Madison Avenue comes to the Valley

One of the most significant effects of the new digital world is the challenge it presents for advertisers. With TiVo and other digital video recording systems now spreading, consumers can easily skip through TV ads. This undermines the buying of ads on TV and motivates the search for new ways to tap into consumer eyeballs. Google’s entire business model revolves around its creative ways to advertise goods and services. A key player in the gaming world, Valley-based Electronic Arts, announced recently it is getting on board with new advertising approaches. Game advertising is a rapidly growing revenue stream – expected to reach more than $700 mn a year by 2010. As this story notes, Microsoft is getting in on the action, too, having purchased one of the leading innovators in so-called dynamic advertising, Massive.

This new revenue stream presents a significant challenge to those who develop the content for these games. Some gamers at EA and other companies get stock options that allow them to get in on the action – but they pay a high price in long hours with little job security. The actors who provide their images and voices for the games, however, are in a different position as, essentially, casual employees of the industry. In recent negotiations with the advertising industry, the unions that represent the actors in ads basically punted on the issue, agreeing to modest increases in pay while conducting a 2 year joint study with the employers on the implications of the new technology without changing fundamentally the way working actors are compensated. Of course, two calendar years in technology is like two decades in the old economy so to delay confronting the impact of digitalization carries significant risks for their members. | 09/01/2006 | EA to embed ads that can be updated into 7 games