This year, numerous publications (including AdExchanger) have reported stagnation in the gaming segment of the advertising ecosystem. These reports reference recent studies by the IAB and WARC/Dentsu, which found that brand advertising spend on video games still lags behind audience time spent playing these games.
For those who have been championing in-game advertising for years, the market’s stagnation is both unsurprising and frustrating. Trying to sell ads in and around video games has been an uphill battle for credibility with advertisers and marketers.
“Rewarded” was a dirty word for a long time. Mobile games weren’t considered “premium.” Brand safety risks scared advertisers away to cleaner environments … like social media? The metaverse came and went (although Roblox is chugging along as a “metaverse-like” platform that often distances itself from the label). “Gamergate” was rightfully off-putting for its undercurrents of misogyny and harassment. Meanwhile, scandals and cultural upheaval at studios made the mainstream press.
Simultaneously, the games industry hasn’t helped itself. In-fighting became preferable to unifying the gaming landscape. Brand buyers’ needs haven’t been a priority on product road maps. On mobile devices, the ad experience has been defined by the worst tactics of performance ads. Bespoke ads in console or cross-platform games can come off as inauthentic.
Now, here’s a harsh truth: The onus is on the gaming industry to make gaming an essential channel for advertisers, rather than a nice-to-have.
A growing need for unifications
Look at the way the out-of-home and podcasting industries have come together in recent years to collectively elevate themselves commercially. They have dedicated conferences and trade organizations, not to mention buy-side champions. As CTV, retail media and the not-so-post-cookie world dominate industry conversations, these smaller media segments have joined forces to convey their value propositions to advertisers.
But we haven’t done that for gaming.
Games publishers (not just AAA studios with dedicated agency sales) have to build bridges to advertisers. Recent strides have mostly been driven by a few large studios with tech companies acting as intermediaries between global studios and the buy side.
Enough debating what “counts” as gaming. Mobile game placements, console game integrations, eSports, custom experiences in Roblox or Minecraft, YouTube and Twitch streaming are all valid game experiences with their own place on a media plan. We should be figuring out how to advocate for the entire space collectively.
The problem with app installs
Prioritizing app-install revenue has hurt us, specifically in mobile advertising, which represents the lion’s share of ad revenue in the gamer universe.
App-install ad revenue has been a drug; developers are overdependent on it, and they’ll fight to maintain it even as its efficacy declines. Monetization strategies are designed to maximize revenue from performance campaigns, allowing install ads to dominate early in a session. When an advertiser or media planner sees this, it’s a turnoff.
Where’s the innovation?
When it comes to the experience, developers don’t meet the expectations of advertisers. If mobile games publishers want to attract brand advertisers, they must invest in basic sell-side infrastructure that other types of publishers offer. For example, giving access to more first-party data and carving out brand placements from performance would enable better pricing inventory and mitigate declining performance spend.
Post-Covid, the gaming industry has experienced turbulence, resulting in a major slowdown in innovation. Gaming used to be at the forefront of innovation in entertainment, but has fallen behind.
Marketing executives are constantly on the hunt for what’s next: the metaverse and VR gaming have been duds, and other channels like retail media and CTV have stolen the bulk of advertisers’ attention. Brand marketers need real reasons to be excited beyond another Fortnite concert.
Playing to win
Here are some hard and fast facts to put the gaming opportunity in perspective: Subway Surfers alone has four times as many active users as Netflix has ad-supported subscribers. Some stats report the entire global podcast listenership at 546 million, which is between 15%-20% of the total global gaming market. Gaming generated $185 billion in 2022, more than three times the music and movie industries combined.
Gaming is bigger and better than most media channels available to advertisers today. If marketers and media planners don’t understand that, the responsibility falls on us as an industry.
We have to power up our approach to our advertising partners and make a better case for gaming as the must-have on the media plan.
“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
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