Innovation or Invasion?

Microsoft is making a bold bet on its latest batch of interoperable platforms. The Xbox 360 delivers games, TV, movies and music. It also integrates with their Windows Phone 7 and there are good sources that say Windows 8 OS will have Kinect as well as Xbox Live support. Microsoft is determined to gain access to the three main geographies of your life; home, work, and everywhere in between. Microsoft’s level of access to media and content, when compared to Apple’s or Google’s, is small but it’s starting to make significant strides into streamlining your digital life. The technology behind it is significant, it’s the stuff of sci-fi and if the strategy works, Microsoft will no longer be catching up to the rest of the innovators.

However, Microsoft is still a business that has an obligation to its shareholders to increase its value. This is why Xbox Live has ads, even at the gold level. The Windows Phone 7 has partnerships with AT&T’s U-Verse to deliver interactive tiles and features to their mobile customers. In the digital content and entertainment spaces at Microsoft, products are designed to give users a good experience and deliver content to the 35 million Xbox Live members and to its growing base of Windows Phone 7 users. In a very real sense, the cost of development, marketing and distribution is subsidized on the idea that these new products will increase the ability of Microsoft and its advertising partners to reach more consumers. That consumer data will then be churned through algorithms and ideally, the ads that you’re more likely to respond to are delivered to whatever platform you happen to be on.

That’s the context that surrounds Microsoft’s NUAds for the Kinect. They build really cool gear that you use to consume media and then use that platform to market to you. Ideally, the better gear they make, the more time you spend with their products. What’s really changed the game lately is the Kinect. We’ve always known that the Kinect had some pretty interesting marketing potential, but Microsoft was smart not to lead with that. It marketed the Kinect to new Xbox customers and made games that were family friendly and interactive but didn’t really capture the attention of the core gaming audience. As a result, Kinect won a world record as the fastest selling consumer electronics device. In 60 days, Microsoft sold 10 million Kinects, averaging over 130,000 units per day. While there’s no demographic breakdown of the new Kinect audience, it’s clear that the marketing campaign worked and now the Kinect and the Xbox 360 is in more households than ever.

What Are Kinect’s NUAds? Do They Really Expect me to Tweet an Ad?
The core of Kinect’s NUAds is interacting with an advertisement through gestures and voice. When this was announced, the near ubiquitous cry from gamers was that it was stupid. I saw people responding that they will not be tweeting any ads. I read articles where people were upset because Microsoft shouldn’t be sending them ads when they bought and own the Kinect. That reaction was easily predicted. Consumers often react negatively when they know they’re being marketed to when there’s no immediate perception of value. In this case, the announcement of NUAds through the Kinect didn’t deliver any inherent or perceived value to the audience. However, after going through the twitter feed of some of the people who tweeted about how shitty NUAds were going to be, most of those same people had either re-tweeted a promotional tweet to win something or they’ve actually sent out tweets to share in order to win something.

While some would call this hypocrisy, it’s actually smart behavioral science. When the potential value of the result is greater than the energy invested, it’s a net win. Most people, not all, will see winning a copy of a new game as a high value, totally worth the one or two clicks required to re-tweet it. The consumer lends their time to send a marketing message to their network and they have a slim chance to receive something they want. With NUAds, the stated resistance is common and popular. In reality, research shows us that participation in shared marketing is directly related to the effort required to participate. The most common one would be to “Like” something on Facebook or to re-tweet something. These take minimal effort and tend to be good ways to increase your audience. For NUAds, the barriers for participation are vocal, physical or both. So if your NUAd asks you to say “tweet this” for a chance to win a prize, the smart money is on you tweeting the ad because the perceived value is worth the effort involved, even if you don’t like the idea.

Another aspect of the Kinect NUAds is the ability to physically interact with an advertisement. There’s very little grey area in this aspect. There’s something about this that just feels creepy and invasive. The feeling is similar to the “uncanny valley” but it’s directed at the interaction between the consumer and the ad. Because there aren’t any videos of those types of ads yet, it’s rightfully met by skepticism. Marketers know that the more someone can interact with their marketing, the more likely they are to perform the desired action.

