Rovio launches advertising division, plans in-game product and brand placement

Execs from Apple, MTV and Millennial Media to head up Rovio's ad business

Angry Birds maker Rovio Entertainment formed a new advertising division within the company, dubbed the Brand Advertising Partnership Team, that consists of high-level executives from Apple (NASDAQ:AAPL), MTV and Millennial Media (NYSE:MM). The company said the new business will create custom advertising programs for brands like McDonalds, Warner Brothers, Campbell's and others.

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The effort by Rovio signals a major new step in the company's business model. Previously Rovio partnered with third-party advertising networks in order to insert ads into its mobile games. According to Ad Age, those third-party ads were almost an afterthought for Rovio, which generated the bulk of its revenues from paid app downloads.

Now, with its new advertising division, Rovio plans to directly approach major brands and allow them to market their products inside Rovio games. The company did not provide details or examples, but such a scenario could allow McDonalds, for instance, to insert its products into the background or foreground of an Angry Birds level--or have the products play a role in the actual mechanics of the game itself.

This type of in-game advertising has been discussed for years in the console gaming industry, and video game vendors including Sony and Electronic Arts have dabbled in the strategy, but it is by no means a widely accepted practice. Nonetheless, as free-to-play games continue to gather steam, advertising dollars likely will grow into a significant revenue source for video game vendors, both console and mobile.

"The model of simply placing standard display ads in online and mobile properties is not necessarily strategic for the majority of tier one brands, and that model was in need of disruption," said Michele Tobin, head of Rovio's North American brand advertising partnerships. "Rovio's fan-first approach and engaged audience creates more native, integrated advertising experiences that more closely align to brands' overall marketing goals."

Rovio "has previously only offered advertising through third-party networks for standard display," Tobin told TechCrunch. "Now, the new team will not only offer mobile/online display opportunities, but they will feel more native and will provide deeper fan-first integrated ad experiences. For example, the new team can offer in-game advertising as well as integrated brand partnerships leveraging characters outside the game. McDonald's used them in their television commercials, point of purchase, etc."

Rovio boasts that it is in a unique position to offer mobile users' eyeballs to advertisers. The in May said it has recorded over 1 billion downloads, and in December it said it had 263 million monthly active users. And Rovio said its YouTube video channel, which houses dozens of custom animations, has garnered nearly 1 billion viral views. 

Executives joining Rovio's new team include Betsy Flounders Novak, formerly of MTV, and Matt Pfeffer, formerly of Millennial Media, in the United States. Rovio's European efforts will be headed by Todd Tran, formerly EMEA General Manager of Apple's mobile advertising business.

For more:
- see this release
- see this TechCrunch article
- see this Ad Age article

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