In-game advertising (IGA) means advertising in video games, and it is different from advergames, which refer to making games specifically to promote a brand or product.
According to research by Mordor Intelligence, The Global Gaming Market in 2020 was worth USD $173.7 billion and is estimated to reach a value of USD $314.4 billion by 2026 based on the 9.64% annual growth rate over the forecast period (2021 to 2026). The biggest areas of growth are in APAC and Latin American regions with the expected annual growth of 9.9% and 10.3% respectively.
The biggest reason for the growth is the COVID-19 pandemic that has significantly boosted up the demand for personal computers (PCs) and gaming consoles like PlayStation 4, Xbox One, and Nintendo Switch. While the average time spent on playing video games was also increased by around 30% to 40% from all generations in 2020 due to quarantine, in which Generation Z and Millennials have the highest percentage of 50% increase in the time spent on playing video games.
Reasons to invest in in-game advertising (IGA)
- IGA offers “Interactivity”, which is unique compared to the rest of the options.
- IGA is a growing media with a lot of opportunities.
- The market offers very specific target markets, which are younger generations.
- Gamers are more engaging while playing video games, which makes in-game ads more effective.
The most important reason to invest in the IGA market is for its unique feature, interactivity. For instance, brands can place ads like billboards, posters, or even audio ads like radio in a 3D game to communicate with their target customers, while players are able to control their characters to interact with the brands and products in the virtual environment.
IGA is basically product placements in movies, but interactable, which offers businesses a completely different approach to communicate and engage with their target markets.
The IGA market is estimated to grow by USD $10.97 billion with an annual growth rate of 20% from 2020 to 2024. The key driver for the IGA market is the increasing popularity of video games, especially mobile gaming.
Compared to other traditional and digital media that are more mature and have fewer opportunities, IGA is currently expanding while many other businesses have not realized the strength and effectiveness of this media, there are still plenty of opportunities for small to medium businesses to take.
The market offers very specific target markets, which are Generation Z and Millennials. IGA also allows businesses to collect very precise data from players’ behaviors and optimize the ads in real-time accordingly.
These advantages allow businesses to effectively promote their brands to younger generations with a minimum amount of costs.
Finally, gamers play games to immerse themselves into the virtual world (3D games on PCs or gaming consoles) or to simply relax and have fun (2D games on mobile devices), therefore they are generally more engaging with both the contents and the ads in a game. According to research by Ghent University, the average brand recall rates are considerably high with brands being spontaneously recalled by more than 40 percent of participants.
Types of in-game advertising (IGA)
- Ad banners
- Video in-game advertising
- Dynamic in-game advertising (DIGA)
Traditional ad banners are known for having low click-through rates since people have gotten used to this form of ads and developed banner blindness. However, ad banners on mobile games are still new and fresh for most players, and the effectiveness of this approach is significantly higher than the standard one. In fact, IGA banners generate a 3% click-through rate, which is 30 times higher than the traditional banners, which only have 0.01%.
Video marketing is one of the most effective marketing strategies in digital marketing, and this applies to IGA as well. Video in-game advertising is commonly used in mobile platforms where most games are free to play. There are roughly 2 types of approaches being used by advertisers:
- Pre-roll videos: a video ad that pops up before the game starts.
- Rewarded videos: offering players rewards (for in-game purchases) by watching an ad for around 15 to 30 seconds.
A study by eMarketer showed that players appreciate in-game ads, since it allows them to play free games, while the game manufacturers can also make profit from the ads, and the ads are more effective since players appreciate them, which creates a win-win-win situation for players (potential customers), game manufacturers, and advertisers.
With the technological advancement in the gaming industry, dynamic in-game advertising (DIGA) has become available for businesses to utilize. Brands can select the specific regions to place their ads in real-time in DIGA-supported games, which allows them to be more relevant by changing their in-game ads based on the current trends in different regions. This has significantly decreased the costs for businesses since they only need to pay for a certain time slot, while having greater flexibility to modify their ads in real-time for different regions.
The most successful games using Dynamic in-game advertising (DIGA) are FIFA (a soccer game) and NBA 2K (a basketball game), where the ads are directly integrated into the video games themselves to create a realistic gaming experience, just like watching a game in real life.
Keys to succeed with in-game advertising (IGA)
- Understand your target audience.
- Choose the right platform.
- Select the best types of ads.
- Make it interesting, non-intrusive, and meaningful.
Understanding your target markets is the first step to create a successful IGA marketing campaign. For instance, if your target markets are boomers who rarely play video games, then traditional media or social media would be a more suitable option. However, if your target market is young people like Gen Z or Millennials, then IGA can be a good option to consider.
After understanding which groups you want to communicate with, choosing the right platform would be the next step. There are roughly 2 major platforms to select based on the game types. Due to the limited computation capability of mobile devices and the unique business model of mobile games, most of them are free to play 2D games. Therefore, the more intrusive types of ads like ad banners and video in-game advertising are the most effective and commonly used in mobile games.
On the other hand, video games on PCs or gaming consoles are mostly 3D games that players need to purchase to play. This type of player is seeking for a fully immersive and unique experience, therefore less forgiving to intrusive ads that could break the immersion of their favorite games. In this case, brands need to carefully select the suitable types of games to put their ads in.
For example, Honda placing billboard ads in a Harry Porter game would be extremely intrusive for players, which could lead to a less favorable attitude towards the brand and ads. Generally, sports games like NBA 2k (basketball) and FIFA (soccer) are the most suitable ones to place ads in.
Finally, like any other type of traditional and digital marketing, the message you want to communicate with your audience needs to be meaningful and memorable. Fully utilizing the features of in-game advertising is the key factor to make your ads effective and unique for your target markets.
If you like to learn more about other digital marketing skills like search engine optimization (SEO), video marketing, and email marketing, please visit https://thedigitalmarketinginstitute.org/.
International Institute of Digital Marketing ™ is a certifying body founded in the USA by several long-standing marketers. We have years of experience in business, marketing, and more, and have put forth our combined experience to develop DMI.