Leveraging the power of gaming during economic downturns
Video games have blossomed into an enormous industry, presenting marketers with a valuable new opportunity for audience engagement. Here’s how ‘gCommerce’ – commerce via gaming – can reward both brands and gamers during a period of economic decline.
With annual revenues of $200bn – larger than all other entertainment industries combined – and a global community of over 2.7 billion, gaming has turned into a massive global industry.
Gamers have thus become a highly coveted audience for brands, particularly now that the metaverse – with all of the new gaming experiences that it provides – has become such a hot topic in both popular culture and the marketing world. The challenge has become establishing authentic connections with those gamers and turning them into customers. Historically, quantitative results have been nonexistent for marketers through video games, so it’s no surprise the industry has the lowest CPMs among all entertainment channels. This elusive demographic is even more enticing to marketers now that gaming has proven to be popular during periods of economic decline.
Video games have become an increasingly popular marketing medium for brands looking to connect with a younger audience
During the Covid-19 pandemic, for example, gamers were installing a historically high number of apps. Gaming, moreover, did not wane during the Great Recession. Today the industry boasts more free-to-play games than ever before, and it’s hard to deny that ‘free’ is a good bet during any recession. Mobile games are dominating with ever-growing numbers, so there’s no reason to imagine that the looming recession will negatively impact the number of players that are accessible to brands.
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Games as an advertising channel
As brand marketers continue to tighten their budgets, they will likely direct their spending to performance-based marketing solutions that can deliver positive ROI. Games represent both a media and new retail channel in one. They offer mass-market reach across all demographics and many games today accept advertising. Even better, the gaming audience tends to be fully engaged with the content presented in games, so their complete attention is virtually guaranteed in an increasingly distracted world.
The last recession did not see the level of inflation we are seeing today, which indicates that the hardest-hit games this time around may be premium titles that require an upfront payment or monthly subscription. As such, free-to-play games that are ad-monetized or hybrid (combining in-game purchases with an ad-supported model) are likely to see increased audience growth during difficult economic periods.
Games that rely on the monetization of high spenders through in-game purchases will need new revenue streams in order to supplement a reduction in player spending power. And with less than 5% of players making in-game purchases, mobile game makers will increasingly need to rely on advertising revenue to compensate. However, traditional game advertising can’t deliver the performance and attribution that brands need.
A perfect storm appears to be approaching:
A tightening of household spending is likely to impact entertainment expenditures
A reduction of in-game purchases and premium titles will limit revenues for gamemakers
Brands will focus their marketing efforts on initiatives that are shown to deliver ROI
Due to financial belt-tightening, brands will be forced to cut those initiatives that don’t perform as well as expected. This could spell trouble for many gamemakers that rely on many existing advertising solutions as a means of monetizing their free-to-play games. The situation will probably be exacerbated by new IDFA rules and restrictions from Apple.
The power of gCommerce
Enter a new solution that addresses these issues: gCommerce, or commerce through games. This new model was pioneered in 2020 and could be a recession-resistant solution against current and future financial hardships, providing a solution for all involved (players, gamemakers and brands).
Through gCommerce, brands can advertise and sell directly to players, attributing KPI performance to their media investments. Players purchase products directly through their games, with no browser redirects or gameplay interruption. With the addition of a rewards program, gCommerce is a direct sales channel and a fair-value exchange with players.
GCommerce platforms such as Scuti allow players to receive up to 5% of their spending back in the form of rewards. This is not a behavior that has to be learned, as the games industry has trained players to seek out and earn rewards from their games. Players exchange their rewards to fuel a better game experience or purchase more physical products. Platforms like Scuti are seeing almost one in five players returning to the marketplace daily to shop and earn rewards. Brands leveraging gCommerce are providing better player experiences and generating direct sales during periods of financial decline.
For gamemakers, gCommerce provides not only a valuable new revenue stream, but also an alternative consumer currency for in-game purchases in the form of earned rewards. Since gCommerce only monetizes from the game menu, it never interrupts gameplay or removes the player from the game.
GCommerce rises above uncertain economic conditions by catering to the needs of all stakeholders. Players can win through engagement and rewards, brands can win through performance-based marketing, and gamemakers can win through a new potential revenue stream. Rewarded gCommerce is at the center of a new ecosystem that, for the first time, aligns the interests of everyone in the industry.
Marc Fonzetti is the chief revenue officer and the chief marketing officer at Scuti.
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