Alright, pretend you own a big company, with lots and lots of money, and you have a new product you want to market. Now, here is my proposal to you: I want you to sponsor my video game. I want you to loan me 25 thousand dollars. I will be contractually obligated to pay you back within 2 years, interest free. That's the bad, here's the good: 15k of that 25k will be spent on marketing for my video game, and consequently, your product. This marketing will be on major websites, magazines, and TV stations. Every ad for our game will contain your product in it. For example, at the end of our TV commercial, or at the top of our magazine/web ad, it will say something like, "The official game of [your product]". Not only that, but a banner ad for your product will appear at the top of our website at all times. You will also get an ad inside our game. When the game is opened, it will display our logo, followed by something like, "Sponsored by [your product]". The other 10k will be spent on development costs. So, what do you think? Is this a good deal or what? I mean, this is basically FREE marketing for your product. You get all your money back within 2 years. You lose nothing, yet you gain a ton of exposure.

Since I get no return on my investment -- since I don't get to charge you interest -- I'm already looking at this pretty unfavorably.

So prove to me that the 15k you're spending on marketing for your video game (which includes my product) is a better deal for me than if I were take that 15k and spend it directly marketing my product. Especially your deal features the effective tying-up of an additional 10k for two years, which I get nothing from (and in fact, I'm losing either the interest I could be gaining on that 10k, or the value of whatever I could be producing with that 10k).

This looks like a complete bum deal to me, I wouldn't go for it. You get too much, I get nearly nothing.

[Edited by - jpetrie on October 5, 2007 8:31:04 AM]

Quote:

Original post by jpetrie So prove to me that the 15k your spending on marketing for your video game (which includes my product) is a better deal for me than if I were take that 15k and spend it directly marketing my product.

Because now 15k is out of your pocket. Forever.

It's either direct marketing for 15k, or "inclusion" marketing for free (basically). Although your ad on my website and in my game is direct.

I think the lost interest is a good point though. Didn't think of that.

[Edited by - J Force on October 5, 2007 8:36:28 AM]

Quote:

It's either "inclusion" marketing for free (basically), or direct marketing for 15k.

It's not "for free." I lose that 15k for two years, during which I cannot use it for my own developments (such as direct marketing) nor am I gaining interest. It's kind of like opportunity cost.

Forgetting the opportunity cost issue, you have to convince me that by spending $15k to market my product your way generates about as much sales for me as direct marketing would. You have that $15k I get back after two years as a buffer, so if I could be expected to generate $45k in sales over two years from direct marketing (netting $30k), you basically have to show me you can generate me $15k in sales for me over those two years -- that way, if $15k is all the money I have, I end up with $30k in my pocket after two years either way.

Of course, this ignores and simplifies a lot of time-varying things, but that's basically how I'd look at it. I'd be skeptical that an ad campaign for your game that happened to include my product in it somewhere would be able to generate even 50% of the sales volume for me as a direct ad campaign would. Now admittedly, I don't know much about advertising returns, but I'm still not too hot on your idea, and having you try to tell me that your plan is "free" for me only makes me scoff all the louder, because it suggests you haven't considered the fact that I could be doing other things with that $15k entirely unrelated to advertising that might be better ROI for my company.

You also missed the timeliness issue. If I have a new product that is ready or nearly ready for its big release release, why would I want to wait an additional two years before seeing this somewhat risky game?

In order to get things out the door quickly, I would prefer a completed or nearly-completed indie game that fit my marketing needs. Then I'd offer to purchase the game if they add my additional marketing component, or at the very least license it to me exclusively if an outright purchase isn't possible.

To invest money into an unknown product from an unknown company for minimal returns (at best) is a really bad business decision. That's one reason why startup game companies struggle for funding.

You are up against the likes of WildTangent, who have ties to a variety of marketing communication channels, an existing games portfolio, proven technical expertise, and an experienced management team hooked up with top VC firms. Good luck.

