• by Colin Kirkland , August 1, 2024

The gaming industry is growing rapidly across the globe, but advertisers are still slow to make use of in-game advertising opportunities, according to a new trends report by WARC Media.

The global games market, which generates revenues of $183.9 billion annually -- surpassing the music and movie industries -- attracts around 3.4 billion gamers across age groups, with two in five people saying they are active gamers, according to WARC.

Additional research by games data platform Newzoo shows that 72% of people ages 35-54 and almost half of people over age 55 game at least once a week.

Yet, although nearly 90% of advertisers surveyed by the IAB said gaming is a brand-safe channel, WARC has found that many marketers remain wary of gaming as a priority ad channel.

Since 2021, the share of advertisers planning to increase spend on gaming has fallen 20 percentage points -- from 72% to 52%.

“Gaming has long been heralded as a vital emerging opportunity for brands, particularly those wanting to reach younger audiences,” says head of WARC Media Alex Brownsell. “However, in-game advertising spend remains low. This may soon change, with game publishers focused on improving ad monetization. But evidence is needed to make the case for gaming as an advertising medium.”

This year, advertisers in the U.S. are forecast to spend $6.7 billion on in-game ads -- up 10% year-over-year, but still only equivalent to 3.7% of total U.S. digital ad spend, according to Dentsu.

Advertisers seem intimidated by various factors of the gaming ecosystem. Gamers across the globe play across so many different devices, formats, genres and market preference, which is contributing to a slow uptake of in-game ads, and gamers are not the same.

However, in a recent report, Activision Blizzard said that gamers represent a “multifaceted constellation of unique groups each with varied tastes, behaviors, and feelings on advertising,” and divided them into different identity types, some who have a more positive reaction to ads than others.

“The Devoted,” for example, are dedicated players that favor brands that introduce “novel elements” and offer “rewarding incentives,” whereas “New Media Consumers” – people who buy new games upon release, regularly update their videogame hardware and log the most gaming hours -- are least disrupted by ads and most influenced by ads to make a purchase.”

Whereas “New Media Consumers,” the majority of whom buy new games upon release, regularly update their video-game hardware and log the most gaming hours, are interested in a diverse range of games and have the highest relative engagement with portable gaming. Due to their frequency of social gameplay, this group is the least disrupted by ads, and most influenced by ads to make purchases, the report shows.

“When advertisers acknowledge these differences, they have a chance to make a significant, resonant connection with their audience that shares the positive affect gamers already have for their favorite IPs,” Activision Blizzard’s report suggests, adding that factors such as the type of game being played, the featured brands, and the timing of the gaming session can significantly influence ad preferences and receptivity.

Brands are not reliant on nascent in-game formats, either; they can choose between social touchpoints to reach gaming audiences, such as creator content on Twitch, user discussions on Discord, and e-sports sponsorship, WARC suggests.

“Gaming is a whole entertainment ecosystem, not a channel, and is stealing share from entertainment platforms,” says Jo Pereira, SVP strategy at Media Futures Group. “However, clients have not grown up with gaming, and feel less confident with the opportunities.”

Gaming may also generate higher viewability and attention rates among consumers, due to difficulty in multitasking. In-game rewarded video ads, for example, achieved an 100% on-screen impression rate on average of over 10,000 attentive seconds per thousand impressions, exceeding the benchmark of 83%.

Younger gamers spend over 12 hours per week on games on average, and consumers in markets like China, Hong Kong, Taiwan and Vietnam are most likely to use games as ways to socialize, according to WARC.