The in-game advertising industry is set for massive growth over the next few years, with Technavio estimating that the in-game advertising market will grow by US$5.1 billion between 2002 and 2027.
At the heart of this growth are game and mobile app developers, brands and AdTech companies.
AdTech companies in particular will play a key role in driving the growth of this industry and shaping the future of in-game advertising.
Although in-game advertising is a hot topic in the programmatic advertising and AdTech circles, there are still some questions around what actually constitutes an in-game ad, how in-game ads are bought and sold, and what impact the IAB Tech Lab’s new in-game advertising standards will have on the industry.
To get answers to these questions, and more, Clearcode’s Head of Marketing, Michael Sweeney, recently caught up with Giuseppe Martoriello, co-founder of iion — an in-game AdTech company.
Questions Covered in the Q&A
- What defines an in-game ad? How do they differ from in-app ads?
- What’s the most innovative thing happening in the in-game advertising industry currently?
- How does the ad-serving process work for in-game ads?
- How are in-game ads bought and sold?
- What impact do you think the IAB’s new measurement guidelines will have on ad spend?
- What are some of the main challenges and opportunities in the in-game advertising industry?
Michael Sweeney: What defines an in-game ad? Is showing a banner ad inside a mobile game an example of in-game advertising or an example of in-app mobile advertising? How do you differentiate the two channels (i.e. in-game advertising vs in-app mobile advertising)?
Giuseppe Martoriello: In-game advertising refers to the display of ads within a video game, which are integrated directly into the gaming environment.
Basically, a billboard inside a game is an example of an in-game ad.
In-app mobile advertising, on the other hand, is a more generic term and refers to the display of ads within any mobile application, not necessarily a gaming one.
There are 2 main differences between the two channels; the location of the ad within the digital environment and the genre.
In-game advertising is blended within the game itself, while an in-app ad is displayed within any type
of mobile app.
Michael Sweeney: In your opinion, what’s the most innovative thing happening in the in-game advertising industry currently?
Giuseppe Martoriello: I think an area ripe for disruption is in-game audio.
Audio in general is a fast-growing medium within the digital landscape and audio ads placed within the gaming environment have been attracting positive feedback from both advertisers and gaming publishers. A key reason for this is because audio ads are one of the least intrusive types of advertising across gaming, yet so powerful.
An impressive campaign that I have seen is one from Gucci that they ran in partnership with Tennis Clash, where they branded the pitch, the clothes and the billboards. Of course, those types of partnerships are not programmatic and more customized but very cool to see what the industry will look like in 5 years.
Michael Sweeney: The process of serving ads inside video games (e.g. an ad on billboard inside a video game) differs quite a lot from display and in-app mobile ads. How are in-game ads displayed inside games? Is there a standardized way of displaying ads inside games or does each game have its
own custom implementation?
Giuseppe Martoriello: The process of serving in-game ads inside games typically involves integrating an SDK into the game itself.
The video game publisher integrates the in-game SDK within its app and then defines triggers for when the ad should play within the gaming environment.
For Instance, for a car-racing app, it’d define the locations in the game where ads should be shown on the billboards.
Once a user has reached that spot, an ad request will be sent to buyers and the ad-serving process will start. If an ad matching the advertiser’s campaign can be found, an ad will be displayed. If not, then the billboard will not show up.
In late 2022, the IAB released new standards for in-game advertising, prior to that, there were no standards in terms of in-game ad size, viewability, and traffic quality, which made it quite hard to scale and automate the buying and selling of in-game ads via programmatic auctions.
Michael Sweeney: How are most in-game ads bought and sold (excluding traditional banner ads inside mobile gaming apps)? If an advertiser wanted to show their logo on a sideline board inside a football video game, how would they go about doing that? Are most in-game ads purchased via direct deals or on the open market (i.e. via OpenRTB)?
Giuseppe Martoriello: Because the IAB has finally standardized in-game advertising in terms of measurement, viewability, traffic quality etc, it’s now finally a scalable medium to run programmatically.
As the buy side is still in its infancy, most of the in-game media is still bought via direct deals or via PMP, with little inventory being purchased via open RTB auctions.
Another issue that has hindered ad spend is that there was no DSP or media-buying platform that was purpose-built for gaming advertising, where you can access all the in-game providers and complement those campaigns with traditional ‘around the game’ advertising.
That was until iion released ‘immersiion’, the only platform capable of achieving that…(shameless plug!)
Michael Sweeney: What impact do you think the IAB’s new measurement guidelines will have on ad spend? Do you think more advertisers will invest in in-game advertising or does more need to be done to attract advertisers to this space?
Giuseppe Martoriello: I think a lack of measurement guidelines by the IAB has been a major constraint in terms of budget spend and adoption in the market.
The IAB’s new measurement guidelines provide a more standardized and transparent method for measuring things like impression count, viewability , traffic quality and reach.
This will likely increase confidence and trust among the large media groups and speed up adoption of in-game advertising.
This won’t be enough by itself, as the market is still very fragmented and agencies would need to sign up to different platforms to buy audio in-game or display, for instance.
The main issue to overcome though is knowledge of the market. Advertisers and agencies are slowly adopting gaming as a channel for branding campaigns, but resistance is still there and further education is needed.
Michael Sweeney: What are some of the main challenges and opportunities in the in-game advertising industry?
Giuseppe Martoriello: The in-game advertising industry has several challenges, which can become opportunities for the companies that can solve them.
Below are the main challenges and opportunities in in-game advertising:
Fragmentation — As I mentioned above, there are quite a few in-game advertising providers that address only a few mediums or gaming platforms, which makes it difficult for media buyers to navigate. Ultimately, more consolidation is needed in the market.
Measurement — It can be difficult to accurately measure the impact and effectiveness of in-game advertising. Most of the in-game ad formats are not clickable, which is not ideal for media buyers that rely on performance and measurement data to plan campaigns etc.
Scalability — As the industry is still in its infancy, adoption on both the supply and demand side needs time to catch up compared to other digital advertising segments.