Exploring the Booming Landscape of In-Game Advertising

Hypercasual to hardcore, the gaming market is experiencing explosive growth. We take a look at what this means for in-game advertising.

Gaming is estimated to reach an overall value of $300bn (~£237bn) globally before the decade is out. In the US alone, 27% of people spend between one and five hours gaming each week.

The advertising opportunities presented by this burgeoning space are immense. In-game advertising is not only growing in sophistication but also in its ability to captivate a varied audience, consisting of a tapestry of global diversity. 

From monetisation models and metrics that signal success, to a peer into the future, where interactive marketing promises to redefine engagement, we delve into the booming landscape of in-game advertising.

Today’s In-Game Advertising Strategies

The landscape of in-game advertising has evolved into a sophisticated arena where creativity meets technology, crafting experiences that are as engaging as they are unobtrusive. Static ads, akin to billboards placed within the virtual worlds of video games, stand as the initial foray into this domain, offering a glimpse into the potential for brands to inhabit the same spaces as gamers. Dynamic ads, on the other hand, represent a leap forward, leveraging real-time data to refresh content in response to an array of factors - ranging from player location to in-game events - thus ensuring relevance and timeliness.

The most popular form is, unsurprisingly, rewarded video ads. This advertising model incentivises users by offering them rewards for watching full-screen advertisements. Following the viewing of a 15-30 second video advertisement, users receive various in-game benefits such as currency, additional lives, or access to new levels. Preferred over in-app purchases, rewarded video ads have gained favor among users. Moreover, 62% of developers have observed an uptick in user retention after implementing rewarded video ads, highlighting their effectiveness in enhancing user engagement.

The integration and immersion of ads within games have become paramount. Far from breaking the spell of the deeply immersive game world, the most successful in-game ads are those that seamlessly blend into the narrative or environment, enhancing realism or enriching the story.

These strategies, underpinned by the judicious use of data and creative integration into the gaming environment, signal a shift in the paradigm of advertising. They offer a glimpse into a future where ads are not just seen but experienced, woven into the fabric of digital narratives in ways that entertain, engage, and resonate with audiences across the globe.

Subtle Integration over Aggressive Marketing

In the delicate dance of games and in-game advertising, true effectiveness lies in weaving ads into gameplay, not as intrusive interruptions but as creative enhancements that enrich the player's journey. We’re talking about a space that features interactive, live, and high-attention inventory. In fact, the majority of gamers feel positive or neutral about advertisements - 69% of console gamers, 65% of PC gamers and 74% of mobile gamers. This underscores a nuanced perspective within the gaming community, and one that is beneficial for those looking to venture into the in-game advertising space. While overly intrusive advertising is unwelcome, thoughtfully integrated, non-disruptive ads, particularly those offering rewards or enhancing the game environment, can find acceptance and even appreciation among gamers.

The Mobile Games Explosion

Mobile gaming is the driving force behind the rapid growth of the global video gaming market, and has ascended to become the most popular form of gaming, a testament to the ubiquity of smartphones and the convenience they offer. In fact, mobile games accounted for more than 50% of the global games market revenue, surpassing both PC and console gaming. This dominance is fueled by the accessibility of mobile devices, allowing users to engage in gaming activities anytime, anywhere. The vast diversity of mobile games, catering to all ages and interests, from casual puzzles to immersive role-playing games, ensures there is something for every type of gamer. Further to this, the free-to-play model prevalent in mobile gaming has significantly lowered the barrier to entry, inviting a wider audience to explore gaming as a form of entertainment. This combination of accessibility, diversity, and affordability positions mobile gaming as the most popular and influential segment in the gaming industry today.

Mobile games is also a space which is actively dispelling myths surrounding the gender of gamers - data shows that 66% of men play mobile games, while the same figure among women is 70%. Gone are the days when the image of gamers was limited to young men in dimly lit basements - gaming has evolved into a space without exclusion.

Cross Global Opportunities 

From the Middle East to South East Asia, to Europe and the Americas, gaming resonates everywhere, transcending geographical boundaries and cultural divides. The immense popularity of gaming, and with it, in-game advertising opportunities, is not relegated to just the Western world. In fact, there are approximately 3.32 billion active video gamers worldwide. That figure has risen by well over 1 billion in just eight years.

The Middle East, for example, has approximately 60% of the population identifying as avid gamers. This region boasts a tech-savvy, young population along with a remarkable penetration rate, and also benefits from substantial governmental investment in the gaming sector. 

APAC is home to the world’s largest gaming market, with total revenues exceeding $84 billion. The hyper-connected young generation, raised amidst the advancements of AI, augmented reality, and gaming, has gravitated towards gaming platforms as a sanctuary for mental well-being. The affinity for gaming within these demographics, notably gender-neutral, underscores its significance not just as entertainment but as a crucial fabric of social connectivity. APAC's youth, increasingly valuing gaming over other media for forging social bonds, has propelled the region to the forefront of the global gaming stage. As gaming morphs into a pivotal realm for community and self-expression, APAC's market continues to expand, driven by a generation that sees gaming as more than play - it's their new social frontier.

Evolving to the Next Level

Technologies like generative AI will create more opportunities to develop even better interaction in gaming stories, where NPCs will be able to have a much more human type of behaviour, creating an even better experience for players.

Advancements in Mixed Reality (MR) are set to revolutionise gaming experiences as well, by blending virtual and real worlds (e.g. Meta Quest 3). And the deployment of 5G networks in the biggest cities will continue to play a critical role in enhancing these MR experiences through improved connectivity and reduced latency.

Juan Soprano, VP managing director, LATAM, R/GA

2024 is finally the year when meaningful amounts of brand dollars break through into non-mobile games. Roblox has invested into (and is now actively talking about) an ad tooling roadmap which might finally achieve the ease and scale that has made YouTube the default for games content media buyers.

Relatedly, in 2024 we see more agency holding groups acquiring game services businesses to accelerate their in-game offering to brand clients. Increasingly we see games implementing age-verification for various features as developers continue to wrestle with young audiences and a patchwork of digital safety laws.

2024 will see much more activity from major publishers acquiring Roblox and UEFN developers. Embracer quietly acquiring Bloxburg in 2022 for ~USD$100m (£78.5m) was just the beginning. 

Dylan Collins, chairman, OMAC Investments