In-Game Advertising: The Most Untapped Opportunity Agencies Don’t Know About

‍

Compared to other dominant advertising channels like streaming, few advertising dollars are being spent on in-game relative to the number of eyeballs spending time there.

Anzu.io, one of our ad tech partners, put together the graphic seen here using data from AdWeek.

While there is significantly more time being spent on gaming, there is a tenth of the dollars being spent. This leaves a massive opportunity on the table and agencies aren’t seeing this or serving it to their clients.

We’re clearly pretty passionate about the in-game advertising opportunity, and so we caught up with our Senior Director of Sales, Matt Cronin, to talk about it. Read the full transcript below!

‍

Transcript: Matt Cronin on The In-Game Advertising Opportunity

Marc: One of the more interesting, I’d say, segments of the programmatic world these days is in-game advertising. It’s been coming up on our radar at Klever over the past few months, even in the past year, I’d say.

But there’s real opportunities now that started to materialize and so we started digging in. For those who are less familiar, maybe, we’re talking about the opportunity to insert ads inside of games, using programmatic means.

2022 spend was about $20 million. 2023 is looking like it’s going to be a bit above $40 million. So, very small in terms of the industry but the trajectory is really interesting, and you know we see that there are more players that are paying attention. Including Xbox and PlayStation who have set up their own ad teams internally, last year. So, it’s coming up.

There’s also VC-funded companies that are emerging and dedicating lots of resources in creating new products. And so yeah that’s what I wanted to talk about today, that’s why I invited my friend Matt Cronin. Matt runs commercial strategy for Klever and we’re going to talk about all kinds of things in-game.

Matt: It’s exciting! You know, it’s one of those things that we started getting a lot of questions about, my team, you know. Out in the field, I was getting a lot of questions about, you know, what’s next, I need something new, I need something interesting to show to bring to my clients. And so, it started as sort of a “me too,” right? Oh I heard about this in-game thing and now, it’s exciting. Cause we’re getting to the point close to that sort of precipice or that inflection.

Marc: It’s a big point.

Matt: It becomes truly actionable for many many types of brands and advertising agencies. It’s not just for Sony anymore, right? It’s not just for the entertainment industry.

There’s opportunity. Some now and growing rapidly that you can really find potentially an opportunity to promote your brand in this environment and we’re excited to help our clients understand the challenges, understand why it’s important, to understand why it’s different than, maybe, what they think or what it used to be.

And that’s one of the things that the team is out there, right now across the country talking to our partners and helping them understand, you know, when this is an opportunity to bring their clients, when they can sort of lead the conversation with their clients about what’s next, what’s coming and what’s exciting.

Marc: Can you tell me first of all what is in-game advertising and what’s the opportunity we’re looking at here?

Matt: Yeah! In-game advertising is really exciting for a lot of reasons, related to just sort of the business opportunity but also the experience in the environment that you get to access potential customers.

So, let me start looking at sort of programmatic space and looking at some of the more premium mid-to-upper funnel areas like audio streaming and video. When we start to look at sort of the time spent within those mediums and the advertising dollars spent, right now there’s a huge discrepancy, right? The advertising dollars are exponentially higher than the total time spent, and the audience there, which creates a very highly competitive environment. So, that’s going to drive CPMs up. It’s going to create just noise.

So we start to look at gaming. And gaming, right now, is sort of an all-encompassing term and right now globally, we’re seeing over 3.2 billion gamers worldwide. If you look at the same ratio of the time spent within that environment and the advertising dollars, we’re seeing an incredible opportunity of untapped area. So that time spent significantly outweighs the advertising dollars spent. So it’s the complete inverse of the sort of connected television and these other formats.

And so one identifying that there’s an opportunity there as the first piece, right and then it starts to be like you have to figure out  – how do you create that experience that is additive to the brand and the end-user? And that’s really where there’s a huge opportunity is when we talk about in-game.

Like I said, it’s all-encompassing but it’s yes it is mobile games, right but also we’re seeing huge growth in PC and console-based games. So right, now 45% of gamers are using a PC to game. 30% are on the console and that’s growing. And obviously yes, there’s still a huge mobile environment but as the phones get stronger and better and more powerful the gaming experience within those platforms or within those devices becomes even better and stronger.

Looking at the peripherals, the add-ons, you can get for your phone you can make it a full gaming system. It really is almost no different other than screen size really than some of the other experiences you can get.

Marc: Yeah and I know that on the console side, I know the Xbox and PlayStation stood up some advertising teams, last year as well.

Matt: Yeah!

Marc: It’s coming.

Matt: If they’re investing in the ability to sell those ads themselves and clearly they understand the opportunity there. And obviously owning that inventory and owning that ecosystem will give them an opportunity to really provide value to their advertisers and thus to their consumers which are the gamers.

Marc: Yeah that’s quite a lot of PC inventory too. It’s not just mobile.

Matt: No, no. I said about 45% of gamers are also on the PC. And growing daily as more and more games come out. We’re seeing, you know, the gaming systems, the custom-built PC’s. We’re seeing people shift back to that PC environment even.

Marc: Should agencies recommend in-game advertising to like all their clients? Does this apply to everybody?

Matt: No, it’s a great question and the short answer is no. I don’t think there’s a one-size-fits-all for anyone, right? Not every format is applicable for every brand. That being said, the perception that gamers are just young 18 to 24 – That is an inaccurate perception, or that really they’re just male.

