Part one of a three part series. Part two is here. Part three is here.
“Video games are bad for you? That's what they said about rock-n-roll.” - Shigeru Miyamoto
The man who has been called the father of modern video gaming for creating cultural mainstays such as Mario, Zelda and Donkey Kong most likely couldn’t have imagined in the 1980s that video games would one day rise to become as ubiquitous and influential as that enduring music genre.
The Australia Plays study, research of more than 1,000 Australian households in 2023 by the Interactive Games & Entertainment Association (IGEA), found that of the nearly 10 million households in Australia, almost 9.4 million have at least one device on which games are played by a member of the household, up from 8.6 million in 2021.
Advertisers are also responding to the increased interest from consumers. IAB’s 2023 Game Advertising State of the Nation report, which surveyed 100 advertising decision makers working in agencies and brands, found 25% reported regular usage of gaming advertising, with 68% in total saying they had used game advertising in 2023.
More than half (52%) said they had increased gaming advertising activity over the past year with 72% intending to increase activity in 2024.
What does all of this mean for brands wanting to get involved in this growing space?
Gaming-focused companies reaping the rewards
“Gaming is a popular activity with 81% of Australians playing video games (up from 67% in 2021), so naturally it's becoming a priority channel for marketers - and on Twitch, on average viewers watch almost 50 million hours of gaming content per day,” she says.
“At Twitch, we’re seeing a diverse range of brands make gaming advertising a central part of their marketing efforts, and it's not just entertainment or gaming companies; brands from all industries are getting involved - food, beauty, government and retail to name a few.”
One example Battenbough provided is when L'Oreal approached Twitch wanting to launch its new Maybelline Colossal Curl Bounce mascara. The service teamed up with Australian streamer /Fasffy, who ran an interactive makeup stream, allowing viewers to influence each step of her makeup application.
Using Twitch’s poll feature, audiences could choose every part of /Fasffy’s look, from colours to the style of makeup.
“/Fasffy went on to match her new makeup look to a Fortnite avatar where the community enjoyed tuning into her game of Fortnite,” she tells AdNews.
“This campaign outperformed minutes watch benchmarks by 89%, and the product actually sold out - sending sales skyrocketing with a 31% increase in Maybelline brand searches on Amazon and a 15.6% increase in glance views.
“This is an excellent example of how brands who are not endemic to gaming can benefit from gaming’s audience and culture, and we expect to see more brands leveraging gaming advertising in the future.”
Aaron Pearce, director of You Know Media (YKM), a gaming and esports agency, says that since the company started a decade ago, the hunger for and performance of gaming advertising has reached the “frothiest” point that You Know Media can remember.
“What we have found a popular topic of conversation over the years with brands, 2023 included, is ‘can I get my brand into a game?’,” he says.
“Like the gaming landscape, the sub-set of in-game is extremely vast. This is like placing a brand into a music video, or live sport… like games, there is no shortage of either of them. The bigger the video games player base, the harder it will be to get brands into the game.”
Pearce says that while 2022 was the year brands tried to get into Web3 games – sometimes unsuccessfully - 2023 saw more brands asking for in-game as part of a gaming media buy.
“With YKM, our in-game TVC/display performs as well as our buys across gaming news and entertainment sites/ video channels, which is well above media industry averages. We suggest in-game is a healthy part of a broader amplification strategy,” he says.
Similarly, Giuseppe Martoriello (pictured right), co-founder of iion, a game monetisation and advertising platform, says the company in 2023 witnessed a significant uptake in in-game advertising due to more game developers and publishers embracing the concept of seamless, non-intrusive ads within their titles, which resonated with players and advertisers.
“However, we are still in the early stages, and while this space has shown consistent growth year on year, mainstream advertiser adoption is yet to be realised,” he tells AdNews.
Worth $240 billion globally in 2020, the market is forecast to reach $294 billion in 2024.
Martoriello sees positive signs, saying this projected growth illustrating steady year-on-year growth, underlining a shift in advertiser attitudes and a growing recognition of in-game advertising's potential.”
Martoriello identified three key trends that emerged in the game advertising space in 2023 – sponsorships, the dominance of around the game formats and creative integration.
“E-sports continued to gain popularity throughout 2023, attracting major sponsorships and advertising deals,” he says.
IAB’s 2023 Game Advertising State of the Nation found that 31% of advertisers had used E-sports sponsorships (of leagues, teams and/or players) in 2023, an increase from 2022.
Martoriello says that Fortnite and Roblox brand activations have also experienced significant growth, with more agencies adding those to their media plan.
