More Than a Game

TV advertising is tired. Internet banners have stopped clicking. What’s next? Play the “advergame.” America’s addiction to video games is leading the way to a brand-new advertising platform with astounding click-through rates, play times, and peer-to-peer potential.

How many 2002 Super Bowl spots made you sit up and take notice? When was the last time you saw a banner ad that really clicked with you? Madison Avenue is in a creative slump. That’s why marketers are testing alternatives to the 30-second spot and the pop-up ad. Their latest experiment: the “advergame.”


America’s growing fascination with video games is hard to exaggerate. Last year, U.S. sales of video-game hardware and software rose 43% to hit $9.4 billion — which exceeded Hollywood’s box-office receipts of $8.35 billion. It’s only natural for advertisers to want to tap into that enthusiasm and to try to exploit it.

“Games are not just about entertainment anymore,” explains Keith Ferrazzi, president and CEO of YaYa LLC, a Los Angeles-based firm that produces and serves low-bandwidth, high-resolution advergames for clients including Burger King, Ford, and IBM. “We have a new medium that is fundamentally different.”

A software company with Hollywood flair, YaYa spent its first year developing a proprietary technology that can stream 3-D, console-quality games to millions of players via a 33-K connection. It also logs each player’s every move — from the make and model of your dream race car to your zip code and birth date. While many of its online-advertising peers were hitting the skids, YaYa grew its client list and actually hit profitability. The company built a SimCity-like game for Siemens AG, a Pepsi racing game featuring a Britney Spears look-alike, and a game for the Roundarch consulting group that helps chief marketing officers diagnose their company’s CRM capabilities.

What’s the attraction for advertisers? “Interactive marketing allows a company to enter into a relationship with a new consumer right there in the medium,” says Ferrazzi, who left his job as chief marketing officer at Starwood Hotels & Resorts Worldwide to head up YaYa in November 2000. According to YaYa’s data, approximately 50% of consumers who receive a game through promotional email play it for some 25 minutes. Players can then forward the game to a friend with a message, an all-time best score, and a replay of an especially impressive jump shot or spinout. Ninety percent of those who receive an email challenge play the game and pass it back. That level of peer-to-peer marketing is unparalleled.

Ferrazzi also wants to challenge the economics of advertising. So with the debut of its software, YaYa introduced a new metric — “cost per time engaged” — as an alternative to cost per impression.

James Nail, senior analyst for Forrester Research, argues that this metric fails to gauge the efficacy of advergaming. “The real question about advergames is, Does the experience do anything to improve a consumer’s brand perception and intent to purchase?” he says. “Who cares how long a consumer plays if the advergame doesn’t move product?”


But advertisers think YaYa is on to something — especially when campaigns can start as low as $150,000. Perhaps that is why, in the midst of an advertising drought, YaYa has been reeling in clients such as DaimlerChrysler and Paramount Pictures. Even AOL and Yahoo are knocking on Ferrazzi’s door. “We built this company as an alternative to traditional online advertising,” he says. “Everyone is talking about how banner ads suck. Well, here’s your alternative.”

Learn more about YaYa on the Web (

Sidebar: He Got Game

When Atari introduced Pole Position in 1982, the racing game became an arcade classic and set an industry standard. So it’s no surprise that YaYa LLC, run by CEO Keith Ferrazzi, has created a multiplayer racing game that shadows the classic.

YaYa’s Honda racing game aims to engage customers with sleek graphics, 3-D replays, and replica Hondas — all streaming over the puniest Internet connection without missing a turn. But unlike PlayStation’s ever-popular Gran Turismo, YaYa’s racing game collects psychographic data about its players.

A market-research tool in disguise, the Honda advergame asks players to submit their age, address, occupation, and hobbies before playing. This line of questioning has struck some experts as intrusive and ineffective. “Why would I fill in endless fields of information when I can go turn on my Xbox and play a game instantly?” asks former Scient chief marketing officer Christopher Lochhead, who now runs a consulting firm.

Honda asked the same question and decided to reward registrants by entering them in a contest to win a 2002 Honda CR-V. Players took the bait. In the end, nearly 80% of registered users played the game — for an average of four and a half minutes. Based on registration data, Honda says that it was able to project buying trends and bolster internal market research.