What Does Kinect’s NUAds Mean for Marketers & Gamers?
From a marketing and behavioral perspective, if a marketer can get you physically and mentally invested in an advertisement, the probability that you’ll perform the requested action is significantly higher. The longer you spend interacting with that ad, the “stickier” it becomes. The more senses that are involved with the ad, the more likely you are to remember not only the ad, but the experience of that ad. This correlates into a higher response from consumers. Even if you don’t immediately run out and buy something, the next time you need that product, you’re more likely to remember the ad and act upon it. For example, I watched Cars 2 with my 5 year old son, even though I knew it was a 90 minute ad for little toy cars, I enjoyed it and the next time I’m in Target with him, I know he’ll be asking me to buy Finn McMissile, you know, the one with the wings. From a marketing perspective, because I’ve seen the movie and enjoyed it, I’m more likely to buy one. Kinect NUAds rely on those behavioral patterns to make their ads more engaging, more entertaining, more interactive and more effective.

From a consumer perspective, the idea that an advertisement requires you to actually, physically interact with the ad itself seems manipulative. That’s because it is. It’s not a way that we’ve experienced ads before. Because NUAds are asking us to perceive, interact and respond to marketing in a new way, there’s a natural resistance. However, if marketers do their job right, they’ll create clever scenarios that will not only communicate the value, but will be fun too. If they can do that, then the NUAds will show their worth. At first, expect the advertisements to be contests. Marketers know that the value of the prizes will have a higher chance of overcoming your skepticism, which will entice you to participate. If that experience is fun, eventually, you’ll participate in the ads because they’re fun. If advertisers take this new ad platform and make the NUAds generic and stupid, the ad campaign will fail and it’ll create a vocal (and deserved) backlash.

Kinect’s NUAds Aren’t Just About the Ads, it’s About Discovery & Connection
The last point about NUAds that needs to be pointed out is that there’s a clear integration of the activities we do on our phones, computers and tablets that’s being developed for the Xbox 360, future PCs running Windows 8, the Windows Phone 7 and the Kinect. Microsoft is adding Bing voice search to the Xbox Live platform that’s location aware. You’ll be able to search by voice for media from Netflix, Xbox Live, Hulu and potentially YouTube. For example, if I’m playing through a game and I can’t quite make it past a level, I can potentially search Bing for “walkthroughs”, select a YouTube result, then send that link to my phone or email to watch while I play that game.

While the Xbox 360 started out as simply a gaming console, it’s become the center of Microsoft’s home entertainment and media strategy. Seeing companies like Apple and Google continually evolve the technology, portability and behaviors of tech users, Microsoft knows that in order to stay relevant with as many people as possible, it has to change.

Will the Kinect NUAds be voluntary? They’ll have to be. Will they attempt to, at the very least, engage the gaming and Xbox Live community with advertisements that speak to us? They’ll have to. Will some of them be annoying and just simply stupid? Of course they will. Will I feel just a little bit dirty for tweeting an ad in the hopes of winning a sweet prize? Probably. Will this additional revenue provide a secondary benefit of lowering the cost of Xbox Live, or the price of video games or any other tangible benefit like that? Hell no.

The truth is that all the behavioral research and evidence to suggest that this will be a success is on the side of advertisers and marketers. The only thing we can really look forward to is the hope that some of these NUAds will be entertaining, clever and audience appropriate. The real benefit that we get is that the money that the advertisers are giving to Microsoft is going to create more amazing gear… for them to deliver ads to us.

JP Sherman’s a professional marketer based out of Raleigh, North Carolina and spends his time providing his marketing skills to The Escapist Magazine, playing games and getting bum-rushed by his 3 young boys. You can follow JP on Twitter where he generally talks about marketing.