What is in-game advertising, and why should brands care? I’ll try to answer both these questions. I’ll also address why uptake for this ad format has been slower than many of us expected, and what we might do about it.
What is In-game Advertising?
In-game advertising refers to any ad placement within a video game environment. An easy way to think of this is as ‘Out of Home’ advertising in a virtual world, as most of these ad slots, for now at least, exist in the form of billboards or banners that players will naturally encounter in their playing experience. These placements tend to be found in arcade, sports and open world games. However, as in-game is a digital media format, it is often compared to display advertising as well. More on that later.
In-game advertising has been around almost as long as video games themselves. In the summer of 2019, I found myself in the basement of a south London pub staring up at a projector screen watching four punters playing MarioKart 64 between glugs of craft ale. Lo and behold, as they careened around the first corner of the Kalimari Desert track, firing shell missiles and lobbing banana skins at each another, I spotted three large billboards on the side of the track.
Game developers of certain genres have long included ad placements in their games to make the environment more realistic, rather than to generate a significant revenue stream from advertisers. One exception is sports games that feature real-world leagues with existing sponsors, but those placements are often bundled in as added value to the broader sponsorship deal rather than treated as a separate, targeted media buy.
Outside of sports, games often feature house ads to serve this purpose (realism), or parody brands which add humour, such as in the Grand Theft Auto series. In the case of MarioKart though, the brands featured on the billboards were simply fake. Similar in look and feel to real brands, but not in an obviously humorous way. Admittedly, Marioro in instead of Marlboro is quite good.
Fast forward to 2021 and skipping over some very ambitious attempts to scale in-game advertising in the mid-2000s (see Massive Incorporated, which was purchased by Microsoft in 2006 for at least $200m, and closed in 2010), and suddenly we have arrived at an inflection point. The big change? The advent of programmatic advertising and the inevitable convergence with gaming. The capabilities of programmatic ad tech lend themselves perfectly to scaling in-game advertising. Here are a few reasons why:
Access. Programmatic facilitates easy access to networks of long tail games, largely played on mobile, that may not generate a lot of revenue through the traditional business model of video games: sell the game on release, and, if you can, generate in-game purchases such as loot boxes and other DLC (downloadable content) bundles. The makers of free-to-play games are more welcoming of in-game ads for obvious reasons, so long as they do not lose large numbers of players because the ads are annoying or intrusive. As demand scales, so the thinking goes, the bigger game publishers will take notice of this and will open their AAA titles to programmatic buyers as well. It remains to be seen whether the big boys will do this as, frankly, they don’t need the revenue.
Dynamic. Programmatic buying allows for maximum buying flexibility. Owing to DSP capabilities as they are now, buyers can toggle just about any targeting parameter one can think of in real-time. In-game does not offer as many targeting options as display or OLV at present, but buyers are still be able to up-weight or down-weight delivery on given days or during given hours, choose ad placements, apply age-gating, and track viewability, to name a few. The mind wanders when you think about the unique parameters that gaming could offer that others cannot, such as targeting users on a win streak or optimising towards a telemetry (positioning) metric, as they exist in a 3D environment.
Integrated. As so much media is bought programmatically now, brands benefit from keeping their digital buys within a single platform. Part of the appeal of this is being able to apply brand safety, viewability and fraud measurement consistently across different types of campaign activity, as well as to unify reporting. This is the aim, at least.
Why Should Brands Care?
With the context out of the way, it’s time to ask, so what? Why is in-game advertising beneficial to marketers? What advantages does it provide over other paid media channels?
As I see it, there are four main benefits of running an in-game advertising campaign. They are:
Relative value. Clearly, the ad spots in games are different from one another. As one might expect, proxy metrics like viewability are affected as a result. Even impression counting is different – sometimes three billboards are counted as one, other times as three. Ahem, standardization please and thank you? Anyhow, ad placements can be chosen to virtually guarantee viewability. An example of this is the starting line of a racing game, where no matter what happens, the cars are static for a few seconds before the lights go green and the race begins. Unless the player exits the race in less than one second, and far before the race begins, any ads around the track are going to be 100% viewable according to the IAB standard. When you also consider that average rates for in-game advertising are comparable to standard display, this makes the placement great value for money. Highly viewable, strong reach, competitive price.
An elusive audience. Linear TV watching is falling rapidly amongst younger audiences. Those who play games online are, apparently, almost twice as likely as the average internet user to have an ad blocker installed, making them much harder to reach through display. Online gamers treat platforms like Twitch, YouTube and Discord as their social platforms, and spend less time on Instagram and Snapchat than the average internet user. According to Nielsen, over half of esports viewers on Twitch do not watch any linear TV at all, and only 50% of them own a paid TV subscription service. When you look at the whole picture, these gaming audiences are probably harder to engage through existing paid media channels than you might realise. It’s not necessarily that brands are failing to get any messaging across to this audience through other media channels. As I said in the primer, I don’t believe other media channels are dead and buried. It’s more that a brand’s potential ability to stand out, get noticed, and create a lasting impression with this audience is much greater through gaming. In the short-term, this might be because of unexpected visibility – people are used to seeing ads from brands they buy on TV or social media, and so are perhaps more inclined to tune them out. When they appear in a game that a player has been enjoying for years, it is surprising, and therefore more memorable (as long as the ad is high quality).
