Penny Arcade: the ugly, profitable details about Xbox Live dashboard ads

#1
Full Article here: Ads up, games down: The ugly, profitable details about Xbox Live advertising

Advertisers buy clumps of people who will see their advertisement, and the cost for these ads is measured by what’s called the “CPM.” The acronym means cost per thousand, with the M being the Roman Numeral for 1,000. If a site sells advertising space at a $5 CPM, the advertiser pays $5 for every 1,000 people who see the ad.

Microsoft sells ads on the Xbox 360 Dashboard at a CPM of between $19 to $23, depending on the ad placement and the type of ad. You’ll pay an extra 20% for animated or video ads, and if you’d like to select specific demographics for those ads, you’ll pay an extra 15% per “targeting criteria,” with the maximum bump being 30%.
It gets crazier: The data shared with the Penny Arcade Report shows that Microsoft estimates 16 million impressions for an ad during a holiday, so an ad with a $21.50 CPM would cost you a stunning $344,000 to control that spot for the day. You can also buy half-day increments. Microsoft estimates that ads during a normal weekday in the first part of the year enjoyed 9 million impressions, with 15 million impressions over the weekend. Based on these numbers, Microsoft estimates that it would cost $193,500 to control the entirety of an ad spot for your average Monday with what’s called a “road block” ad. Start layering on the features, however, and that price can begin to rise very quickly.

It would be hard for any company pass up this amount of revenue, and the number of ads being sold is only limited by the amount of ad space Microsoft can fit on your screen; the amount of marketing a design can deliver to the audience may trump both aesthetics and ease of use for gamers. “If you notice the dashboard redesign added in more spots for ads than were on the blades so they have more inventory to sell,” my source explained.
I contacted Microsoft and asked how much advertising revenue impacted the profitability of the Xbox 360. “We don’t share this information publicly but we can tell you that, since 2010, the advertising business has grown 142%,” I was told.
The Next Web:
That works out to, cue Google’s calculator functions, top tier pricing of CPM rates [...]

Millions of ad impressions per day, with larger viewer tallys on the weekends, at double digit CPM rates means that ads on the Live Home screen are bringing in tens of millions of dollars a year. The total amount could be 9 figures yearly.

However, it is the demographics of Xbox users that drive the high CPM rates. The young male population group is notoriously hard to reach, making these specific ad locations worth more than they might otherwise be, if they were viewed by a mostly different subset of the larger citizenry.
 
#4
It gets crazier: The data shared with the Penny Arcade Report shows that Microsoft estimates 16 million impressions for an ad during a holiday, so an ad with a $21.50 CPM would cost you a stunning $344,000 to control that spot for the day.
Holy shit.

I shudder to think what the 720 dashboard will look like.
 

John Harker

Definitely doesn't make things up as he goes along.
#5
Whoever is paying those CPMs is not particularly good at negotiationing.

That said, this is the same model for everything.
There is nothing unique about the way this ad model is designed
 

Data West

coaches in the WNBA
#9
I'm surprised it costs so much. Do people actually go out and buy stuff because it's on Xbox live? I saw the WoW ad and went, 'wow.. WoW?'
 
#12
I asked Microsoft about the inability to find games, and was offered a pat answer. “A core principal for advertising on Xbox LIVE is to invite not interfere with the user experience and we diligently work with brands to ensure they deliver engaging experiences that are relevant and add value to the Xbox LIVE community,” a representative told me. “More broadly, we are also working very hard to make it easy for subscribers to find the entertainment they are looking for. One example of this is Bing Voice Search on Xbox, which is getting even easier to use. Now you can search for your favorite entertainment using simple voice commands.”
The search bar is nice finding exactly what you're looking for but obviously it doesn't help people discover new games. What a bullshit answer.

The gui will be optimized for 1080p displays so they can put in even more ads in.
I'm thinking it will look like this but with the game you're playing in the middle instead:

 

Kelegacy

XBOX - RECORD ME LOVING DOWN MY WOMAN GOOD
#13
Xbox live looks exactly like a platform that should be free. Load up the dashboard and its the same for a paid user as it is for a free user.

This just goes to show that Live should be free. We are helping pay for it just by using the machine online due to advertising.

Bonkers.
 
#16
That said, this is the same model for everything.
There is nothing unique about the way this ad model is designed
Yeah, really. Absurd amounts of money (for advertising on a paid service) being made aside, this isn't SHOCKING NEWS. The dashboard ads aren't a good thing, by any means, but it's also not some radical shift in advertising business.
 
#19
Thank you for your $60. Now please enjoy our ads so that we can make a shit ton of money.
LOL MICRO$OFT AMIRITE!!!

Seriously, they're a business, they're supposed to make money, why are we grudging them the chance to make money? If someone wants to pay $350k for an advert, let them. It's their money.

The adverts really aren't intrusive beyond the first day. You'll know exactly where everything is to click to it without even looking, and if you want a game just type it into Bing and you'll have it in seconds. The only people bothered by adverts are the people that set out to notice them. Everyone else can just get on with life.

Also, your $60 is for online play and some TV stuff. It has LITERALLY NOTHING to do with advertising. There is no relation whatsoever.
 
#21
this is one of the reasons why microsoft lost me (as an xbox customer) and i won't go back because it only getting worse.

haven't booted up my 360 in 2 years now.
 
#26
Here's a pro tip: never use the main dashboard for anything. Hit the guide button and bring up the old blades. Everything is faster to get to and there are no ads.
 
