The latest analysis from AdExchanger highlights the ongoing challenges faced within the gaming segment of the advertising ecosystem. Reports from the IAB and WARC/Dentsu indicate a palpable stagnation, revealing that brand advertising expenditure on video games has yet to catch up with the substantial amount of time audiences dedicate to gaming activities.
Proponents of in-game advertising are expressing a mix of frustration and resignation due to the glacial pace of growth in this area. Historically, selling advertising space in and around video games has been an uphill struggle, particularly due to issues such as brand safety concerns and stigma surrounding mobile gaming.
The article identifies several factors contributing to this stagnation. It notes that "rewarded" advertising had long been viewed negatively, impacting mobile games’ reputations as "premium" environments for brands. The emergence and subsequent decline of the metaverse concept have also contributed to a complex landscape, although platforms like Roblox continue to thrive without closely aligning with the 'metaverse' label. Furthermore, cultural issues such as the fallout from "Gamergate" and various scandals in the gaming industry have made potential advertisers wary.
Fundamentally, the article posits that the gaming industry bears the responsibility of transforming gaming into a critical advertising channel as opposed to a secondary option. To achieve this, a collective effort from game publishers is necessary to foster better connections with advertisers. Unlike other media segments, such as out-of-home and podcasting that have capitalised on collaborative initiatives to enhance their visibility to advertisers, the gaming sector has largely remained fragmented.
The analysis further critiques the prevalent dependency on app-install advertising revenue within mobile gaming, noting that such overreliance has stifled the industry's creativity and innovation. Advertising strategies focused predominantly on performance campaigns often disregard brand partnerships, leading to a perception of gaming advertising as less attractive. Inadequate access to essential data and a lack of efforts to differentiate branded content from performance-driven content exacerbate these issues.
The piece underscores a notable decline in innovation post-COVID, with the gaming landscape no longer leading in entertainment advancements as it once did. As alternative channels like retail media and connected television (CTV) gain traction, brand marketers are increasingly cautious, looking for compelling reasons to invest in gaming outside of conventional engagements, such as high-profile in-game events.
However, the report does provide perspective, pointing out the sheer scope of the gaming market. Subway Surfers boasts four times the number of active users as Netflix's ad-supported offering, with worldwide gaming revenue reaching $185 billion in 2022—over three times greater than the combined revenue of the music and movie industries. In light of these statistics, the authors suggest that the onus is on the gaming industry to amplify its messaging to advertisers, presenting a strong case for gaming as an essential part of any advertising strategy.
As advertisers continue to navigate a rapidly evolving landscape, the insight from AdExchanger serves as a critical overview of the current and future state of gaming in the world of advertising.
Source: Noah Wire Services