An ad for the Xbox Kinect last year showed people using gaming system to create symphonies, teach astronomy with beautiful animated travels through space, and perform brain surgery. Now, ads on the Xbox are encouraging users to talk about where they like to eat sandwiches.
On Wednesday, Microsoft Corp. is launching a beta test in Canada of this new interactive advertising, called NUads, on its popular gaming system. It allows users to interact with the ads, for example by answering poll questions with their opinions on the product, or just-for-fun quiz questions about the plot of the ad to keep the viewer more engaged.
The company previewed the launch of NUads at the Cannes advertising festival in 2011, and began testing them with a select group of advertisers in the U.S. this spring, including Toyota and Unilever. Its expansion to Canada begins with test ads from Subway Restaurants and Rogers Communications Inc. Subway's ad includes a question about where users would eat the Tuscan Chicken Melt.
But while it might sound silly, Microsoft, which owns the Xbox platform, claims its interactivity leads users to spend more time with its ads and pay more attention to them – since the system allows people often to choose which ads they watch. According to its research, Xbox's ads over all have a click-through rate of 1.1 per cent, which seems small but is much higher than the usual rates that people click on banner ads online. The system's audience is 4.4 million people in Canada, who together rack up roughly 87 million total hours of usage time per month. The beta test in the U.S. of the new advertising has already surpassed their viewership targets.
NUads (the name stands for "Natural User-interface Advertising") can run in Xbox Kinect's channels where banner ads usually appear, including on the system's home screen. Once the test period is complete, Microsoft plans to roll out the ads in its TV apps, as well as its Xbox Live programming, which would bring them even closer to the goal of reinventing the classic commercial break.
The move comes as online video advertising is gaining steam. While TV is still overwhelmingly dominant in terms of marketing spend, advertisers' attitudes toward it are changing. According to a study also to be released Wednesday by IAB Canada and digital video advertising company BrightRoll, 68 per cent of advertisers surveyed think online video is as effective or more effective than TV. Xbox, as a device that many people use to access digital content on their TVs, could stand to benefit from the push for digital video advertising. It also includes "pre-roll" ads before much of its broadcast content, such as Disney Channel programming. On average, 45 per cent of the requests for proposals that the advertising agencies surveyed received this year involved an online video component. That was up 10 per cent from the previous year.
"Thirty-second spots have been around for decades – high production value, beautiful pieces of creative. But what's been missing with the 30-second spot is interactivity," said Eyal Zilnik, sales solutions executive in gaming with Microsoft Advertising.
The Rogers ad, which is also part of the test period, makes its interactive element into a game by asking users to guess how many devices were featured in the spot. It's a diversion for the viewer, but it can also amount to real-time market research for advertisers in what would otherwise be a passive television spot. The Rogers ad also asks which device customers would most likely need a faster Internet connection for, and Subway's ad polls customers about where they eat sandwiches. They can answer by moving their hands to check a box, or by speaking to the system.
"We're able to engage our audience in real time, and get feedback directly from our audience," said Kathleen Bell, director of marketing for Subway Restaurants in Canada. "We just want to be part of something that's new, innovative, and allows us to reach people in a new way."