“While in-game, sponsorships and game influencers capture the attention of brands, the top environment where they spend is around the game advertising,” he says.
“This includes leveraging traditional and familiar ad units such as banners, interstitials and rewarded video ads, which typically perform well in terms of reach, engagement and click-through rates.
“Advertisers also became more skilled at seamlessly integrating their messages into the gaming experience, effectively blurring the lines between advertising and gameplay.”
Brands and advertisers leaning in strongly
The Australian video game industry itself rose to $345.5 million last year, an increase of 21% over the past financial year, according to the eighth annual Australian Game Developer Survey (AGDS).
Brands and advertisers are responding accordingly - Gary Fung (pictured right), regional gaming director at TotallyAwesome, an APAC-focused youth-first engagement platform, says he has seen brands across all major verticals actively move into the space or express strong ambitions to tackle these audiences in 2024.
“Companies are starting to look past the hype and saliency of traditional media metrics to explore the new attention economy and are finding that through progressive communication and immersive experiences, they are hitting more brand KPIs,” he says.
Scott Cleaver, head of innovations at No Standing, a digital marketing agency based out of Melbourne, says that advertising in-game is nothing new; whether it’s through sideline billboards or on jerseys in games like NBA 2K or FIFA, or custom virtual world builds in the metaverse, brands are constantly looking for ways to capture the attention of a digitally native audience in a mutually valuable and organic way.
“We’re currently witnessing a much more mindful approach to in-game advertising, with activations guised under realism and authenticity and intent to enhance the gaming experience,” he says.
“Brands should focus on enhancing gaming experiences instead of disrupting them, pay attention to frequency, unplug their preconceptions about age, unlock new powers of experimentation, and get in the game now.”
Jaclyn Hadida, country manager ANZ at InMobi, a mobile marketing platform, says there’s a growing realisation that gaming is now a mainstream form of entertainment that people of all ages and genders are participating in.
“In fact, we are seeing further crossover between gaming and the cultural zeitgeist,” she tells AdNews.
“Consider that one of HBO’s flagship shows this year, ‘The Last of Us’, is an adaption of a video game whilst Netflix continues to extend its push into video games, most recently trialling its cloud-streamed game service in August.
“Another realisation is that gaming advertising can (when executed well) give brands the type of deep engagement and attention that is becoming harder and harder to find in crowded media world.”
Despite increased interest, could more be done?
Although brands are seizing the opportunity to get involved, Georgia Woodburne (pictured right), MD for JAPAC at Azerion, a digital entertainment and media platform, says that while gaming advertising was on the radar of mainstream agencies, in-game advertising is not yet deeply ingrained as a significant or regular part of a brand’s digital or screen investment mix.
“While it is not specified how gaming advertising has performed in terms of sales metrics like ROI, at Azerion we have seen strength in the channel in its contribution to offline metrics (in-store visits, as an example)”, she says.
“Performance for media metrics well surpasses any benchmark expectations with each and every campaign, but with greater adoption comes greater analytics. All signs point to gaming being as successful as video channels in driving revenue outcomes.”
Woodburne says that while most in-game brand activations may be still in a trial mode, there is a strong appetite for continued investment in this space, with seven in 10 advertisers intending to increase their activity and participation over the next year.
“This suggests that the industry sees potential in gaming advertising and expects it to perform well in the coming year,” she says.
Mark Murray, MD of APAC for SmartMedia Tech, an enterprise Web3 platform, says this market continues to represent a huge opportunity for advertisers, and it’s a market that continues to grow as platforms and advertisers get the content and experience for advertising right, but it could be doing better still.
“Too often the narrative from gaming businesses is that you need to tread carefully when engaging gamers and not do anything to ruin the experience,” he says.
“Advertisers need to stop thinking in-game ads will deter users, which is a barrier to them using them. If integrated correctly, in-game ads, especially rewarded video, actually add incremental value. It doesn’t have to interfere with gameplay retention, and can even encourage in-app purchases.”
Murray said that in 2023, there was an uptick in revenue generation across the board and “really strong growth” in segments such as live-streaming on gaming platforms, where SmartMedia Tech has seen a year-on-year increase of 13%.
“According to a recent Dentsu X report, that growth is attracting a larger consumer base and delivering attractive ROI for advertisers,” Murray says.
“We are also seeing an increase in in-game embedded advertising as sentiments from gamers are trending increasingly positive, and this has traditionally not been the case.”
Media and creative agencies seeing positive signs
Virginia Hyland, CEO of Havas Media Network Australia, says in-game advertising delivered high engagement for brands in 2023.
