered users the opportunity to enter and participate in specialized promotional races via the Puma website.