Video games have evolved into a powerful advertising platform, providing a unique and engaging medium for brands to connect with consumers. As the gaming industry continues to grow rapidly, advertisers are realizing the huge potential to reach diverse demographics, including hard-to-reach younger audiences, through this interactive channel.
Video game advertising ranges from subtle product placement and in-game billboards to more immersive experiences like “advergames” (i.e. games designed specifically around a brand). The convergence of games and marketing not only offers advertisers innovative ways to get their message across, it also adds a new dimension to the gaming experience, benefiting both the gaming industry and advertisers. In this guide, we explore the evolving facets of video game advertising.
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Video game advertising, or in-game advertising, refers to the integration of marketing content into the gaming environment. It can range from subtle in-game product placement to full-blown advertisements on game loading screens or as part of the game interface.
According to a March 2024 forecast by EMARKETER, US mobile game ad revenue is expected to reach $7.77 billion in 2024. For reference, total game ad revenue will be $8.59 billion, with mobile game advertising accounting for 90.4% of game revenue.
By 2024, mobile gaming ad revenue will account for just 2.8% of total US digital ad spending.
Chart showing US mobile gaming ad revenue from 2020 to 2024. (Subscribers only)
Types of in-game ads
Just as internet advertising comes in many different ad formats (display or video ads), in-game advertising comes in many different ad placements and types.
Static Ads: Ads that are built into the game and cannot be changed without an update. Interstitial Ads: Full-screen ads that play during natural pauses in gameplay, such as different levels of a game. Dynamic In-Game Ads: Unlike static ads, dynamic ads change based on a variety of factors, such as the player’s location, time of day, and progress in the game. Product Placement: This involves integrating a product, brand, or its attributes into the game in a way that makes it feel like a natural part of the game’s setting. For example, Chipotle has had a virtual restaurant within Roblox since September 2021. The restaurant chain has used this space to run limited-time cross-promotional events. Sponsored Content or Events: Brands can sponsor special game content, such as levels, missions, or in-game events. In 2018, Samsung began offering exclusive Fortnite skins for those who purchased Galaxy smartphones. The Samsung Fortnite skins received 2.6 billion impressions and won a Webby Award. Interactive Ads: These ads allow players to interact with the ad in some way. This can range from something as simple as clicking on a banner ad to receive a reward, to more complex interactions such as mini-games. Reward-based ads: These interstitial ads offer in-game currency as a reward for watching the ad to the end. Intrinsic/native ads: These ads are designed to blend seamlessly into the game environment and gameplay and are not intrusive. Ads may appear as part of the game itself, mimicking the game’s graphics and style. Banner ads: Ads that are overlaid on parts of the screen during gameplay. Video ads: Ads that are served in video format and may include a reward (such as a game reward for the player watching the ad).
What is an advergame?
In-game advertising and advergames represent two different strategies for integrating marketing into the gaming world.
In-game advertising aims to place advertisements such as banners, billboards, and product placements within existing games, exposing players to these ads during their gaming experience without altering the core gameplay. This approach is cost-effective and allows brands to leverage the existing player base of popular games. This strategy can also be used to increase brand awareness.
Advergames, on the other hand, are custom games developed by game developers specifically around a brand or product, with the entire game acting as an interactive advertisement. This strategy focuses on creating deeper brand engagement by immersing players in a game environment that puts the brand’s message at the center. Though more costly and less flexible than in-game advertising, advergames offer a unique and engaging way to connect with consumers.
Examples of advergames include Chiptole’s Scarecrow, in which the protagonist grows food for a healthier environment, and Chex Quest, a game developed for a cereal brand that mimics the popular video game Doom.
Choosing between these two approaches will depend on your brand’s marketing strategy, objectives, budget, and desired level of integration with the gaming experience.
Advertising trends in the gaming industry
Apple’s launch of AppTrackingTransparency (ATT) in 2021 disrupted the gaming industry, which relied on precise targeting and tracking for profitable installs. But the industry has since adapted. Mobile games are diversifying their monetization strategies to increasingly incorporate video ads and other ad features that are attractive to brands. Console and PC games are also slowly adopting programmatic advertising.
Although the gaming industry hasn’t received as much attention from marketers as connected TV or retail media, it is currently in the midst of a significant long-term growth in advertising revenues. According to a March 2024 EMARKETER forecast, advertisers are expected to spend $8.59 billion in 2024, with total U.S. gaming advertising revenues having more than doubled over the past five years. By 2026, it will surpass the $10 billion mark.
Still, there’s a disconnect between the amount of time gamers spend gaming and the amount of advertising money going into gaming. By 2024, time spent on mobile gaming will account for 10.7% of total time spent on mobile in the U.S. Mobile gaming advertising revenue will account for 3.8% of total mobile advertising spend.
A chart showing that time spent on mobile games will exceed advertising spend between 2020 and 2025. (Subscribers only)
In-game advertising is an attractive way for big advertisers to reach their target audience. In 2022, the Interactive Advertising Bureau and Media Rating Council updated their standards for in-game advertising for the first time in over a decade. Typically, in-game advertising is a space where competing developers fight for player attention, but big brands with big budgets are making their presence felt.
