What will it take to get brands to increase their gaming spend in 2024?

This editorial series examines industry trends across the media, media buying and marketing sectors as 2023 closes and the new year begins. More from the series →

Gaming advertising is still in its early days, with some brands remaining skeptical about spending more on that sort of content. Going into 2024, convincing marketers to spend more confidently in gaming will be key to the success of companies in the space.

After an explosion in global gaming activity during the COVID-19 pandemic, gaming came back to the ground somewhat in 2023, but it is now firmly established as one of the most popular entertainment channels, and perhaps even the most popular, according to a 2023 study by Deloitte. Yet stakeholders in the gaming marketing and advertising industries feel that brands’ marketing spend in gaming has not yet scaled up to match this potential opportunity.

“I feel like [former Yahoo! chief sales officer] Wenda Millard 20 years ago, when eyeballs were up here and ad spend was down here — and here we are now, and 80 percent of all spending is digital,” said Enthusiast Gaming CEO Nick Brien. “So there’s always a lag; there’s a lag in any media.”

Digiday spoke to stakeholders in gaming advertising to get a better sense of what it might take to convince brands to spend more in the space. Here’s what they had to say.

Running the numbers

Deloitte’s research showed that gaming has become the most prominent form of entertainment among millennials and Gen Z, exceeding the popularity of streaming television and movies. In 2023, gaming industry revenues grew by 2.6 percent to $187.7 billion, according to Newzoo — far more than more established channels such as music ($26.2 billion) and print media ($47.2 billion).

Despite the cultural predominance of gaming, ad spend in the sector remains far behind traditional media. U.S. ad spend on games in 2022 totaled $8.6 billion — a small fraction of brands’ spending in channels such as social media and linear television, and a yet smaller fraction of the over $600 billion in ad spend in 2023. The gulf between these numbers appears to back up gaming advertising companies’ assertion that spending in the sector does not yet match the opportunity available to brands and marketers.

For better or worse, many brands still view gaming as an experimental channel — something to be pulled from an innovation budget, rather than budgeted for as a marketing pillar in its own right.

“Advertisers, right or wrong, are seeing it as bleeding edge, and that makes the conversation very messy — ’maybe we can’t invest in gaming until we crack this attention thing, or until we understand how it de-duplicates audiences from social executions, and what have you,’” said Activision Blizzard Media vp of global business research and marketing Jonathan Stringfield. “So, what then happens is you kind of keep raising that bar, in terms of burden of proof, higher and higher, and it gets hard to scale.”

Standing at attention

Although the Interactive Advertising Bureau and Media Rating Council collaborated to create new standards for the viewability of in-game ads last year, these updated guidelines did not lead to the influx of brand activity expected by some observers. Over the past year, it’s become clear that attention is the metric that brands really care about when it comes to advertising both inside and outside of gaming — and gaming advertising companies such as Activision Blizzard Media have responded by developing their own dedicated attention measurement solutions. 

“Attention is a really important measurement piece, because not only does it help in a comparative analysis across the other digital channels, but you can also use it when you’re talking about traditional channels as well,” said Indy Khabra, the co-founder and media, data and technology lead of the gametech company Livewire. “Attention crosses both traditional and digital media, which is very unique for a metric. You can’t do viewability on linear TV.”

An abundance of formats

Advertising can be a slow-moving industry, in part because the marketers who command millions of dollars of brands’ ad budgets are relatively unlikely to be the ones who stick their necks out to experiment with a new format. They like streamlined processes, like the IAB’s regulated ad units for digital displays, or the standardized lengths for commercials and video ads. 

One reason why marketers have been wary of diving deeper into gaming could be the sheer variety of potential entry points into the space for interested brands. There is nothing approaching a standardized ad unit in gaming; instead, marketers are forced to choose between a wide range of options that includes intrinsic in-game advertising, influencer and esports org partnerships and advertising on Twitch and YouTube, in addition to more niche techniques such as branded community Discord channels.

If gaming companies truly want brands to increase their spending in gaming, they will have to work together to develop standardized units that can be applied across their multitude of inventory types. 

“You can’t buy it effectively, because there’s so many fragmented units,” said Andris Merkulovs, CEO of the in-game advertising platform Monetizr. 

The premium question

It’s no secret that securing inventory inside premium console titles will be key to the success of intrinsic in-game advertising companies — but despite reports last year that both Sony and Microsoft were looking to spin up their own internal in-game advertising departments, the big console manufacturers have remained reticent about their in-game ad plans ever since. 

Still, it may just be a matter of time until the premium game developers depend on advertising as a revenue stream. As gamers flock to free-to-play and live service titles, the decrease in premium gaming income could be the impetus they need — but for now, the big game developers are still making money hand over fist without having to compromise their games with advertisements.

“I find it fascinating that the big publishers still have not leaned into this as the next revenue play,” Brien said. “Maybe they make too much money — I don’t know. Maybe they’re just too damn rich.”

Cutting deals

In spite of the slower-than-anticipated growth of the in-game advertising industry, in-game ad companies remain confident. They believe it is inevitable that brands will increase their spending in gaming over time — so the in-game ad companies that are able to outlast the competition in the present day will reap the rewards in the future. 

Confidence notwithstanding, in-game ad companies are taking concrete steps to help rectify brands’ caution around gaming. To help marketers become more comfortable spending in the sector, for example, the in-game advertising firm Frameplay has intentionally cut its margins to help improve sellers’ commission. The horse has been led to the water — now, the in-game advertising companies just need to figure out how to get it to drink.

“Frameplay is dedicating time and resources to show marketers how intrinsic in-game advertising works and the efficacy of it,” said Frameplay CEO Jonathon Troughton. “Media planners see the inherent value of gaming; we saw a slow adoption happen with CTV, and now it’s vital to every media planner. The same is seemingly true for gaming, even though it already has a massive audience.”

https://digiday.com/?p=528855

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : DigiDay – https://digiday.com/marketing/what-will-it-take-to-get-brands-to-increase-their-gaming-spend-in-2024/?utm_campaign=digidaydis&utm_medium=rss&utm_source=general-rss