Video games have evolved into a powerful advertising platform, providing a unique and engaging medium for brands to connect with consumers. With the rapid growth of the gaming industry, advertisers are recognizing the tremendous potential to reach diverse demographics, including hard-to-reach younger audiences, through this interactive channel.
Video game advertising can range from subtle product placement and in-game signage to more immersive experiences like “advergames” (i.e., games specifically designed around a brand). This convergence of gaming and marketing not only provides an innovative way for advertisers to get their messages across, but also adds a new dimension to the gaming experience, which is a win-win for both the gaming industry and advertisers. This guide explores the evolving aspects of video game advertising.
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Video game advertising, or in-game advertising, refers to the integration of marketing content into a gaming environment. This can range from subtle product placement within a game to full-fledged advertising during a game's loading screen or as part of the game interface.
According to EMARKETER forecasts in October 2023, mobile game advertising revenue in the United States is expected to reach $7.74 billion in 2024, an increase of 13.0% from the previous year. For reference, total gaming advertising revenue would be $8.53 billion, with mobile gaming advertising accounting for 90.7% of his gaming revenue.
Mobile gaming ad revenue will only account for 2.5% of total U.S. digital ad spending by 2024.
Types of in-game advertisements
Just as internet advertising has a variety of ad formats (display or video), in-game advertising offers a variety of ad placements and types.
- Static ads: These are ads built into the game and cannot be changed without updating.
- Interstitial ads: Full-screen ads that play during natural pauses in gameplay, such as during different levels of a game.
- Dynamic in-game advertising: Unlike static ads, dynamic ads change based on various factors such as the player's location, time of day, and game progress.
- Product placement: This involves integrating a product, brand, or its attributes into a game in a way that feels like a natural part of the game setting. For example, Chipotle has opened a virtual restaurant within Roblox since September 2021. The restaurant chain will use the space to run cross-promotional events for a limited time.
- Sponsored content or events: Brands can sponsor special game content such as levels, missions, and in-game events. Samsung began offering exclusive Fortnite skins to those who purchased a Galaxy phone in 2018. The Samsung Fortnite skin earned him 2.6 billion impressions and won him a Webby Award.
- Interactive advertising: These ads allow players to interact with them in some way. This can be as simple as clicking on a banner ad and earning a reward, or it can be a more complex interaction such as a mini-game.
- Reward-based advertising: These interstitial ads include in-game currency rewards for watching the ad to completion.
- Intrinsic/Native advertising: These ads are designed to blend seamlessly into the game environment and gameplay without being intrusive. Advertisements may appear as part of the game itself, mimicking the game's graphics and style.
- Banner ads: Ads will be overlaid on part of the screen during gameplay.
- Video ads: Advertisements served in video format. This may include rewards (e.g., players receive game rewards for watching advertisements).
What is an adver game?
In-game advertising and advergaming represent two different strategies for integrating marketing into the gaming world.
In-game advertising involves placing advertisements such as banners, signage, and product placement within an existing game, allowing players to be exposed to these advertisements during the game experience without changing the core gameplay. It is intended to be This approach is cost-effective and allows brands to leverage the popular game's existing player base. This strategy can also be used to build brand awareness.
Advergames, on the other hand, are custom games specially developed by game developers based on a brand or product, where the entire game acts as an interactive advertisement. This strategy focuses on creating deeper brand engagement by immersing players in a gaming environment that is completely centered around the brand's message. Although more expensive and less flexible than in-game advertising, advergames offer a unique and engaging way to connect with consumers.
Examples of Adver games include Chiptole's Scarecrow, a game where the title character grows food for a healthier environment, and Chex Quest, a game developed for a cereal brand that mirrors the popular video game Doom. And so on.
The choice between these two approaches depends on your brand's marketing strategy, objectives, budget, and desired level of integration with the gaming experience.
Advertising trends in the gaming industry
Although the gaming industry has received less attention from marketers than connected TV and retail media, it is in the midst of a long period of tremendous advertising revenue growth. Advertisers are expected to spend $8.53 billion in 2024, according to EMARKETER forecasts for October 2023, with total U.S. gaming ad revenue more than doubling over the past five years. It will surpass the $10 billion mark by 2026.
Still, there is a disconnect between the amount of time gamers spend on media and the advertising dollars spent on it. In 2024, time spent on mobile games will account for 10.7% of the total mobile time spent in the US. Mobile game advertising revenue accounts for 3.8% of total mobile advertising spending.
For major advertisers, in-game advertising is an attractive way to reach their target audience. In 2022, the Interactive Advertising Bureau and Media Rating Council updated their in-game advertising standards for the first time in more than a decade. In-game advertising is typically an area where competing developers fight for player attention, but big brands with big budgets are making their presence felt.