Mobile offers more monetization opportunities than console or desktop/laptop gaming, including interstitial ads, brand marketing through in-game events, and branded merchandise, whereas PC and console gaming rely heavily on subscriptions and purchases. Static surface ads and real-time events such as sports games are also valuable gaming avenues for marketers.
The number of gamers over 65 is on the rise, creating a new demographic for video game advertisers, although younger gamers have more purchasing power and are more likely to already be gamers.
Esports (electronic sports) is a branch of video gaming that involves organized competitive gaming between professional players and teams. Esports offers a variety of marketing and advertising opportunities, including sponsorships, partnerships, and collaborations with gamer influencers.
The benefits of in-game advertising
Businesses wanting to try gaming advertising should consider focusing on a specific platform or genre of game.
For example, furniture brands can partner with social simulation games. IKEA partnered with The Sims 2 to bring 76 items to the game that can be used to decorate your living room, bedroom, or home office. Another example is sports apparel companies Puma and Nike appearing in the basketball video game NBA 2K22. This is a straightforward and logical strategy, as these companies sell products similar to those featured in their chosen games.
Alternatively, targeting strategies can rely on demographic insights: a fashion brand wanting to capture the attention of moms could showcase their virtual goods through hyper-casual or casual mobile games, as this is the type of game that attracts the target demographic, according to our Video Game Marketing and Monetization 2022 report.
Casual games require little to no tutorial, can be played in a short amount of time, and are often puzzle, casino, or word games (as defined in the Video Game Marketing and Monetization 2022 report). Candy Crush Saga is an example of a casual game. Casual games typically have a primary audience of older millennials and Gen Xers.
Hyper-casual games are an even more playable subset of casual games (e.g. High Heels! and Flappy Bird). These types of games appeal to Gen Z and younger millennials, and skew slightly female.
The most successful types of gaming advertising are sponsorships, advergames and virtual goods because they offer something different to traditional gaming marketing methods such as TV and social advertising.
Not only can these ads help drive revenue, but they can also increase user engagement through actual gameplay by offering new features, cosmetics, or other rewards for players to engage with. Gaming ads can also reach new audiences if they go viral (e.g., TikTok’s Flappy Bird filter).
US Gaming Statistics
According to an August 2023 EMARKETER forecast, by 2024, more than half of the U.S. population (54.6%) is expected to be digital gamers.
Mobile gaming will be the largest segment, with 168.2 million people (49.2% of the population) playing games on their smartphones. There is an overlap between mobile, console, and desktop/laptop gamers: 9 in 10 digital gamers play on mobile, meaning just over 10% of gamers are solely focused on desktop or console. Chart showing US digital gamer population from 2020 to 2024. (Subscribers only)
Although there is a significant overlap, the demographics of each platform are different.
While the stereotypical gamer is thought of as young and male, a June 2021 Comscore study found that three-quarters of mobile-only gamers are female. However, men are prominent in console and desktop/laptop gaming, making up two-thirds of players across both devices. Gaming audiences are also skewed younger: by 2024, 75.1% of 18-24 year olds will play video games, according to an August 2023 EMARKETER forecast. In contrast, TV penetration for the same age group is just 54.5%, and is declining, according to a June 2024 forecast.
Gen Z Gaming Statistics
According to an August 2023 forecast, there will be 50.4 million Gen Z digital gamers in the U.S. in 2024, compared to 47.5 million Millennials. This gap will widen, reaching a difference of 5 million by 2027.
According to a March 2023 Kagan survey, 63% of U.S. adults of Gen Z play games at least once a week on console or PC, and 71% play mobile games. However, according to an April 2023 Giraffe Insights and Precise TV survey, Gen Z teens (ages 13-17) are more likely to play on console than on mobile or PC. This is likely because they haven’t had their phones for long enough to pick up years of mobile gaming habits.
A chart showing the types of video games that U.S. gamers prefer to play by generation as of April 2024. (Subscribers only)
Time spent playing the game
With the rise of smartphones and tablets, mobile gaming has become one of the most popular and accessible forms of gaming.
According to a June 2024 forecast by EMARKETER, the average time spent gaming on mobile devices per day in the U.S. is projected to be 25 minutes in 2024, up 2.1% from 2023. For reference, the average time spent gaming on desktop/laptop is 17 minutes, and the average time spent gaming on other connected devices (such as smartwatches and connected game consoles) is also 17 minutes.
Video Game Marketing and Monetization
In addition to advertising in video games, there are other marketing and monetization opportunities, including in-app purchases (IAP) such as subscriptions, in-game currency, and premium content.
According to our In-Game Ad Revenue Forecast 2024 report, IAPs for virtual goods in games (e.g. buying coins to progress to the next level) will reach $22.5 billion in 2024. In-app subscription spending in games pales in comparison, coming in at less than $1 billion ($940 million).
This article has been updated. It was originally posted on March 11, 2024.