We’re seeing a huge dispersion of sort of the age and demographics of gamers. 45 plus, all the way down to 18. There is a core user base of that 18 to 34 that really sort of elusive hard-to-find audience but I think of it… I remember back when sort of Facebook came out and everyone said, oh, you know older demographics aren’t on Facebook and we actually found was that all of our grandparents were on Facebook because they wanted to see pictures of the grandkids.

So as younger generations age, we grew up with, you know, Nintendo and Sega. So gaming is part of my childhood. And even today I’m not a hardcore gamer but I have an Xbox and I play games. And my friends do as well. So you know still marketing strategy and having a cohesive strategy that aligns with the brand should indicate where you place your advertising but I would say there’s no need to eliminate in-game just because of the perception that either one is not reaching your demographic or two is not reaching sort of agenda, right.

We’re seeing about a 55-45% split between, you know, male to female, which while still, I mean for all intents and purposes let’s call that even, right? Like if there’s an opportunity to find a game and environment that you can reach a potential customer when maybe, there’s no competitive spend there, right?

If you’re selling financial services on your own site, there’s going to be competition, there’s going to be chaos but if you can reach that user when they’re leaned in when they’re gaming when they’re in that environment, you really have an opportunity to make an impression on them. If you leverage sort of the advancements in the technology of late and provide an additive gaming experience through the creative and through the messaging, to the opportunity.

Marc: Cool! What about formats like in-game formats? Like, what, you know like for example in the olden days when you think about mobile gaming it was a lot of interruptions, a lot more popups and so that versus more native formats where the ad is part of the game.

Matt: Yeah, I think I think the term they’re using it is intrinsic in-game advertising.

Marc: Yeah.

Matt: And that’s a huge concern and something that the industry has done a really great job or not the industry but that sort of subset of the industry. And it’s not just in game advertising, right?

There was popups early on the web, right and we demanded less intrusive more engaging ad formats and that’s where sort of expandables came in and all sorts of more interactive ads. And so historically those in-game ads were disruptive, they were intrusive, they weren’t again additive to the consumer environment or they were incentivized, right? It was ‘watch this video, get tokens.’

I don’t know that you can really count that as a quality brand experience because you’re incentivizing someone to take that action. But now with just the advancement of technology, the advancement of games, games have become real life, right?

So immersive and so the advertising is now mimicking the real world, right? So you’re seeing interactive billboards within grand racing games or you’re seeing virtual product placement within sports games. You’re seeing videos in places where there are screens. And so it’s now sort of like the virtual world is mimicking the more positive experience of the real world just in that virtual environment.

And so again, it’s not unique to in-game, right? Creative always has to sort of match the environment in which it’s being displayed and so finding unique game-specific metrics and formats to leverage is what’s going to help drive the success of the medium of the format.

Marc: How about sort of measurement standards, industry standards for ad quality? Where are we at with that?

Matt: Yeah! So great question and a valid concern. I think early on as with a lot of things it was a little bit of the Wild Wild West, right? These gaming companies, gaming environments were sort of walled gardens which obviously we’re very used to in this industry. So with that there was a little bit of unknown, right? In terms of the metrics that data, the quality, the brand safety. In a way they were sort of grading their own homework.

What we’ve seen now is there is now a sort of standardization in terms of definitions, metrics and that’s being brought on not just by the gaming partners but by opening that ecosystem to the “double verifies” The “ComScores,” right?

So all the major players across viewability fraud, brand lift measurement, brand safety they’re all now part of the in-game environment and some measure some things but that’s sort of the next step, right? So the evolution is these guys really like this is a valid medium. This is not just a fad, right? And so this is a huge opportunity in this space and so just like everybody else wanted to get on board. These guys want to get on board to make sure that the environment is good, is clean, is what you would expect.

And so really the same guardrails for the most part that you can put up around any other sort of digital programmatic type of campaign are now available and evolving within the end-game environment. And that’s also part of the challenge, right? There are so many different providers.

When do you use which one, do you use this one, when you go to this gaming provider, when you go to that one? Because they’re all out there saying similar things, different things, positioning themselves. And that’s really one of the things that we try to do a Klever – is understand when to use each – what the benefits of each platform are. And they all have things they do well and they all have things that maybe others do better. When to use which one, when do we use that – and that‘s something that we really pride ourselves on.

It’s understanding this space from a really holistic level and being able to take a strategy and implement it tactically. Because otherwise, you’re sitting there, you know, looking at a list of 50 different providers and not knowing what the difference is, right? You know, they call this the, you know, XYZ and they call that the ZYX but really the same thing, right? It becomes marketing and so one of our jobs for our partners, and our partners using in game, but also our partners that we use across other programmatic platforms.

It is really to help them understand what they’re buying, why they’re buying it and when to use different tools and sitting where we sit in the industry kind of being technology agnostic. It’s really nice to be able to make kind of pure recommendations to our clients because our only skin in the game is their success, right?

We’re not buying inventory ahead of time like the old ad network days where we’ve got somehow to fill a $200 million deal with the publisher. We are able to with any given campaign, with any given execution, even within the same brand, the same agency, the same client – to look at the different tools and really help them understand when to use in-game advertising, when not to use in-game, when PC, when mobile –  based on what the goals for that individual campaign are.

‍