Why are advertisers turning towards in-game advertising to reap revenue and branding benefits? We explore this topic with Amit Rathi, Country Manager, AdColony.

Not many of us would be aware of the first time in-game advertising made its way into the world of advertising. It was in the 1970s when Scott Adams, developer of Adventureland, placed a brief ad in the game for his next title – Pirate Advertising. Since then, the industry has flourished to be one of the major advertising platforms for brands. It is estimated that the in-game advertising industry will be worth $3.54 billion between 2021 and 2025.

But how will the industry evolve in the coming days? Is it providing true value to the advertisers and reach to their target audience? Amit Rathi, Country Manager, AdColony answers these and more questions on the in-game advertising industry in conversation with MartechAsia. Amit holds over 18 years of experience in the fields of mobile advertising, online advertising, social media, print media, product promotions and business development generating revenues for organisations.

How big is the in-game advertising market? Can you review the year 2021 for the industry in a nutshell?

Amit Rathi, Country Manager, AdColony

The recent report predicted that in-game advertising is expected to rise by $3.54 billion between 2021 and 2025. APAC is expected to grow at a rapid pace during the predicted period and is estimated to account for around 34% of the market’s overall growth. The rise in popularity of mobile gaming is related to the market’s expansion. In APAC, China and Japan are the most important markets for in-game advertising.

According to redseer, India’s gaming sector is expected to reach $7 billion by 2026. Its gaming ecosystem is rapidly changing as it grows in popularity, not to mention that the market is maturing in terms of both demand and supply. Today, the nation’s gaming sector has reached a once-in-a-generation tipping point, outperforming earlier projections in terms of sophistication, scale, growth, and propensity to spend.

Newer games and genres have emerged in the industry as a result of the rise of online gaming, particularly post-Covid. The gaming market matures and evolves to the next level, making it an intriguing space to monitor, thanks to a healthy mix of monetisation techniques, India-first content, and increased desire to pay.

What 2022 holds for the industry? How transformative it will be in the coming times?

Gamification now pervades every online experience, from marketing and sales to education, thanks to mobile devices that enable play 24 hours a day, seven days a week, anywhere.

It is expected that by 2025, there will be more than 2.2 billion people who download games through smartphones. More brands are aiming to grow beyond these fundamental products in order to improve platform watch-time and, as a result, revenue. One of the clearest instances of this is the emergence of OTT gaming, which provides publishers with unique opportunities.

According to the experts, the OTT business will be worth more than $332 billion by 2025. Given the vast sums of money at stake, it’s no surprise that the OTT market is fiercely competitive with some big players also creating a gaming ecosystem for their users.

Data-driven marketing via programmatic will also become a big hit in 2022, with the rise of OTT gaming, there is no surprise that brands will start looking at this type of platform as a form to promote their campaigns.

What is the drawback of in-game advertising? How can technologies like AI, ML, NLP and others help address this major challenge that troubles CTOs and CMOs?

In-app advertising provides marketers with a viewable impression for users, whereas seamless in-play advertising provides you with a viewable impression as well as increased engagement levels.

I don’t think it’s a challenge; I think it’s an opportunity for CTOs and CMOs to leverage these technologies properly to reach and target people precisely and effectively. Through in-game advertising, brands and marketers may differentiate the business from the competition and attract a highly particular target demographic by selecting the correct in-game advertising option.

Furthermore, by investing in this format, brands will be able to optimise the ads in real-time. To top it all off, in-game advertising can be an excellent approach to obtain very specific data and expand your client understanding.

What are some of the biggest myths about the in-game advertising industry? How will you burst them?

Gamers aren’t kids, more than 70% of gamers are over 25 years old.

Gamers aren’t hardcore – 71% of games played are casual encounters on their mobile phones or social media.

Gamers aren’t men – over half of gamers in APAC are female.

Gamers aren’t idle – 61% of gamers belong to middle and high-income segments.

And finally, though 90% of the users play games regularly, they don’t call themselves gamers.

The perception of the word ‘gamer’ is different from individual to individual. Today, everyone is a gamer, albeit of varying degrees, and therefore marketers cannot differentiate between who is and isn’t a gamer anymore. However, their motivations and demographics are different and will impact how marketers engage them.

How in-game advertising providers ensure that their ad consumers are the ones they are targeting and if they are consuming the ad in the true sense?

It’s critical to undertake adequate market research before starting to tathe ideal audience for in-game advertising. As it is extremely individualised, knowing who makes up brands’ present or prospective audience can assist decide the effectiveness of the campaign.

As the in-game advertising providers, we also need to create audience segments based on their first-party data behaviour and mapping with third-party data sources, as well as using technologies and algorithms to produce granular data segments in order to reach the intended audience. Not to mention the importance of creating detailed and realistic gamer personas to serve as brands’ ideal marketing targets.

Furthermore, three out of every four viewers choose rewarded video, which ensures higher engagement and attention, resulting in higher KPIs for brands.

In-game advertising RoI. How can it be calculated?

There is no cookie-cutter approach to determining ROI – this depends on the objective of every individual campaign.

If the marketer is looking to drive reach, then ad impressions with frequency cap become their most significant KPI. If the marketer is looking for higher engagement levels then video completion rates, click-through rates and Install become their KPIs.

Tell us about the static band dynamic banners, video and audio ads. Which of these will be a boomer in 2022 and why?

It all depends on brands’ individual KPIs. That being said, native mobile gaming ads, seamlessly embedded into the gameplay, deliver incredibly high engagement and top-of-mind recalls. The ubiquity of gaming combined with online experiences optimised for engagement, means mobile gaming delivers an audience reach that cannot be beaten. Put simply, native mobile gaming ads do not suffer from ad blockers.

Mobile gaming reaches more than 1.1 billion consumers in Asia-Pacific. Whilst OTT and CTV come in second in terms of reach, the reality is that more than 40% of those audiences can potentially skip ads or change the channel. Similarly, online content, music streaming, social platforms like Instagram or Twitter, or messaging apps like WeChat all suffer from ad blockers or people simply scrolling past.

Mobile gaming can both deliver reach at scale, as well as can offer access to engaged audiences that cannot be matched.

Which industry segment will lean more towards in-game advertising?

At the end of the day, everybody is a gamer. Brands are starting to realise that if they want to target a potential customer base regardless of who they are, they need to be embracing gaming, and COVID-19 has expedited that by several years.

At the same time, the bigger brands are asking their agencies to embrace new marketing channels and innovation, which is why in-game advertising has become more important than ever. Regardless of industry, all brands will be able to integrate gaming into their overall marketing strategy to target their intended audience who are engaged and tuned in to the game, in order to drive long-term real-world results.