New IAB Study Reveals Five Misperceptions About Video Game Advertising

Sizable Audiences are at Play, Yet In-Game Ad Networks and Programmatic Remain Undervalued and Underutilized

Two out of every three Americans play video games through various platforms (ESA, 2022), and gaming is third only to TV and social media in terms of where audiences spend their time--yet gaming captures less than 5% of advertiser budgets.

A new IAB study of over forty brands, agencies, ad tech companies, game developers, and publishers conducted in partnership with MediaScience revealed that investments in gaming are not nearly at the levels they should be due to five lingering misperceptions. The reality is that the industry has built an ecosystem that makes it easier to buy at scale and measure than ever before. The study is being released at the IAB PlayFronts today, March 8th .

"The success stories we heard from buyers about gaming were striking — and all the more so because they don't align at all with the misperceptions of the industry at large," said Zoe Soon , Vice President, Experience Center, IAB. "Advertisers are missing a prime opportunity to reach and persuade consumers in these dynamic environments."

Misperception 1: It's too expensive for brands to get started.
When advertisers think of gaming, they tend to think of high-end, one-off custom integrations. Yet there are many more affordable and undervalued opportunities. While the first generation of in-game advertising media was fragmented and hard to buy, today's programmatic channels make it easy to buy, are comparable in cost to other digital media, enable marketers to test and learn, and are cost-effective, efficient, and scalable.

Misperception 2: In-game advertising is too hard to activate with quality inventory.
Some advertisers feel that ease of activation and quality is only possible in well-known, premium game titles. "Quality inventory and serious reach are possible," Soon continued. "With new ad networks and technology, it's easy for advertisers to get both the scale and brand-safe reach they need."

Misperception 3: Gaming cannot deliver on key objectives throughout the funnel.
" Buyers want to make good quality buys that align with their brands and drive all the way through to purchase," said Jack Koch , SVP, Research & Insights, IAB. "And while that is absolutely possible in gaming today, perception lags reality."

While in-game advertising often mimics real-world awareness media — for example, billboards in a driving game or stadium signage in a sports game — gaming offers much more. You can drive mid-funnel objectives by letting gamers feel and interact with your product. Gamers can drive a branded vehicle in a war game, or get a "power-up" from a healthy drink in a running game and become associated with energy. There's also ample inventory that is lower funnel and clickable, so advertisers can track through to conversions.

Misperception 4: In-game advertising is too difficult to measure.
AdTech and publishers have brought measurement standards and capabilities up to a level that will meet the needs of most advertisers. However, there is still progress that needs to be made. In some cases, the data is not fully consistent and comparable to other media, and in-game advertising doesn't yet offer the same level of granularity buyers expect in digital marketing. In a joint collaboration between IAB, IAB Tech Lab, and the Media Rating Council (MRC), in July 2022 , IAB released its Intrinsic In-Game (IIG) Measurement Guidelines to establish updated measurement guidelines for ads that appear within gameplay.

Misperception 5: In-game advertising is not brand safe and not welcomed by players.
There's still a lingering misperception that buyers can't get brand-safe reach at scale and that in-game advertising is unwelcome.

In reality, with proper planning and through third-party monitoring services and/or AI-based keyword blocking, brand safety issues can be easily mitigated. Programmatic makes it possible to reach brand-safe audiences at scale.

Also — just as in any medium — attitudes about advertising depend on an acceptable value exchange. On a free mobile game, players fully expect to see ads in exchange for getting the game for free. The interviewees for IAB's research shared that ad formats that provide tangible in-game value such as in-game playables, rewards, currency boosts, and skins are well-received by gamers. Where there are billboards in a driving game, gamers enjoy it more if it adds realism to the game. AdTech and publishers are keenly aware of the need for a strong value exchange and develop ad formats that deliver on that promise.

What the Industry Needs To Do Next

• Educate and collaborate
  Sellers need to make clear that in-game advertising has evolved, and can be as easy and cost-efficient to activate as other digital media. Education is needed about the range of buying opportunities and ad formats across custom integrations and dynamic network media buys, and measurement/brand safety capabilities available. The buy-and-sell side should collaborate to reduce friction and boost investment, while publishers and ad tech providers partner to open new player-centric inventory.
• Demonstrate unique value
  AdTech companies and publishers need to show the quality of their reach and inventory through audience insights and channel profiles, and provide case studies about driving full-funnel success leveraging measurement that's similar to other digital media.
• Build for interoperability
  AdTech companies and publishers should help advertisers understand how to efficiently leverage first and third-party data, and how data can be interoperable so brands can make smart cross-platform decisions. Standards, like IAB's Intrinsic In-Game Measurement Guidelines, are vital to helping align in-game metrics to other digital media for consistency and comparability.
• Quantify why gaming, and why now
  Empirical effectiveness research is needed to illuminate how the engagement and context of in-game ads can drive significant impact, and how to ensure that in-game advertising is brand-safe. Gaming offers sizable audiences and can be a future-forward leader with strong engagement, creative, contextual alignment, and performance.

Koch concluded, "High quality audiences at serious scale, brand safety, easy buying, and defensible measurement are all finally in place. As the misperceptions dissipate, we expect spending on in-game advertising will begin to catch up to the opportunity."

The report was released at IAB PlayFronts 2023 and can be downloaded here .

About IAB
The Interactive Advertising Bureau empowers the media and marketing industries to thrive in the digital economy. Its membership comprises more than 700 leading media companies, brands, agencies, and the technology firms responsible for selling, delivering, and optimizing digital ad marketing campaigns. The trade group fields critical research on interactive advertising, while also educating brands, agencies, and the wider business community on the importance of digital marketing. In affiliation with the IAB Tech Lab, IAB develops technical standards and solutions. IAB is committed to professional development and elevating the knowledge, skills, expertise, and diversity of the workforce across the industry. Through the work of its public policy office in Washington, D.C. , the trade association advocates for its members and promotes the value of the interactive advertising industry to legislators and policymakers. Founded in 1996, IAB is headquartered in New York City .

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SOURCE Interactive Advertising Bureau (IAB)