Part 3 of Spotlit's Three Part Series detailing the under reported trends of 2020. Other topics include:
Part 3: Gaming - Live.Die.Commercial.Repeat
Simply put, it was an incredible year to be in the business of gaming. Video games and Interactive media drove a record breaking $140B in revenue worldwide (surpassing the global box office by over 11x), driven by the 82% of global consumers who played video games and/or watched video game content in Q1 and Q2. Just read all that again. These are startlingly impressive numbers.
Amidst this success, the Covid-19 pandemic amplified and accelerated deeply disruptive forces throughout the gaming ecosystem. The launch of multiple cloud gaming platforms, massive M&A moves, and the rapid adoption of Netflix style gaming services (Xbox’s $10/month Game Pass grew from 10 to 18m subs between April and December alone) will all have a significant impact on the trajectory of gaming in the years to come. Yet of the many changes occurring in gaming, little attention has been paid to a potentially more crucial trend that took shape this past year.
In 2020, as time spent, concurrent users, revenue and overall mainstreamification grew, so too did demand from brand advertisers clamoring to join in. This demand in turn triggered a series of experiments in in-game advertising, paving the way for new monetization opportunities long ignored by console and PC game developers.
To be clear, advertising in gaming is nothing new - mobile game ad revenue in the US alone accounted for just under $4B this past year. That said, inventory in the PC and Console segments has historically been scant, almost exclusively limited to hard coded assets in sports titles like EA’s Madden franchise. With traditional advertising channels severely challenged in 2020, however, brands ranging from Bud Light to Kellogg sought alternative methods to meet younger, tech savvy audiences in their native digital spaces.
Case in point: Under its new Arena Banners program, Riot Games cut deals with 21 partners, including Mastercard, Spotify, and Mercedes-Benz, to display advertising in League of Legends during high profile eSports matches. Similarly, Dollar Shave Club and Experian ran video ads in EA’s UFC 3, rewarding those users who opted to view the ad with in-game perks. And we couldn’t talk about brands advertising in video games without calling out Fortnite’s collaborations with Marvel and Air Jordan that got as much press on Hypebeast as they did on IGN.
On their own, these seemingly disparate tests wouldn’t be enough to label in-game advertising our underreported gaming trend of 2020 but the accelerating nature of these experiments led to an important second-order effect: significant agency and adtech investment in video game advertising infrastructure. On the agency side, both Publicis and Dentsu UK&I (among others) spun off specialist gaming divisions to service their growing number of interested brand clients. In terms of adtech, firms like Anzu and Frameplay have been on deal making sprees – integrating their dynamic in-game advertising technologies with programmatic marketplaces and standardizing reporting metrics to appease advertiser demand. The scale and expertise these players can now provide, coupled with the growing demand exhibited by big budget-brands, is laying the foundation for explosive growth and our readers would be wise to make moves now to capitalize.
For Brand Marketers – There is a first mover advantage to be had by using in-game advertising. CPMs are still relatively low for inventory that has shown early signs of being highly effective. But make no mistake, gamers are notorious for loudly criticizing advertisers perceived as intrusive to their experience. “It's not just about the audience and the impressions,” said Bill Durant, managing director of Exverus Media “Think about how your brand's USP can come to life in an in-game environment. If you are Gatorade, running in NBA2K as the official energy drink makes more sense than buying banners in League of Legends.” In other words, this isn’t the time to shoehorn creative from another channel into video games. Tailor your message to the context of the game and gamers will reward your investment.
For Game Developers & Publishers – The mobile gaming industry offer some best practices for early experimentation with ad formats (e.g., optional rewarded video is less likely to be perceived as intrusive) but your first move should be locking down ad measurement and attribution. In a nascent channel like in-game advertising, giving marketers the hard data that their investment is paying off will separate you from competitors and entice bigger budget brands. As mentioned above, Anzu and Frameplay are two potential partners if you want to go out of house. That said, there is a larger opportunity there to build out this functionality in house, more seamlessly integrating adtech into your preferred game engine and making it easier in the long run to innovate on ad formats.