Brand safe. Given the unchanging nature of video game environments there is limited exposure to brand risk when compared with other digital media, where the content changes daily and can cover almost any conceivable topic. More recently, developers update games on a regular cycle, but these updates are unlikely to involve adding new ‘brand unsafe’ content to games – Formula 1 aren’t suddenly going to add rocket launchers to your race car (they should though, maybe as a side mode for a limited time. That would be excellent). Even if there was some potential risk in a scheduled update, it should be relatively easy for developers to give their advertising partners the heads up well ahead of any changes going live. The conversation, then, should shift more towards brand suitability. Is Heineken right for a racing game? On the face of it, perhaps not…until you see what Heineken did with Formula 1 and the ‘When you drive, never drink’ tagline, promoting their non-alcoholic beer. Will we ever see household brands in-game in shooters like Call of Duty? This is a fascinating question to ponder: how long can marketers resist access to such a vast and highly engaged audience? Popular TV shows are violent, and advertisers are perfectly willing to buy ad slots next to those shows. Perhaps controlling the soldier rather than watching the soldier crosses an ethical line. Or perhaps it is only a matter of time.
Creative freedom. This one is a little more future facing. A simple in-game execution usually involves re-purposing a display banner, which is then slotted into the ad placements within the game. This is a quick and easy way to scale a campaign, particularly if reach/awareness is the goal. But every game is different – even within the same genre – so the creative potential beyond banners is enormous. Advertisers are only limited by their imagination in this regard – but they do need to think about the player experience and the micro-world/culture in which they are positioning the brand. Anything that can be built in a virtual environment can be used to demonstrate a brand’s distinctiveness and if done correctly, thinking of the player and the game environment first (and good luck convincing established game developers to work with you if you overlook this part), we will see an explosion of creativity in this space. We are already witnessing the first evolution beyond banners into skins/wearables. After that I think we go beyond advertising into content, which is a conversation for another day.
Why has uptake been slower than expected?
I will suggest there are at least two answers to this question. Before I outline them, I’d like to preface by saying that these two issues were probably unavoidable. I also think they will fade over time.
1. In-game advertising has been compared to existing ad formats far too much. Namely OOH (“it’s just OOH but virtual” - games set in sports stadiums/cityscapes) and display advertising. This makes me a hypocrite, of course, as this is how I started this piece, and how I have explained in-game advertising to clients more times than I can remember. The reason is obvious: having a reference point is like a shortcut. We can show the main attributes of the format without exploring the nuances in detail – what makes it different to OOH and display - because we often don’t have time for that. Why is this a problem? Because you immediately get sucked into a discussion about measurement, verification, and attribution. Why can’t we measure sales? What do you mean there is no click thru? When is my verification partner of choice going to be fully integrated? These are all fair questions, but the comparison to the full capabilities of display advertising is misguided. It needs time to mature. The format is also fundamentally different – the placements live in an interactive 3D environment for a start. So it is unfair to assume that there are no benefits to running in-game ads until it is as evolved as display. All it means is that we need to understand clearly what the benefits are of running in-game ads today, and then make a fair assessment based on the facts.
2. The second issue is, well, Travis Scott in Fortnite. The benefits of in-game ads are simple: noticeable (if they are high quality), viewable, competitive pricing, and deliver strong reach across a potentially elusive audience. That’s a lot of benefits! The problem is, when most marketers think of in-game executions, they think of Travis Scott in Fortnite. In other words, massive, expensive, hard-coded into the game, global live events. The kind of activation that gets 12 million people to tune in and watch (and god knows how many more millions to watch the replay), that dominates the trade press for weeks (or is it years at this point?) and wins glamorous awards. The net result is that every marketer now fantasizes about being involved in the next once-in-a-generation Fortnite/Metaverse campaign, so when they see mock-ups of banners set around a football pitch, they think ‘Why on earth would I do that? No trade magazine is going to write an article about us doing that. My boss won’t notice or care’. These are all very human responses, but again, misguided. Not every campaign is going to be a global sensation. This thinking is as ludicrous as expecting every campaign you run to go viral. We are holding all gaming activations to that standard, and it is completely unrealistic. We don’t do that in other channels, so we shouldn’t do it with gaming. Instead, we should think practically, and make decisions grounded in the principles of advertising. The focus should probably be on getting brand X in front of as many potential customers as possible, and to make the placement as noticeable and memorable as possible, within the available budget. ‘Hard-working media’ as the saying goes.
In-game advertising is still relatively nascent. It has some improvements to make before it becomes a staple in the digital marketer’s media mix. But one thing is for certain: it solves, at least to some extent, real problems that marketers have only recently started to take seriously. It is high value and easy to activate. And when done correctly, achieves two basic yet vital objectives of advertising – that people notice the ad, and recall the brand.
LA.