In-game: The dawn of a new ad category

In-game advertising uses contextual advertising, delivering an engaging experience without the use of third party data

Hardly a week goes by without a headline casting doubt over the future of digital advertising. Whether it’s Google’s announcement about phasing out third-party cookies in Chrome, the ICO’s decision to step up regulatory activity around the use of data in real-time bidding, or the latest YouTube brand safety scandal, the ecosystem continually finds itself under a dark cloud.

But every cloud has a silver lining and these developments are pushing brands to explore alternative forms of digital advertising that can deliver relevant, engaging ads in brand safe environments without a reliance on third-party cookies. Spend on native advertising, for example, is expected to grow 372% over the next five years, exceeding $400 billion globally by 2025, while the worldwide market for contextual targeting is expanding more than 18% each year.

One emerging ad category that fits the brief is native in-game advertising. This relatively new channel uses contextual advertising that is appropriate to the game, delivering an engaging experience without the use of third-party data. As a recent eMarketer report outlines, “in contrast to other ad ecosystems, game publishers place more emphasis on contextual than behavioural data.”

In-game advertising allows brands to reach massive audiences with over 37 million UK consumers playing computer games, and almost half the online population playing on mobile. Despite skewing slightly to a younger age group, gaming spans all demographics and provides access to highly engaged, difficult to reach audiences. The same pattern exists across the globe and, during a recent CES 2020 panel discussion, Grace Dolan, vice president of integrated marketing at Samsung explained, “If you look at what gaming is today, it’s not a niche interest the way it’s historically been perceived. If you look at the number of consumers in the U.S. that are gaming, it’s 67-68%. More Americans are gaming than are not. It’s just part of mainstream entertainment, and it’s a passion point.”

The gaming market encompasses multiple segments from ultimate users who live and breathe gaming, to backseat gamers who prefer to watch others play, and time fillers who play Candy Crush during their commute and don’t view themselves as gamers at all. Brands are beginning to recognise the value of the market, with PepsiCo’s Mountain Dew spending 40% of its marketing budget targeting gamers last year, according to its vice president of marketing, Nicole Portwood. As new developments such as cloud gaming take off, the reach of gaming will increase further and its audience will continue to diversify.

As well as vast reach, gaming also provides advertisers access to attentive audiences, who are fully immersed in the gaming experience. As Tony Wenzel, co-founder and president of Brandometry makes clear, “Gamers are committed, consistent and loyal like Nascar fans. It’s not uncommon for game players to modify games, which indicates deep affinity, something brands and advertisers cherish.” In addition a Newzoo study reveals mobile gamers are more receptive to advertising than non-gamers and are more likely to associate advertising with high quality brands, buy from brands whose ads they enjoy, and have a positive attitude towards global brands.

But there are still a couple of challenges to overcome before advertisers can take full advantage of in-game advertising.

Adopting a multiplayer approach

At present there is still a disconnect between game developers and advertisers. Brands don’t always understand what they can gain from in-game advertising. They may be clinging to a gamer stereotype that doesn’t fit with their target audience, or they may be unaware of the opportunities that exist beyond interstitials. At the same time developers understand the benefits of monetisation but are concerned ads may disrupt the gaming experience and be unpopular with gamers.

There is, however, a growing awareness that in-game advertising enables developers to monetise the game, rather than the gamer, and reduce their dependence on in-game purchases. Rather than being negative for gamers, these ads can enhance a game, with billboards in open world games or hoardings at virtual sports stadiums adding to the realistic features of the environment without breaking the immersive experience.

One example of successful collaboration is the partnership between Nike’s Jordan brand and Epic Games, which resulted in two new skins on Fortnite’s Downtown Drop game mode sporting Nike’s classic Air Jordan 1 trainers. With around 250 million registered Fortnite users, this type of advertising gives the Nike brand mass exposure to elusive and often ad-averse consumer groups while also enhancing the gaming experience.

For in-game advertising to succeed, both sides need to work together to ensure advertising is authentic to the game environment and create innovative, bespoke ad campaigns that engage and reward consumers in a non-intrusive way.

Taking standards to the next level

Ten years ago, digital display was the wild west of advertising, with few rules and standards to maintain quality. But in recent years standards around brand safety and viewability, as well as initiatives such as the Coalition for Better Ads, have improved desktop web and mobile experiences, reducing the prevalence of ads that fall beneath the threshold for consumer acceptability.

To avoid in-game advertising following the same route and to maintain quality from the outset, industry-wide standards must be developed that relate specifically to this ad category. Once in place, advertisers can ensure they only buy ad placements that meet or exceed these industry standards.

Such a quality framework is only possible if measurement around in-game ads is also advanced. Advertising within the gaming environment is always going to be more about trackable impressions than click-through rates, so success metrics must be developed with this in mind. “The value of in-game ads lies with the frequency with which users will see your brand,” asserts Daryl West, head of social media and sponsorship at vehicle-leasing brand Vanarama, which advertises within the FIFA franchise. “In-game partners are ‘always on’ in a highly engaged global environment – this is hard to achieve on any other channel without an infinite budget." Attribution technologies and genre-specific real-time success metrics that measure this engagement are currently being developed so brands can understand the true impact of in-game advertising.

The next headline is just days away and it won’t bring good tidings for digital advertising, but it’s not all bad news. Issues such as data privacy and brand safety are driving the exploration of alternative ad formats and are bringing the dawn of a viable new ad category in the form of native in-game advertising.

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