“The gamers are in a state of exploration and happiness is at an all-time high which means that gamers are more receptive to messages and information about brands,” she tells AdNews.
“Recall is also high because of the frequency in which they consistently return to their favoured platforms on a regular basis of between 2-7 times per week, spending between 1-5 hours in the gaming state at any one time.”
Euan Macdonald (pictured right), digital lead at Half Dome, says that gaming advertising can sometimes fly under the planning radar, but as more publishers lean into development of inventory, the space gained traction over 2023.
“New formats like shoppable, brand extensions and Metaverse actions continue to build out engaging inventory for advertisers to tap into,” he says .
Rachel Fyfe, senior account manager at The Pistol, says gaming advertising continues to grow steadily year on year, with reports from Technavio predicting a 9.34% market growth rate YoY.
“I'm anticipating no signs of it slowing down in APAC, considering 34% of growth worldwide is currently attributed to the APAC region,” Fyfe says.
She says that brands that have utilised in-game advertising and sponsorships have reported increased brand engagement and customer conversion rates, attributing this success to the unique blend of interactivity, personalisation, and immersion offered by gaming advertising.
“Brands that invest the time and resources into enriching the user experience for their in-game audience are the brands that are seeing the biggest improvements in brand awareness and preference,” she says.
“The gaming industry has strengthened its position as a powerful advertising platform, and it’s exciting to see what new territories will be explored in 2024 and beyond.”
Liam Wilson, strategist at UM, gave the example of Uber Eats and Starfield collaborating to bring items from Starfield into reality, enabling eager explorers to order limited edition in-game items to their doors, to highlight the success of gaming advertising this year.
“This collaboration blurred the lines between digital and real-life borders, engaging gamers and the broader community by adding value to their experience in a way that is authentic to the brands,” Wilson tells AdNews.
“In recent years, we have also witnessed how the gaming and music industries have joined forces to add value to gamers; 2023 was no different. Rappers 21 Savage and Nicki Minaj are playable characters in Call of Duty, and Apex Legends’ hero shooter game launched a collaboration with Post Malone."
Wilson says that if brands can extend gaming experiences into other contextually relevant environments, then brands are ultimately taking what people love and fuelling their fandom outside of the game, thereby deepening engagement and preference with the brand.
“Because why be just watchable when you can also be playable?” he says.
Suzie Shaw, CEO at We Are Social Australia, says gaming advertising is becoming increasingly popular and sophisticated, but currently, brands are still only scratching the surface, and only just beginning to understand how much growth potential there is in targeting the gaming audience.
“Gaming marketing is becoming more creative in its approach to engaging with gaming communities, going beyond banner ads and creating immersive experiences and worlds within the gaming sphere,” she says.
“The media is increasingly talking about gaming as the next frontier of brand engagement.”
Shaw says the advertising industry has also been paying more attention, with bespoke categories at prestigious award shows, such as the Cannes Lions Festival, being some of the most closely followed categories.
“It’s also a period of maturation in gaming advertising,” Shaw tells AdNews.
“With increased scrutiny on the use of gaming intellectual properties by advertisers, this year we’ve seen a push to protect developers and their creations, and how they’re used to engage and sell to gamers.
“Everything is pointing to increased popularity of gaming advertising in the coming years.”
Stacia Grooby (pictured right), strategy director at Five by Five Global, says the agency is seeing increasing appetite for partnerships and collaborative brand campaigns that marry supporting ecosystem products such as PC technology and gaming furniture, secondary passion categories such as music, sports, fashion, and non-endemics like finance and education institutions, with the latest video game releases and activations.
“There is a growing appreciation that video games have a significant influence over the younger generation of consumers which many industries are struggling to capture and/or maintain, and in return video game advertisers can benefit from the diversity, expanded audience and financial support that teaming up with non-endemic and secondary passion brands can provide,” she says.
“A smash hit or a colossal failure”
Jordan Barclay, better known as EYstreem online, has already become the most watched gaming YouTuber in Australia with close to 8 million subscribers on the platform tuning into his Minecraft and Roblox-focused content.
The 21 year old content creator tells AdNews that gaming advertising in 2023 was either a smash hit with players or a colossal failure, yet companies, regardless of the campaign’s performance, still insist on believing their activations and in-game advertising is a success.
“You’ll see them releasing press and LinkedIn posts about how they’re “innovating” and “reinventing advertising”,” he says.
