6 predictions for the future of advertising in games

With 1.5b daily players (25% of the world’s population), gaming is a channel that advertisers cannot neglect. Over the past few years, the birth of hypercasual game genres and growth of platforms like Fortnite and Roblox have truly established gaming as part of the culture. Gaming platforms are not just games anymore, they are true entertainment destinations for the masses. This creates a new field of opportunities for brands to better connect with a young audience, which is increasingly harder to reach, let alone engage, on traditional channels.

However, it is clear that traditional advertising (banners or interstitial videos), being intrusive and hated by 91% of users, is not adapted to a future where entertainment becomes more immersive and 3D. While it is still a huge and growing market, the future of advertising in games will be very different from what it is today. Here are 6 predictions on how brands will interact with gamers by 2023.

Product placements 

Let’s start with the most obvious one - product placements. Product placements are essentially advertising in a 3D world - banners, videos or 3D virtual products inserted within the games. Natively integrated with the games, this new generation of adverts does not intrude or interrupt on the user, which creates a positive experience, and generates awareness for millions of players (and streamers). Solutions like Admix (disclosure: my company) give control of the experience to the game developer. They are free to position the ads where they want within their gameplay, and whitelist categories of advertisers who are relevant to them. Advertisers can then programmatically target their audience. These product placements can be interactive, and monetized per view, engagement and even purchases.

Prediction: 90% of world’s largest brands to embrace in-game advertising via product placements. In-game will become its own programmatic channel by 2023, and remain the best opportunity for brands to target a huge audience at minimum starting cost.

Virtual goods

The next generation of product placements will be virtual goods: virtual items that can be earned or purchased in-game to add to the user’s inventory. Second Life has pioneered virtual goods on their platform, enabling players to buy and sell items since 2005. Their economy is still worth $50M a year. More recently, League of Legends and Fortnite have done collaborations with brands like Louis Vuitton to integrate their products in their game. Products can then be traded amongst players, which creates free publicity via word of mouth without being seen as intrusive. Blockchain technology enables to keep track and ownership of virtual goods via non-fungible tokens - so that an exclusive LV bag cannot be digitally copied and used by someone else. By engineering scarcity, the value of digital goods will rise with the audience.

Analysts expect virtual goods to be a $190B industry by 2025. As we increasingly live online, more brands will use this as a way to showcase their products to consumers, and give them a chance to try them on their avatars, or virtually with augmented reality. 

Prediction: Fashion/apparel and sport brands targeting young people are leading the way here, developing accessories that look cool in-game. More marketplaces like OpenSea will emerge to support a scalable infrastructure to create, deploy and track virtual goods.

Player sponsorships

Of course, sponsorships already exist in esport, with top teams and players being sponsored by RedBull, BMW and other brands. But with streaming platforms like Twitch or Mixer exploding, any player can become famous - not only the pros. The most famous streamer in the world, Ninja, is not considered a pro player, but his entertaining streams of Fortnite or Valorant attracts millions of fans and sponsorship deals with Adidas. These opportunities will extend to smaller influencers in the future. Think about the growth of popularity of Instagram over the past 8 years. First, influencers were mainly celebrities, endorsed by big brands. Eventually, micro influencers grew with the platform and ended up doing promotions for smaller brands. Fast forward to 2020, 75% of brands have run some form of influencer marketing. Streaming is just yet another platform for brands to target younger generations in a native way.

Over the next few years, we will see all brands across verticals flocking towards smaller streamers to sponsor them. A good way to do this without affecting the user experience is to brand their avatars or accessories, to be seen by millions of people streaming the content online. Players essentially become brand ambassadors within the game.

Prediction: in addition from the obvious ones, legacy brands struggling to appeal to young generations will be using this as an opportunity. Insurance companies, car manufacturers, airlines, telcos - sponsors you would normally see on a football jersey will make their way in-game first.

