Gaming Revenues Reaches $184 Billion, Yet Advertisers Remain Cautious

The gaming industry has surged ahead, boasting an impressive global annual revenue of $184 billion, surpassing both the music and movie sectors combined. With an estimated 3.4 billion people across various age groups engaged in gaming, the sector presents a massive audience and significant cultural impact. However, in-game advertising spending remains surprisingly low, as highlighted in WARC Media’s Global Ad Trends report, ‘Gaming: Advertising’s Untapped Opportunity.’

“Gaming has long been viewed as a crucial emerging opportunity for brands, especially those targeting younger demographics. Yet, in-game advertising expenditure remains modest,” said Alex Brownsell, Head of WARC Media.

He noted that game publishers are now focused on improving ad monetization, although evidence is still needed to solidify gaming as a viable advertising medium.

A Vast Audience Yet Low Ad Spend

Two in five people of all ages play video games, with 72% of those between the ages of 35 and 55 and 46% of those over the age of 55 playing at least once a week, according to Newzoo. Advertisers are cautious to fully commit to gaming as a platform for advertising, despite its broad appeal. Thanks to enhanced capabilities like fraud detection, context and age rating, and engagement data, nearly 90% of advertisers surveyed by the IAB saw gaming as a brand-safe medium. Yet marketers continue to be skeptical.

US Advertisers’ In-Game Spending Projections

Dentsu forecasts that US advertisers will spend $6.7 billion on in-game ads in 2024, amounting to just 3.7% of total US digital ad spend. Despite this, research by Dentsu, Lumen, and Activision Blizzard Media indicates that in-game rewarded video ads achieve a 100% on-screen impression rate, exceeding the benchmark of 83%. This underscores the potential of gaming for active engagement and high attention rates.

Measuring Attention in Mobile Game Advertising

Gaming’s interactive and immersive nature makes it an ideal medium for advertisers. Activision Blizzard Media, in partnership with dentsu Media US, introduced “Play Attention: Calling Focus to Gaming,” a study employing eye-tracking technology to measure gamer attention. The study found that gaming environments generate higher viewability and attention rates compared to other mediums.

Rewarded video ads, which offer gamers incentives to engage with advertisements in return for in-game rewards, stand out for their respectful approach to gamer choice. These ads achieve a 100% on-screen impression rate and command an impressive average of 10,043 attentive seconds per thousand impressions, surpassing traditional online video advertising.

Future Advertising Strategies in Gaming

The insights from the “Play Attention” study suggest an integrative approach to marketing within games. Ads should complement rather than disrupt the gaming experience, aligning with gaming content and communities to resonate authentically with audiences. As the gaming industry continues to grow, adopting new and effective advertising strategies will be crucial for brands aiming to connect meaningfully with the gaming community.

With companies like Netflix investing heavily in gaming and platforms like LinkedIn and YouTube integrating gaming content, the future of advertising in the gaming industry looks promising. However, as Jo Pereira, SVP Strategy at Media Futures Group, EssenceMediacomX, notes, “Gaming is a whole entertainment ecosystem, not just a channel. It’s stealing share from other entertainment platforms, but many clients still feel less confident with the opportunities it presents.”