“A key example of this is the Roblox game: “Walmart Land”; their flagship metaverse product for 2022, which quickly lost all active players, and then was later discontinued; and was replaced by Walmart Experience which averages 100-200 active players.
“This is compared to top performing Roblox games like Blox Fruits, averaging 400K active players at any given time. This is because these integrations feel like pure advertising, with no consideration as to why players are enjoying Roblox. It shows a huge disconnect between corporate and players.”
Barclay did say, however, that the companies that do understand what players want continue to see success, highlighting Disney’s “rinsed and repeated [yet] massively successful” collaborations with Fortnite to bring franchises like Star Wars and Marvel to the game promote upcoming movies and events, with each addition resulting in an increased player count.
On the horizon lies increased interest
The overwhelming feeling among the agencies and platforms AdNews spoke to is that 2024 will see even more interest around gaming advertising from brands, with increased innovation and creativity taking centre stage as advertisers experiment with new formats, technology and environment.
Fyfe (pictured right) says what has piqued client interest is not just the vast number of consumers engaging with games; it's the diversity of the demographic and the high levels of engagement witnessed.
“Moreover, gaming platforms offer unique, immersive and interactive ad experiences that clients find increasingly appealing. Such ad experiences can generate strong emotional connections to brands,” she says.
“Undoubtedly, the interest in gaming advertising is increasing, and as the gaming industry continues to evolve, we anticipate this trend will only gain further momentum.
No Standing’s Cleaver says that in the transition into 2024, the fusion of advertising and gaming is set to become more innovative, with brands exploring new frontiers in interactive marketing.
“Advertisers are looking to capitalise on the deep connection that gamers have with their favourite games, seeing this as an opportunity to build meaningful relationships with consumers,” he tells AdNews.
“The digital frontier is in full throttle, with game development pushing the envelope, conjuring up worlds that are ever closer to the real deal. But this is just the tip of the iceberg. When you factor in the gear and gadgets from AR and VR, not to mention the whole metaverse scene—it's clear we're just getting started. The metaverse, in all its glory, is like a rookie player with a skill set that's yet to peak.
“It’s an exciting preview of the game-changing potential yet to unfold.”
Battenbough says that 2023 saw Twitch record a “significant increase” in the variety of brands jumping on board of gaming advertising, especially brands that exist outside of the gaming realm altogether – such as Dyson, Lynx and even the New Zealand Electoral Commission.
“Across APAC, we’ve seen more viewers finding content they love on Twitch with hours watched growing 16% year on year in 2022, so we expect to see more brands get involved in reaching a growing and engaged audience, and recognise that gaming is a space where everyone can play,” she says.
Pearce says it helps now that many marketeers now have kids that game, and they see them playing the likes of Minecraft, Fortnite and Roblox, which increases organic interest.
“Often we have meetings where marketing team members talk about their credit card filled with V buck or Robux purchases,” he says.
Pearce said that the rise in programmatic game networks and hunger in holding groups and agencies trying to create divisions around gaming is also proof to the growing appetite and spend around gaming.
While 71% of respondents in IAB’s 2023 Game Advertising State of the Nation report said they still buy directly with media owner for gaming advertising, 43% said they use programmatic guaranteed deals (a figure that increased from last year), 41% use programmatic traded inventory on open exchanges and 39% use programmatic private marketplace deals.
“With these range of businesses around gaming, some are doing and some are saying, but all are contributing to more brands having interest in, or actively participating in the space which is a rising tide, and really positive,” says Pearce.
“Companies are gamifying parts of the online experience to drive engagement, collect 1PD, and boost profitability,” she says.
“Cultivating a loyal audience is as much about the experience as it is the products. Gamification is becoming more popular to help combat low conversion rates that plague e-commerce and gather first party data.
“Gamification has the potential to make online shopping more playful, even triggering the dopamine response for some shoppers.”
Martoriello says what’s particularly noteworthy about the “substantial surge” that iion has seen in the involvement and interest of advertisers and agencies in game advertising is the takeup from early adopters phase of the innovation cycle.
“At this stage, it's independent agencies and forward-thinking advertisers who are spearheading the movement, while larger media conglomerates exercise a greater degree of caution,” he says.
“A significant observation is the rise of gaming as a priority for most brands. They are increasingly attracted to a versatile platform that enables them to execute scalable campaigns across the entire gaming multiverse.”
Martoriello says that this encompasses everything from mobile rewarded videos to collaborations with gaming influencers, all managed through a fully self-serve model.
“This approach has been instrumental in allowing them to execute comprehensive, full-funnel campaigns across diverse gaming environments,” he tells AdNews.
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