Mobile has more monetization opportunities than console or desktop/laptop games, including interstitial ads, brand marketing through in-game events, and branded merchandise. Alternatively, PC and console games rely heavily on subscriptions and purchases. Static surface advertising and real-time events, such as sports games, are also useful gaming avenues for marketers.
The number of gamers over 65 is on the rise, creating a new demographic for video game advertisers. That being said, young gamers have increasing purchasing power and are more likely to already be gamers.
Esports (electronic sports) is a subsection of video games and gaming competitions organized between professional players or teams. Esports offers a number of marketing and advertising opportunities for gamers, including sponsorships, partnerships, and collaborations with his influencers.
Advantages of in-game advertising
Companies considering experimenting with game advertising should consider focusing on a specific platform or game genre.
For example, furniture brands can work with social simulation games. IKEA collaborated with The Sims 2 to feature his 76 items in the game that can be used to decorate your living room, bedroom, or home office. Another example is the appearance of sports apparel companies Puma and Nike in the basketball video game NBA 2K22. These are logical and easy strategies since these companies sell products similar to those featured in the games of your choice.
Alternatively, targeting strategies can rely on demographic insights. According to the Video Game Marketing and Monetization 2022 report, fashion brands looking to engage with mothers can introduce virtual products through hyper-casual and casual mobile games. This is because these games are the type of games aimed at a target audience.
Casual games require little or no tutorial, can be played in short matches, and are often puzzles, casinos, or word games, as defined in the Video Game Marketing and Monetization 2022 Report. Candy Crush Saga is an example of a casual game. Usually, the main audience for casual games is older Millennials and their Generation X.
Hypercasual games are an even easier-to-play subset of casual games (e.g. High Heels! and Flappy Bird). This type of game attracts Gen Z and younger millennials who lean a little more toward women.
The most successful types of game advertising are sponsorships, advergames, and virtual goods. Because they offer something different from traditional game marketing approaches such as TV and social advertising.
These ads not only contribute to revenue, but they can also increase user engagement through actual gameplay by offering new features, cosmetic items, and other perks for players to participate in. Gaming ads also have the potential to reach newer audiences if they go viral (like his Flappy Bird filter on TikTok).
US gaming statistics
According to an August 2023 EMarketer forecast, more than half (54.6%) of the U.S. population will be digital gamers by 2024.
- Mobile gaming is the largest segment, with 168.2 million people, or 49.2% of the population, playing games on their smartphones.
- There is overlap between mobile, console, and desktop/laptop gamers. Nearly 9 out of 10 digital gamers play on mobile. That means just over 10% of gamers are dedicated exclusively to desktops or consoles.
Although there is considerable overlap, demographics differ across platforms.
- While the typical gamer is thought to be young and male, three-quarters of mobile-only gamers are women, according to a June 2021 Comscore study.
- However, men are more prominent in console gaming and desktop/laptop gaming, accounting for two-thirds of players on both devices.
- The game's audience also skews toward younger generations. According to his EMarketer forecast in August 2023, in 2024 he expects his 75.1% of users aged 18 to 24 to play video games.
- In contrast, TV penetration in the same demographic is only 54.5% and decreasing, according to the February 2024 forecast.
Gen Z gaming statistics
According to August 2023 forecasts, there will be 50.4 million Gen Z digital gamers in the U.S. by 2024. By comparison, there are 47.5 million millennials. The gap will widen further, reaching 5 million people by 2027.
According to a March 2023 Kagan study, 63% of U.S. Gen Z adults play games on a console or PC at least once a week, and 71% play mobile games. However, according to an April 2023 Giraffe Insights and Precise TV survey, Gen Z teens (ages 13-17) are more likely to play on console than mobile or PC. This is probably because you haven't owned a phone long enough to develop a mobile gaming habit over the years.
Time spent playing the game
Thanks to the proliferation of smartphones and tablets, mobile gaming has become one of the most popular and accessible gaming formats.
EMARKETER's February 2024 forecast predicts that the average daily time spent using mobile devices for gaming in the U.S. will be 26 minutes in 2024, an increase of 4.8% from 2023. For reference, you'll spend 17 minutes gaming on your desktop/laptop and 18 minutes on other connected devices (like smartwatches and connected gaming consoles).
Video game marketing and monetization
In addition to advertising in video games, there are also marketing and monetization opportunities, such as in-app purchases (IAPs) such as subscriptions, in-game currency, and premium content.
According to a July 2023 forecast, virtual goods (such as purchasing coins to advance to the next level) IAP in gaming is expected to reach $22.5 billion in 2024. In-app subscription spending in games pales in comparison, reaching less than $1 billion ($940 million).
