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With Increased Video Game Usage, How Are In-Game Ads Adjusting?

With Increased Video Game Usage, How Are In-Game Ads Adjusting?

Let’s just say that the video game industry is not hurting this year.

No matter how you look at the numbers, business is looking good. Microsoft’s Game Pass surpassed 10 million users in April. Nintendo’s Switch console sales were up 24% year-over-year. Twitch’s number of gaming hours increased 50% between March and April.  

As video game usage increased, so did the ad spend for video game products. MediaRadar found that ad spend for the video game industry in April was more than double January’s spend.

Most of this ad spend came from virtual retailers, game subscription services, video game titles and consoles.

But what about spending within games? How are brands using in-game advertising to reach new consumers?

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How has in-game advertising grown over the last few years?

The in-game ad format has changed

In-game ads have evolved over the years. Originally, developers would work the ad creative into the code and release a game update for users. With time, in-game ad capabilities advanced. Ads could be inserted dynamically, but this was still costly.

Now, ads can appear with even less disruption to the game. 

“Rather than inserting adverts into the game for the players to see, there are solutions for inserting adverts into a stream,” explains founder and CEO at Cheesecake Digital Philip Wride. These adverts in streams look like they are part of the game. 

Fortnite is the biggest game revolutionizing in-game advertising. From Nike Inc. rewarding virtual Jordan sneakers to Travis Scott’s concert that drew in over 12 million attendees, Fortnite is the master of grandiose in-game advertising. 

“Sites joke that Fortnite is no longer a game, but one big advertisement — and there is some truth to that,” writes Matthew Liebl. Even though fans know they are seeing ads, it’s not annoying to them because the ads feel part of an exciting experience.

This type of experiential ad is a far cry from banner ads or pop-ups that users don’t want to see. 

The in-game ads are reaching different personas

There’s an old stereotype that gamers are solitary guys chatting on headsets drinking a caffeinated beverage — but that’s far from the truth. 

There’s a video game for everybody today. 

“I’d argue that almost every brand in the world has an overlap with the gaming audience,” said, CEO and co-founder of in-game ad platform Itamar Benedy. Why? Roughly 2.6 billion people will play a mobile game this year and 1.3 billion will play a video game on a PC. 

With that many people playing, you’ll see everybody from aunts playing Candy Crush to teenagers playing eSports. With those different buyer personas, brands from Kindle to Disney to the NFL can find someone to market their brand to in a video game. 

Also, advertisers remember that younger generations are changing their media preferences. 

Millennials and Gen Z’ers are watching TV less and turning their attention to games more. In 2018, these generations were watching TV 17% less. On top of that, they are turning to eSports instead of live sports. The eSports’ audience in 2019 was 10x larger than the Superbowl’s viewership. 

With more attention on games, advertisers can get creative to reach their audiences. They can learn from brands like DHL and Wendy’s who’ve used games in unique ways to build brand awareness among different customer segments.

The impacts of COVID-19 on in-game ads

During this pandemic, some ad tech startups and video game developers used technology to display public service announcements in games. 

Rebellion Developments placed ads that said “Stay home. Save lives.” in their games. Activision Blizzard’s London-based division, King, donated 230 placements to COVID related information. 

As we reopen, we will likely see PSA’s decrease, but the value of in-game ads increase.

Looking at the impact of COVID-19, an analysis from Technavio predicts that the in-game advertising market is expected to grow by nearly $11 billion by 2024. Games have only become more popular during this time, and even though people will return to work and school, COVID habits will linger. 

This gives advertisers more room to be creative and think about new ways to reach buyers.

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.