#30
Yup. They're making money hand over fist on Xbox 360 owners, and yet still charge you to play your games online. The 360 will most likely be my last Microsoft console.
MS has a history of starting off well with something and then eventually feeding it whole to the marketing and bean counter sharks. It was a nice run for a while there though.
 
#32
LOL MICRO$OFT AMIRITE!!!

Seriously, they're a business, they're supposed to make money, why are we grudging them the chance to make money? If someone wants to pay $350k for an advert, let them. It's their money.

The adverts really aren't intrusive beyond the first day. You'll know exactly where everything is to click to it without even looking, and if you want a game just type it into Bing and you'll have it in seconds. The only people bothered by adverts are the people that set out to notice them. Everyone else can just get on with life.

Also, your $60 is for online play and some TV stuff. It has LITERALLY NOTHING to do with advertising. There is no relation whatsoever.
I'm used to corporate apologists by now but this is still a crazy post.

Just wanted to point that out.
 
#33
I would like to see the breakdown of non system related ads like Dorittos and gaming stuff like showing a game like Minecraft is available. Are publishers paying for placement on the dashboard or is this outside gaming companies?

Thank God for the XMB.
Actually I wonder what Sony charges for the advertising ticker on the XMB that can't be removed.
 
#35
Don't know how people still put up with it. The dashboard gets progressively worse each update all the while having members pay a premium for services free on other platforms.
 
#36
How much time do people stare at these ads? Always wondered, because well I usually boot up to play a game.
The good news is that it doesn't matter how long - to the system, at least.

Don't know how people still put up with it. The dashboard gets progressively worse each update all the while having members pay a premium for services free on other platforms.
Because it takes me 2 seconds to hit "Play Game" or "Quickplay" if not less.
 
#38
Thank God for the XMB. Hopefully Sony doesn't trash that next gen.
Sony would be stupid not to. So MS is making tons of money on Live subscriptions, raking in money hand over fist on ads, and people think Sony is not going to try and get a cut of the pie? Its not like free multiplayer and limited ads are helping them sell consoles. If Sony doesnt implement something similar next gen someone should get fired.
 
#40
LOL MICRO$OFT AMIRITE!!!

Seriously, they're a business, they're supposed to make money, why are we grudging them the chance to make money? If someone wants to pay $350k for an advert, let them. It's their money.

The adverts really aren't intrusive beyond the first day. You'll know exactly where everything is to click to it without even looking, and if you want a game just type it into Bing and you'll have it in seconds. The only people bothered by adverts are the people that set out to notice them. Everyone else can just get on with life.

Also, your $60 is for online play and some TV stuff. It has LITERALLY NOTHING to do with advertising. There is no relation whatsoever.
And yet I don't have to pay anything to get the same TV stuff and play games online on the ps3.
 
#43
LOL MICRO$OFT AMIRITE!!!

Seriously, they're a business, they're supposed to make money, why are we grudging them the chance to make money? If someone wants to pay $350k for an advert, let them. It's their money.

The adverts really aren't intrusive beyond the first day. You'll know exactly where everything is to click to it without even looking, and if you want a game just type it into Bing and you'll have it in seconds. The only people bothered by adverts are the people that set out to notice them. Everyone else can just get on with life.

Also, your $60 is for online play and some TV stuff. It has LITERALLY NOTHING to do with advertising. There is no relation whatsoever.
I'm sure they're bleeding money on all those peer to peer connections as well as the "TV stuff"...

Fact is, they really don't need those $60 a year to cover their costs, because the advertising already covers it and then some. Either drop the paid ads (aka not the new XBLA releases) for gold members, or drop gold & silver differentiation all together.
 
#47
And yet they still upped the fee from 50 to 60. Haha.. im a part of the problem tho.
Tho I'm glad to say i've yet to ever click on an ad.

If only MS would subsidize the sub fee to 40 instead with all that money theyre making.. >_>
But who am I kidding.
 
#48
Don't know how people still put up with it. The dashboard gets progressively worse each update all the while having members pay a premium for services free on other platforms.
I don't get how people continue to bitch about this. If you know the alternative press on. It is amazing how much energy people spend on things like this and will be the same people that claim they just want to play games. Go in the settings launch game from disc insert, done.
 
#49
Millions of ad impressions per day, with larger viewer tallys on the weekends, at double digit CPM rates means that ads on the Live Home screen are bringing in tens of millions of dollars a year. The total amount could be 9 figures yearly.
It sounds like a lot, but in the console scheme of things it's almost not.

For example, if MS ships 10m consoles in a given year (it's actually closer to 15) a $10 price cut would cost them 100m in revenue right there. Or in other words as much as they supposedly may make for a full year of ads, would only "pay for" a $10 price cut on the hardware.

I mean sure, it's hardly pocket change no matter how you break it out, but like I say, you can toss around billions in the console game pretty easily, this article speculates they may pull in as much as 100m per year in ads (that would be on the high end)
 

Pie and Beans

Look for me on the local news, I'll be the guy arrested for trying to burn down a Nintendo exec's house.
#50
Wonder how much stuff like this boils Sony exec's blood. Their system is free to play online, doesn't fuck customers eyes full of ads at every given second, and yet for their own misdemeanours most of the internet refuses to forgive them, villifies them at every turn, and they experience lower sales on their hardware.

But if they dared add ads, or went subscription for online, the internet shitfit would be legendary. Real catch 22 shit because Microsoft took their 'community' as hostages fast and early.