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A number of publications were published this year (including AdExchanger) noted stagnation in the gaming segment of the advertising ecosystem. The reports refer to recent studies by the IAB and WARC/Dentsu that found that brand advertising spending on video games continues to lag behind the amount of time audiences spend playing those games.
For those who have been promoting in-game advertising for years, the stagnation of the market is 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 were not considered “premium”. Brand safety risks have scared advertisers to cleaner environments… like social media? The metaversion has come and gone (although Roblox touts itself as a “metaversion” platform that often distances itself from the label). “Gamergate” was justified disturbing for its undercurrents of misogyny and harassment. Meanwhile, scandals and cultural upheavals at the studios made it into the mainstream press.
At the same time, the gaming industry did not help itself. Duel has become more suitable than unifying the game environment. Brand buyer needs were not prioritized in product maps. On mobile, the ad experience was defined by the worst performance ad tactics. Custom ads in console or cross-platform games can feel inauthentic.
Here’s the harsh truth: It’s up to the gaming industry to make games a necessary channel for advertisers, rather than an enjoyable one.
The growing need for unification
See how out-of-home and podcasting have combined to rise commercially in recent years. 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 deliver their value propositions to advertisers.
But we didn’t do it for gaming.
Game publishers (not just AAA studios with dedicated agency sales) need to build bridges to advertisers. Recent moves have mostly been driven by a few large studios with technology companies acting as intermediaries between global studios and the buy side.
Enough of the debate about what “counts” as playing. Mobile game placement, console game integration, eSports, custom experiences in Roblox or Minecraft, YouTube and Twitch streaming are all valid gaming experiences with their own place in the media plan. We should figure out how to collectively defend the entire space.
Problem installing apps
Prioritizing revenue from app installs has hurt us, specifically in mobile advertising, which accounts for the lion’s share of ad revenue in the gamer world.
Revenue from ads asking for app installs was dope; developers are too dependent on it and will fight to maintain it even as its effectiveness declines. Monetization strategies are designed to maximize revenue from performance campaigns and allow ad installs to dominate the early stage of the visit. When an advertiser or media planner sees it, it’s a sight to behold.
Where is the innovation?
In terms of experience, the developers are not meeting the expectations of advertisers. If mobile game publishers want to attract brand advertisers, they need to invest in the basic sell-side infrastructure that other types of publishers offer. For example, providing access to more first-party data and excluding brand placement from performance would enable better inventory pricing and mitigate declining performance spend.
Post-Covid, the gaming industry experienced turbulence that led to a major slowdown in innovation. Gaming used to be at the forefront of entertainment innovation, but it’s falling behind.
Marketers are always looking for what’s next: the metaverse and VR games were duds, and other channels like retail media and CTV stole most of the advertisers’ attention. Brand marketers need real reasons to be excited beyond the next Fortnite gig.
Play to win
Here are some hard and fast facts that put the gaming opportunity into perspective: Subway Surfers alone has four times more active users than Netflix has ad-supported subscribers. Some statistics put the total worldwide listenership of podcasts at 546 million, which is between 15%-20% of the total global gaming market. Playing earned $185 billion in 2022more than three times the music and film industries combined.
Gaming is bigger and better than most media channels available to advertisers today. If marketers and media planners don’t get it, the onus falls on us as an industry.
We need to strengthen our approach to our advertising partners and make a better case for gaming as a must in the media plan.
“Data-driven thinking” is written by members of the media community and contains new ideas about the digital revolution in media.
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