Big Budgets, Bigger Challenges: Adtech's Role in Gaming

A recent study conducted by the Interactive Advertising Bureau (IAB) and Advertiser Perceptions has unveiled significant shifts in the video game advertising landscape. The research, which surveyed 300 advertising decision-makers with a minimum media spend of $5 million, demonstrates that gaming has firmly established itself as a mainstream advertising channel. An overwhelming 91% of advertisers no longer view gaming as an experimental medium. This newfound confidence is reflected in budget allocations, with over a third of respondents now dedicating specific funds to gaming initiatives. The remaining advertisers are incorporating gaming into their general media budgets, signalling its integration into broader marketing strategies.

Audience Reach and Demographics

Gaming's appeal lies largely in its vast and engaged audience. With approximately 3.38 billion gamers worldwide, the platform rivals digital video viewership. This massive reach, combined with gaming's particular effectiveness in targeting millennials and Gen Z, makes it an increasingly attractive option for advertisers seeking to connect with younger demographics.

Spending Trends and Projections

Despite its growing acceptance, gaming ad spend still lags behind audience engagement. In 2023, U.S. gaming ad spend reached $7.5 billion, a slight dip from the previous year. However, projections suggest a rebound to $8.5 billion in 2024, with expectations of hitting $11.5 billion by 2027. This trajectory is supported by the fact that 40% of current gaming advertisers plan to increase their budgets in the coming year.

Platform Preferences

The study also sheds light on platform preferences among advertisers. Mobile gaming leads the pack, with over three-quarters of marketers having advertised in this space. PC and desktop gaming follow closely behind, while console advertising, though less prevalent, still attracts nearly half of the surveyed advertisers.

Brand Safety and Measurement Confidence

One of the most significant findings is the growing confidence in brand safety and measurement within gaming environments. Nine out of ten advertisers now consider gaming to be a brand-safe medium, and 85% express confidence in their ability to measure return on investment. This increased trust is crucial for the continued growth of gaming as an advertising channel.

Programmatic Adoption

The industry is also seeing a rise in programmatic adoption. A third of advertisers are using programmatic guaranteed methods, while others are exploring private marketplaces and open auctions. Notably, over a third of advertisers are running "always-on" gaming campaigns, indicating a shift towards viewing gaming as a consistent, rather than sporadic, advertising channel.

New Guidelines and Emerging Trends

To address the challenges and opportunities in this evolving landscape, the IAB has introduced new creative guidelines. These cover aspects such as aspect ratios, video ad length, and text readability, aiming to establish best practices that balance effective advertising with user experience across various gaming platforms.

Emerging trends in the industry include the rise of intrinsic in-game ads, which integrate more seamlessly into gameplay environments. Platform innovations, such as Roblox's new self-serve dashboard with advanced targeting options, are making it easier for advertisers to enter the gaming space. Additionally, the exploration of ad-supported models in cloud gaming services by companies like NVIDIA presents new opportunities for advertisers.

As gaming advertising continues to mature, it's poised to play an increasingly important role in comprehensive media strategies. The combination of a massive, engaged audience, improving measurement capabilities, and innovative ad formats positions gaming as a critical component of future advertising ecosystems. While challenges remain, the industry's trajectory suggests that video game advertising will continue to grow in both sophistication and importance in the coming years.