The metaverse, luxury skins and the power of authenticity: the future of gaming advertising

In the second part of the panel, the industry experts talk about how best to approach in-game marketing

Gaming has gone from being a bedroom hobby to a boardroom priority, according to gaming experts on a panel discussion as part of The Drum Can-Do Festival, in partnership with Bidstack. The panel explored why brands have been slow to see gaming’s potential, how best to approach in-game marketing, and what the future holds for gaming - and the brands that want to reach its vast audiences.

Despite generating more revenue than the global music and movie industries combined ($159bn in 2020), gaming, until very recently, was ignored by brands, according to Bidstack CEO James Draper. He said that while brands had previously neglected gaming’s marketing potential, advertisers are now cognisant of its power.

How brands can reach audiences through gaming

“The advertising world was a little bit behind the curve before, but now they are catching up,” he told The Drum’s reporter John McCarthy, the panel host. “Brands can see that the audience is already there and are very engaged. This is a huge ecosystem for brands to tap into - and it’s already mainstream - but it is still expanding, expanding, expanding.”

Meanwhile, Glen Calvert, COO of esports team Fnatic and founder of Affectv, suggested any initial lag in brands getting involved with the gaming sector is now coming to an end.

“Brands are slowly getting more involved,” he added. “There’s always a five to 10 years lag from eyeballs to brand money; just look at when the internet came along! It got eyeballs but it still took a good while for advertisers to switch their money over from newspapers. I think you're at that time in gaming now where the numbers are a lot clearer. It’s becoming less of a niche channel and more of a staple.”

Authentic In-game advertising

The panelists said that brands don’t always understand what they can gain from in-game advertising, but that brand partnerships and in-game advertising fit seamlessly into the gaming environment. “Those coming into this space need to be sympathetic to the games industry,” said Charlotte Cook, VP of gaming at Bidstack.

“These are pieces of art which takes years to make so just throwing a big brand message inside a game is going to cause more harm than good. It’s very important to alleviate those concerns [about inauthentic advertising] early on and ensure your brand is authentically positioned within a gaming world.”

Oracle Data Cloud chief product officer, Derek Wise added: “The ones that are doing it really well approach it as you would TV product placement. It needs to be unobtrusive for it to be effective.”

Will Kassoy, president of online funding platform Omaze and a former SVP of Activision Blizzard, agreed that the most important aspect to consider when placing in-game ads was authenticity. “It is critical,” he said. “The best activations are those that are really authentic - partners who you would expect to be investing in that consumer segment in reality. A sporting brand appearing in a Tony Hawk video game makes more sense than a non-sporting brand.”

The panel cited Coca Cola’s 2017 activation with FIFA player Alex Hunter as a successful example of an in-game brand partnership. “That partnership was a very strong activation because it fit in beautifully with the narrative,” added Bidstack’s Draper.

The panel also highlighted Louis Vuitton’s 2019 partnership with Riot Games’ League of Legends, in which the brand released skins in-game before dropping a real clothing line for League of Legends just two months later.

“This is where luxury brands can start to play,” explained Fnatic's Calvert. “Not by providing blanket advertising coverage, but with a limited edition drop. They got the balance right.”

New business models

The panelists also discussed the future of gaming, touching on how the cloud could transform advertising within the sector, and what brands need to be aware of to play effectively in the in-game marketing space.

Calvert asserted that that level of interactivity brought about cloud-based gaming, which will allow tens of thousands of people to view a game at one time, each with the option to pay to jump into a game and take over, would lead to the creation of new business models, particularly in the world of marketing.

“The business models that can be built within games will be absolutely incredible,” he concluded. “You can see the beginning of this with skins and loot boxes on things such as Fortnite, but that will continue to include things that we can’t even imagine right now. As the metaverse [the virtual collective universe which will comprise all digital worlds] is created, it is going to get really fascinating

This is the second in the two-part series of this panel discussion. Watch the full digital panel here.

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