Video game budgets are increasing, but ad tech still needs to catch up

The majority (91%) of advertisers who buy ads for video games no longer consider games to be an experimental media channel.

That's good news, according to a joint IAB and Advertiser Perceptions study released during the third annual PlayFronts event this week.

The IAB survey surveyed 300 advertising decision makers who currently buy video game ads and spend at least $5 million across their media mix. This result shows that these advertisers consider video game advertising to be a mature and effective channel, especially when it comes to reaching Millennials and his Generation Z.

35% of respondents have a dedicated gaming budget, and a third spend on gaming from their general media budget.

However, IAB Experience Center Vice President Zoe Soon said ad spending on games still lags behind viewer engagement.

To put this into perspective, approximately 3.38 billion people around the world identify as gamers, and 3.37 billion say they watch digital video. The difference is far from proportional,” she said.

According to eMarketer, CTV spending reached $24.6 billion last year, more than three times as much as in-game ad spending. U.S. advertisers spent just $7.5 billion on gaming ads last year, down from $8.6 billion in 2022.

It could have been an anomaly, or it could have been due to the turmoil in the video game industry over the last year. EMarketer expects U.S. ad spending to rebound to $8.5 billion this year and reach $11.5 billion by 2027.

And despite last year's drop in spending, the IAB/Advertiser Perceptions survey bodes well for future spending trends. His 40% of advertisers who are already spending on games say they plan to increase their budgets this year.

creative blocks

To increase the proportion of gaming budgets, the IAB has developed best practices to make it easier for advertisers to spend on games.

This week at PlayFronts, the IAB announced new creative guidelines for video game ads, including aspect ratio specifications, video ad length, and recommendations for making on-screen text easier to read. These guidelines establish best practices for balancing user experience and effective in-game advertising across web, mobile, PC, and consoles.

But compared to previous PlayFronts events, there was little creative or ad tech innovation.

Several attendees told AdExchanger that they were blown away by the solutions highlighted this year.

One agency executive told AdExchanger that the conversation centered around mobile advertising. Video game advertising has long been mobile-centric, so this didn't seem like a new perspective.

Still, mobile deserves attention. Of the marketers surveyed by IAB, 76% said they had advertised in a mobile game, while 67% had tried his PC/desktop and had never used a console. He was only 47%.

But what about branded in-game assets, overlaid on-screen pop-ups, unique in-game ads, and other formats that make more sense in PC and console environments?

Essential in-game advertising is getting a lot of airtime on stage, and the concept has come a long way from just a few years ago, when most marketers had no idea what it was. said Jonathon Troughton, CEO of in-game advertising platform Frameplay. he told AdExchanger.

But despite the demand for more premium in-game inventory, including on consoles, PlayFronts presenters emphasized that most gamers will only tolerate some level of in-game ad saturation, which is another sign of maturation. He said it was one of the first signs.

Troughton said brands are increasingly understanding that they need to value the player experience, and game studios are also realizing that “there has to be some kind of contribution” before ad dollars start flowing.

He said the IAB's new creative guidelines for in-game activations will help advertisers unlock more spending by addressing their pain points.

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So what about two of the hottest gaming properties, Roblox and Epic's Fortnite?

Branded Metaverse-like subworlds on these platforms haven't received as much attention on stage as they have in past years. Instead, speakers focused on ad placements such as sponsored overlays that are triggered when players defeat enemies or reach in-game milestones.

For example, Roblox, which announced its in-game advertising platform last year, showed off a new self-service dashboard that allows buyers to target viewers based on age, gender, device, location, and genre. But one participant who was unimpressed told AdExchanger that such a dashboard had long been a gamble for buying the platform.

Cloud gaming was another area where participants wanted to see more. Another agency executive told AdExchanger that cloud gaming is clearly a priority for major manufacturers like Microsoft and Sony, and that marketers should focus on it as well.

To be fair, PlayFronts ended with a cloud-focused presentation featuring computing company NVIDIA. NVIDIA rents access to high-performance gaming hardware through cloud services, and users pay for rental passes. NVIDIA demoed a free, ad-supported version that allows users to watch video ads and get cloud access to their gaming rigs for a limited time.

If you've ever seen an ad to access airport Wi-Fi, this is nothing new. However, this does represent a potential new ad inventory for the gaming market.

Gain confidence in your game

All the nonsense about creative and technology innovation aside, the main takeaway from this year's PlayFronts is that marketers have more confidence in the brand safety and measurement of video game advertising.

9 out of 10 advertisers who are actively spending on video games say their brands are safe, and 85% of advertisers are confident in their ability to measure ROI from game ads states that it has.

That confidence is important for emerging channels, says Jack Koch, senior vice president of research and insights at IAB. Advertisers tend to be okay with not knowing exactly what happens after a user watches a TV ad, but when it comes to emerging media, they want to prove that exposure drives conversion.

Advertisers also see gaming as a powerful awareness driver, ranking it second only to social media in driving consideration and purchase. The latter is especially surprising given that many in-game ad formats are not clickable.

Buyers are also now more comfortable running automated programmatic campaigns.

According to the IAB, 32% of advertisers use programmatic guaranteed, 20% use PMPs, 17% buy through open auctions, and 37% run gaming campaigns “all the time.” doing.

That means video game ads deserve a place in your media plan.and “Once [marketers] Give it a try,” Koch said. “They use it consistently.”