Advertising in Video Games Remains Stagnant - But There Are Signs of Hope
New moves from Roblox, Google and Discord could prove promising
Gaming is fully immersive. There is nothing like having a brand appear in a players’ favorite game as they play with friends online, and now marketers can do so at scale via a broad array of tech startups.
Those were among the key messages at this week’s 4th annual IAB Playfronts event -as well as the Advertising in Games Forum back in 2005.
Unfortunately, there is a sense of déjà vu when it comes to advertising in video games, the always-about-to-break-out medium. As Zoe Soon, VP, Experience at IAB took the stage, she laid out the fact - not without a small degree of frustration - that in-game advertising still makes up just 5% of digital ad spending.
“It doesn’t add up,” Soon said.
Will it ever? There’s little doubt that gaming is a massive cultural force/time suck for numerous generations, particularly Gen Z. The recent Indiana Jones release just took off, as did the latest Call of Duty. Except brands can’t advertise in either.
At the same time, the gaming industry is actually struggling, enduring numerous rounds of layoffs, and even - as leading game industry analyst Matthew Ball recently laid out - a puzzling decline in participation.
If gaming is cooling, and tariffs are looming, just how much urgency is there for brands to crack this difficult-to-crack medium?
Well, there may be reasons for optimism:
1)Roblox made a somewhat surprising deal with the supposed industry enemy - Google - designed to push out background video ads and reward ads - all over the platform’s millions of games. “This will scale,” said one Playfront attendee. Those with long memories might recall that Google acquired an in-game ad company back in 2007!
Everything about in-game advertising screams for centralization and simplicity. For instance, there are miles between ads in games like Candy Crush and custom activations in an Assassin’s Creed. “This whole event is about reducing friction,” said Nathan Lindberg, head of brand partnership at Overwolf. Google is good at simplification.
Ashley McCollum, head of immersive media solutions at Roblox, said currently there are roughly 400 brands on the platform, many of which have built custom experiences.
“Our vision is to become a staple on every media plan that is trying to reach Gen Z audiences,” she said. “We want it to be so much easier.”
Indeed, if there’s a knock against Roblox, is that (in addition to its audience is perceived as being super young) its that brand experiences can only reach so many players without marketers paying to drive people to them. This deal should help.
Discord gave one of the more compelling presentations
The tech company, which offers a platform designed for people to play games while video chatting with small groups of friends, is now 10 years old, and reaches 200 million people globally (about a quarter of which are in North America).
The company first introduced ads a year ago, relying mostly on endemic game advertisers and a campaign for HBO’s Dune.
“Game marketers have it tough,” said Peter Sellis, Senior Vice President, Product. “It’s challenging to break in. From the day they were born gamers were pressing the skip button. And this is a tough group to appear to authentically.”
Discord’s answer to that challenge are ad units called Quests, invite gamers to play games, watch trailers and other custom content, for 15-minute sessions. Not only are the ad experiences opt in, the creative is compelling, and theoretically they enable brands to cut across multiple gaming titles through a single platform, and at least getting close to some of those, non-ad-supported titles.
“This is about organic influence, and being alongside top games, said Sellis. “Ad fatigue is real. You need to gamify ads and make it fun. We see this as a generational white space.”
3)AI might make things easier.
Big Technology has a great interview with Roblox CEO David Baszucki about how close the company is to letting players use a few AI prompts to make their own games. This sort of thing would also seem to be good news for brands, as making ‘playable’ creative has required resources, cumbersome development time, etc.
Yet as Matt Sharpe, Creative Director of Advertising at Zynga explained, while video ads in games are great generate awareness, when brands like Progressive make simple-to -play games and run them at ads, that’s when engagement and resonance really spikes.
Matt Edleman, recently named president of the gaming ad firm Super League, concurred on my podcast last week. “If you don't make your brand playable by showing up in these playable environments and tapping into that love of gameplay, you are actually missing out on important ways of engaging your audience.”
4) Maybe cloud gaming helps advance ad models
We thought this might happen when Google got into cloud gaming with Stadia. That platform is now gone. But as Netflix, and particularly Amazon push into ‘console-less’ cloud gaming services, they may be well positioned to push more ad opportunities in games. After all, Amazon is an ad juggernaut, and already has the infrastructure and relationships to accelerate such a play.
Of course, you need to have lots of great games, and lots of players, on these cloud platforms to make them attractive to brands.
Ok, now for the downside:
1)The big guys still have an aversion to advertising.
Take Epic Games, makers of the mass hit Fortnite as well as the game engine for numerous other big titles. As one attendee explained to me, even a relatively huge ad business would be small potatoes for a company projected to make $5.8 billion. While Roblox is all in on ads, and Discord is moving in that direction, Epic seems to have no interest.
2) Microsoft has been quiet
The software titan finally completed its acquisition of Activision Blizzard in 2023, which some saw as a sign that it planned to push harder into in-game ads. But folks I spoke to at the Playfront said they’ve seen little sign of even basic integrations between teams -and that the company may be just a bit distracted by the AI Wars
3)The old ‘where does the money come from’ question.
As to who funds in-game advertising, brands and agencies are still figuring that out. While mobile games often come right out of performance/display budgets, activations can come from groups like Havas Play, or video teams, social teams, or innovation dollars. “The budgets are all over the place,” said one attendee.
That has been true - for roughly two decades.
4)The industry still treats gamers as a weird ‘other.’
A big theme at the Playfronts was that nearly everyone is a gamer, in some capacity. Yet as Edelman put it, the distance between Wordle players and World of Warcraft devotees is vast. “If I'm sitting around a room at a media agency and I'm thinking about running video ads, I'm not thinking about running video ads against video viewers,” he said. “That's not the way my brain works. I think about running video ads against males 18 to 34 fashion enthusiasts. Our media agencies and particularly brands still thinking about advertising to gamers. It doesn't make sense.”