> This marketing will be on major websites, magazines, and TV stations.

You are under-estimating the costs of a marketing campaign. A company that does business nation-wide is going to require a lot of GRP (Gross Rating Points) for its marketing campaign to be effective enough to be worth the investment.

> I will be contractually obligated to pay you back within
> 2 years, interest free.

As Frob said, the customer company will be tying up US$25K for two years with no immediate results to show for it. Two years is a lot, and in many industries two years correspond to 3 or 4 complete product cycles.

Lastly, the company you are doing a game for is going to lend you THEIR brand in the process. It's the difference between "The official game of Joe's Pizza" and "The official game of the Vancouver 2010 Winter Olympics". In the latter case, your customer will rightly ask why should they pay *you* for use of *their* brand...


I think you need to work your business plan the other way around. Instead of YOU taking charge of your customer's marketing campaign, just be a component of *their* marketing campaign. Here is some reading for you:

http://www.news.pharma-mkting.com/pmn66-article03.htm
http://www.brandweek.com/bw/search/article_display.jsp?vnu_content_id=1003119314

We're here talking about very small (600 seconds of gameplay *max*) casual games that are integral to a product's web page and marketing launch campaign. Highly targeted and customer-specific. Something that isn't 2 years in the making...

Hope this helps.

-cb

About the timeline: it wouldn't be as bad as you think. The game would be released within 1 year. And we would already bring in revenue way before that through affiliate sales (or perhaps our own portal?) and additional advertising on our site. So the promotion for our game/your product would start within a couple months after you hand out the loan.

But either way, I think I'm convinced that this is a bad idea, based on your responses here, and at the other forum I posted this at.

This is extremely unlikely to happen.

Quote:

I want you to sponsor my video game. I want you to loan me 25 thousand dollars. I will be contractually obligated to pay you back within 2 years, interest free.

jpetrie and cbenoi1 are correct. The company gains NOTHING from this deal. No interest... and what you're describing is an unsecured loan. If you default, the company has to spend more money taking you to court to recover the money. If you have no assets, then the company writes off a bad debt.

Also, companies are very choosy about who gets to use their brand name.

A company will ONLY give money for sponsorship when the company will gain an enormous amount of benefit from it. Where I work (a non-games and non-IT company) we get many, many, requests for money. 99% of them have no hope because the company gains zero benefit.

(And that 15 grand wouldn't buy much airtime on TV. TV ads are mega-expensive.)

If you're serious about the casual games & sponsorship kind of thing, you could always do free games for charities to get a portfolio together. A company *MIGHT* look more favourably on sponsoring a game linked to a charity (there was one about ocean overfishing floating around a week or so ago) because the company gets kudos within a community for it.

The game MUST align with the company's business.

ie, if the game is about responsible pet ownership and looking after your dog, etc, then a pet food company *MIGHT* be interested in sponsoring it, because of the higher brand awareness & the warm and fuzzy feeling with dog owners. But that game is most likely going to have to be part of a wider campaign for either the charity or the company.

Even so, you really need a strong business case to get anywhere. And that company's marketing people are more likely to approach a game company than the other way round.

Anyway, these are just some food for thought ideas.... good luck!

[Edited by - Hobbesian on October 5, 2007 8:01:45 PM]

Quote:

Original post by Hobbesian (And that 15 grand wouldn't buy much airtime on TV. TV ads are mega-expensive.)

It would buy me a heck of a lot of time on G4TV. And that's the main network I would wanna advertise on.

I don't know if you've inquired as to how much just a magazine ad is, but some publications could easily blow your $15k in three months or less for just one full-page 4-color ad.

In addition to this, at only a 12% return over two years, the company has already lost $6000 right off the top. Not to mention the opportunity costs mentioned above.

I'd also be weary of anybody that promises me such a great marketing campaign from a product that is produced in only a year and for under $10k. If I could get that good a programmer or artist for $10k/yr I'd hire them myself.