CAMPAIGN-I: Spotlight on: Online Gaming - Will gaming be the next victim as online advertising suffers? As Freeloader closes shop, Deborah Bonello reports on the future of online gaming

How many times have you heard the old adage that the internet isn't

about selling, it's about communication and entertainment? If you're

mixing in the right circles, then it should have been about a million

times, yet it seems that in the storm that's battering the online

advertising market, even online gaming isn't sacred or safe.



Gaming has always been lauded as the most sticky content for internet

sites, but the section has seen a series of dotbombs of late. Perhaps

the most prominent was Freeloader, owned by the games development

company Pure Entertainment, which announced that both it and Pure would

be winding down over the next few months.



At the final count, Freeloader had more than 750,000 unique users and in

January it recorded 9.3 million page impressions. The dotcom's business

model, which allowed users to play games online or download them to play

offline, was based entirely on advertising and sponsorship revenue.

Brands could advertise on banners within the games themselves or using

various pop-up online technologies.



Freeloader, like everyone else, suffered a lull in its ad revenue during

January and February but according to a statement, the business was back

in line with profitability by March. It spent a mere pounds 500,000 on

its entire ad campaign and so can't be accused of frittering its funding

away on marketing. Harry Holmwood, the executive deputy chairman of

Freeloader and managing director of its UK office, said that the site

was recording an average click-through rate of 6 per cent on its ads.

And games on the portal were high quality - Pure also developed games

for the PlayStation and Nintendo - so what went wrong?



Holmwood blames the downfall of the site on third-party ad sales

networks rather than the bottom dropping out of the online ad industry.

Unlike Freeloader's UK online ad sales, the US and Europe were handled

independently.



'If we'd had the same kind of in-house sales team in just one of the

other countries, such as Germany, that we have here in the UK, then we'd

be profitable now,' Holmwood says. His accusations echo those of many

industry watchers. Last year, Future Publishing, which owns the internet

and games brands PC Format and PC Gamer, took over the online ad sales

for Barrysworld from Real Media to provide the portal with the

specialist sales service which it needed. Not specialist enough, as it

turns out.



Barrysworld was another dotcom casualty this year, although it was

rescued by Electronics Boutique.



So is it to do with specialisms, or is Holmwood just looking for a

scapegoat?



Dominic Mansour, the associate director of Quantum New Media, says:

'While the internet is a specialist area, the traditional rules of

planning and buying apply. The traditional media agencies haven't been

divided up according to different market sectors, so why should the

online agencies be any different?'



This could well be the case, but the online ad network DoubleClick

realigned into industry- focused teams last year, as did Grey

Interactive. Each media owner and online agency has its own philosophy

about the method of implementing digital tasks - does a platform which

has always prided itself on niche marketing and one-to-one capabilities

require niche-focused industry teams in order to sell, plan or buy more

efficiently? After all, digital agencies have to get much more involved

in their clients' businesses than traditional advertisers. Or is

Freeloader's just a plain and simple case of a shrinking market?



Uproar.com is another online gaming website with a similar business

model to Freeloader. It offers in-game ads, banners, pop-ups and

sponsorship opportunities with brands. The company, which has just been

bought by Vivendi, also owns the recently relaunched online gaming

portal Flipside.



Uproar boasts around 450,000 unique users - substantially less than

Freeloader did when it was in its prime - and yet the managing director,

Alexandra Tickle, is not remotely phased by Freeloader's demise.



'Our games aren't hardcore games,' Tickle says. 'They're dip-in, dip-out

branded games like Catchphrase and Family Fortunes. Our average user

session lasts around 40 minutes. As the popularity of online gaming

comes to fruition, it's one of the best atmospheres for advertisers to

be in because the people are relaxed, chilled out and receptive to

advertising.'



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