• by Karlene Lukovitz  @KLmarketdaily, March 8, 2023

Nearly two out of three Americans, or 215 million, play video games, and video games trail only TV and social media in terms of consumer time-spent per week, according to various industry studies.

Still, only about 3% to 5% of ad budgets are allocated to gaming -- and the reason comes down to five buy-side misperceptions about this medium, according to a new report from the Interactive Advertising Bureau (IAB). 

The report is based on online interviews with 40 senior-level decision-makers, 75% of whom were from agencies and advertisers, and the rest from ad-tech partners, game developers and publishers. The survey was conducted by MediaScience from early December 2022 through the end of January 2023. 

The misperceptions and realities, according to the report, are: 

*Game advertising is too expensive and hard to buy. Reality: Game ads no longer require expensive custom integrations, and programmatic buys are easy, comparable in cost to other digital media, scalable, and allow for testing. 

*In-game ads are too hard to activate with quality inventory. Reality: With new ad networks and technology, it is easy for advertisers to get the scale and brand-safe reach they need. 

*Gaming is mostly effective for upper-funnel objectives, and can’t deliver throughout the funnel. Reality: It is now possible to make quality buys that align with brands and help drive consumers all the way through to purchase. In-game advertising allows for mimicking real-world awareness media like billboards or signage, and can also drive mid-funnel objectives by letting gamers interact virtually with a product (for example, drive a branded vehicle in a war game, or “power up” with an energy drink during a running game). 

*In-game advertising is too difficult to measure. Reality: While ad tech and publishers have brought measurement standards and capabilities up to a level that “will meet the needs of most advertisers,” work is still needed. In some cases, the data is not fully consistent and comparable to other media, and in-game advertising doesn’t yet offer the same level of granularity buyers expect in digital marketing, acknowledges IAB, which is promoting updated measurement guidelines for in-game ads that it released with IAB Tech Lab and the Media Rating Council (MRC) last July.   

*In-game advertising is not brand-safe and not welcomed by players. Reality: Planning and use of third-party monitoring services and/or AI-based keyword blocking can mitigate brand safety issues, and programmatic makes it possible to reach brand-safe audiences at scale. In addition, similar to other forms of media, gamers are receptive to ads that are authentic and communicate a clear value exchange.

Today, “high quality audiences at serious scale, brand safety, easy buying, and defensible measurement are all finally in place,” says Jack Koch, senior vice president, research and insights, IAB. “As the misperceptions dissipate, we expect spending on in-game advertising will begin to catch up to the opportunity.” 

To address the misperceptions, IAB says that sellers need to educate clients, both sides need to collaborate to reduce friction and boost investment, and ad-tech providers need to partner to open new, player-centric inventory. 

In addition to employing industry standards, ad-tech companies and publishers should highlight the quality of their reach and inventory through audience insights and channel profiles, provide case studies about driving full-funnel success leveraging measurement that is similar to other digital media, and help advertisers understand how to leverage first- and third-party data and how data can be interoperable to allow for sound cross-platform decisions. 

IAB also advises the sell side to conduct empirical-effectiveness research to demonstrate how the engagement and context of in-game ads can drive significant impact, and how to ensure brand safety.

For its part, the trade association will continue to focus on gaming advertising, and plans to conduct more research on it later this year, with both the buy and sell sides, "to identify trends and insights that will help further educate, align and propel the industry," a rep tells Digital News Daily.