If Games Want Brand Advertising, They Should Play By Brands’ Rules

This year numerous publications (including AdExchanger) noted stagnation in the games segment in the advertising ecosystem. These reports cite recent studies by the IAB and WARC/Dentsu, which found that brand advertising spending in video games still lags behind the time audiences spend playing those games.

For those who have championed in-game advertising for years, the stagnation of the market is not surprising and frustrating. Trying to sell ads in and around video games has been an uphill battle for credibility with advertisers and retailers.

“Awarded” was a dirty word for a long time. Mobile games were not considered “premium”. Brand safety risks have scared advertisers into cleaner environments… like social media? The metaverse has come and gone (although Roblox thrives as a “metaverse”-like platform that he often distances himself from the label). “Gamergate” was right disgusting for its undercurrent of misogyny and harassment. Meanwhile, scandals and cultural upheavals at the studios made headlines.

At the same time, the gaming industry did not help itself. Internal struggle has become more desirable than unifying the gaming landscape. Brand customer needs were not prioritized on product plans. On mobile, the ad experience is defined by the worst performing ad tactics. Custom ads in console or cross-platform games may appear inauthentic.

Now, here’s the harsh truth: the onus is on the games industry to make games a key channel for advertisers, not a nice-to-have.

The growing need for unification

See how the podcasting and out-of-home industries have come together in recent years to collectively rise commercially. They have dedicated conferences and trade organizations, not to mention buying champions. While CTV, retail media and the not-so-post-cookie world dominate the industry conversation, these smaller media segments have joined forces to communicate their value propositions to advertisers.

But we didn’t do that for games.

Game publishers (not just AAA studios with dedicated agency sales) need to build bridges to advertisers. Recent moves have largely been driven by a few large studios with technology companies acting as intermediaries between global studios and the buy side.

Enough of the debate about what “counts” as gaming. Mobile game placements, console game integrations, eSports, custom experiences in Roblox or Minecraft, YouTube and Twitch streaming are all valid gaming experiences with their place in the media plan. We should figure out how to collectively advocate for the entire space.

Problem installing the app

Prioritizing app install revenue has hurt us, especially in mobile advertising, which represents the lion’s share of ad revenue in the gamer world.

Ad revenue for app installs was dope; developers are too dependent on it and will struggle to maintain it even as its effectiveness declines. Monetization strategies are designed to maximize revenue from performance campaigns, allowing install ads to dominate early in the session. When an advertiser or media planner sees that, it’s a turnoff.

Where is the innovation?

In terms of experience, the developers are not meeting the expectations of advertisers. If mobile game publishers want to attract brand advertisers, they need to invest in the basic sell-side infrastructure that other types of publishers offer. For example, giving access to more first-party data and decoupling brand placement from performance would enable better inventory pricing and mitigate performance spending cuts.

Post-Covid, the gaming industry experienced turbulence, resulting in a major slowdown in innovation. Games were once at the forefront of innovation in entertainment, but they have regressed.

Marketing executives are constantly on the lookout for what’s next: the metaverse and VR gaming have underperformed, and other channels like retail media and CTV have stolen most of the advertisers’ attention. Marketers need real reasons to get excited after another Fortnite concert.

Playing to win

Here are some hard and fast facts to put the gaming opportunity into perspective: Subway Surfers alone has four times more active users than Netflix has ad-supported subscribers. Some statistics report that the entire global listenership of the podcast is 546 million, which is between 15%-20% of the total world gaming market. Games generate $185 billion in 2022more than three times more than the music and film industries combined.

Games are bigger and better than most media channels available to advertisers today. If marketers and media planners don’t understand this, the onus falls on us as an industry.

We need to strengthen our approach to our advertising partners and make a better case for gaming as something that needs to be on the media agenda.

“Data-driven thinking” written by members of the media community and featuring fresh ideas about the digital revolution in media.

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