Loyalty programs

Gaming could bring a twist to the good old loyalty program that brands have been using for years. Think of what airlines, who rely on loyalty programs more than any other industry, are doing to make their loyalty program more appealing to consumers: they created alliances. If two airlines are members of the same alliance, customers can rack up loyalty points across one airline and redeem it on another. Similarly, a gaming loyalty alliance would enable players to aggregate points across various games, as they complete missions and levels. These points can then be redeemed for discounts or offers on real brand products. 

For the game publishers, signing up for this alliance is totally free and helps them retain users longer, as they have a reason to keep playing, to unlock more points. They could also be compensated as an affiliate. For advertisers, it is a new marketing tool and channel to get exposure to hundreds of millions of players daily. This has already been tried, but mainstream brands were not interested in gaming until recently.

Prediction: brands heavily relying on loyalty programs (insurances, airlines, supermarkets, cinemas) to adopt this model first. The infrastructure is likely to be built by a monetization solution, already integrated with a wide selection of games.

Virtual events

A month into the Covid pandemic, Lady Gaga and other artists announced One World Together at Home, a mega concert taking place in… Roblox, the sandbox virtual world with 100m users. The concert ended up raising an unprecedented $127m for Coronavirus relief. The month before, Travis Scott performed in front of 12m people in Fortnite. Earlier this year Alexandria Ocasio-Cortez, member of US congress, joined a Twitch stream and ended up raising $340k to support transgender rights. Can you imagine a better platform to reach and engage young people? Political parties had already crashed Second Life in the early 2010, realizing how undervalued this virtual estate was.

These examples show that gaming platforms are more than games - they are entertainment and social platforms, a 3D version of the internet. With 1.5B people playing games daily, it is a channel increasingly harder to miss. In the near future, brands will pay these platforms to do their launch events in-game. While renting out the front lawn of Animal Crossing would be expensive, it might still be cheaper than the logistical costs of renting actual real estate, and certainly provides more exposure.

Prediction: entertainment celebrities and brands will lead the way and leveraging gaming audiences to promote their events - increasingly more festivals will be streamed in-games - just yesterday, Wave announced a $30m round for their virtual concert platform! In the next few years, any brand, politician appealing to consumers under 40 year old will follow.

Virtual land ownership

Eventually, brands will take this concept further. Why rent the virtual land when you can own it? Platforms like Minecraft, or Roblox, and more recently decentralised platforms like SomniumSpace or Decentraland gives the users a chance to own some of the virtual estate. Users can then monetize their lands in different ways: by driving traffic to their buildings and monetizing via advertising, entry fees, or selling virtual goods. Users can also rent their land to others willing to use it. As more of these platforms develop, corporate buyers will flock in. Owning a prime piece of virtual estate in a popular gaming platform will give these brands exposure to millions of users and an advantage over their competitors. While it seems crazy, it really isn’t when you think about games as a 3D version of the internet. Buying virtual land now is not different to buying a premium .com domain back in the early 90s. Can you imagine if you owned shopping.com or football.com? These domains are now worth millions.

Similarly, the utility of virtual land platforms will explode over the next few years as more people use it and a real economy develops on the platforms, and brands will capitalise on it to showcase products, services and remain top of mind with an audience increasingly living online.

Prediction: media brands and publications will be the first to buy virtual land, in an effort to capitalise on underpriced eyeballs. Eventually, all brands will have a ‘virtual HQ’!

These predictions are not as far fetched as you'd think. Every single one of them has been tried and tested by at least one brand already. Gaming platforms are where the eyeballs are going, and as long as the infrastructure supporting it keeps growing, that’s where brands will go. What do you think the future of advertising in game looks like? Comment below!

At Admix, we focus on user-friendly ads that are integrated with the gameplay, similar to product placements. In-game ads are the perfect environment for brands to place their ads programmatically and engage users while they play, without being intrusive and creating a bad experience. Get in touch to schedule a chat!