When will advertisers press play on gaming?

Marketers haven’t fully bought into gaming, but that’s not for lack of trying.

Despite there being some 190 million gamers in the US, according to the Entertainment Software Association, gaming is still just peanuts in the eyes of some advertisers, making up just 5% of total digital advertising spend, according to the Interactive Advertising Bureau (IAB), which hosted its fourth annual PlayFronts conference Tuesday.

That’s down a touch from the 6% of spend it accounted for back in 2022, but executives are optimistic that the tides could be turning.

“It definitely can be discouraging because it is a small percent, but we’re seeing a shift,” Zoe Soon, VP of the IAB’s Experience Center, told us.

At PlayFronts this year, platforms like Unity, Zynga, Activision Blizzard Media, and Discord showed off new wares. At the event, the gaming industry pitched the basics of the category—one executive used their time onstage to show slides detailing exactly what a mobile gaming ad looks like, and where it runs—something that’s perhaps hard to imagine happening in other sectors, like television.

“It feels like it’s been the same narrative for 10 years…The disproportionate ad spend is still real,” said Amanda Rubin, chief revenue officer at Wildfire, an agency that manages what she described as “basically influencer marketing, but for Discord.”

Press X to remove hurdles

Annual US in-game ad revenue is expected to reach $11.5 billion by 2028, according to eMarketer, while the gaming creator economy is projected to hit $230 billion by 2034, per research firm Market.us. Companies like AppLovin have seen their valuations skyrocket with the promise of unlocking mobile gaming inventory.

So why the lopsided investment? Rubin, who told us she has attended every single PlayFront, said part of the problem is that advertisers tend to approach the industry as a monolith. A person enjoying solitaire and Candy Crush, for example, might not be the same kind of consumer as someone deep into Call of Duty, and mobile gaming inventory isn’t the same as the inventory sold by a social platform like Discord.

“None of those ad units are the same,” she said. “You need a gaming budget, but it’s like, ‘What type of gaming? Why do I need it? Where do I sit?’”

The IAB’s Soon acknowledged other barriers facing the category during her keynote speech. “A lack of standardization and measurement has also been a key barrier that we at the IAB are working with the industry to resolve,” she said. Last year, the IAB published its first creative guidelines around best practices for gaming inventory. It also updated its gaming measurement standards in 2022.

“As programmatic technology improves, and more successful case studies emerge, we will see increased adoption in the coming years,” Soon said onstage.

As the industry works to lower the hurdles for advertisers, major advertising players are deepening their ties with the industry. Google, which presented at the PlayFronts, announced a partnership with Roblox this week that will see the ad giant sell the gaming platform’s programmatic advertising inventory. It also announced expanded availability for its “immersive” ads, which can fit seamlessly into a gaming environment (which other platforms already offer.)

Discord, which touts 200 million monthly active users, used its stage time to pitch rewarded inventory, called Quests, where advertisers can offer users in-game incentives. The format is designed to appeal to an audience that “since the day they were born, were pressing the Skip Ad button,” Peter Sellis, SVP of product at Discord, said onstage, adding that users opt-in to Quests at a rate of 10%.

Notably absent from the presentation was AppLovin, a mobile gaming ads platform and Wall Street darling that currently boasts a market cap three times that of the ad-tech giant The Trade Desk. Though it has faced recent pressure from short sellers and some skeptical ad buyers, the platform has thrust mobile gaming inventory into the spotlight.

Game face

Several presenters acknowledged that advertisers are keen on reaching elusive Gen Z and Gen Alpha audiences, and execs from the media company Bent Pixels argued on Tuesday that the growth of gaming creators who often livestream for hours at a time is key to reaching younger audiences.

“Just a few years ago, gaming content was simply viewed as tips and tricks, cheat codes, and let’s plays,” Louis Timchak III, VP of West Coast sales at Bent Pixels, said onstage. “As we’ve all witnessed over the last years, it has evolved exponentially into livestreams, in-game integrations, custom maps, esports, alignments, sponsorships, and much, much more.” 

That evolution has allowed for easier brand placement, Soon said. “It’s such a natural integration to [see] someone streaming that you are watching, and then [have a] product placement, they have a soda can or there’s something in the background,” she told us. That kind of product placement can capture plenty of eyeballs: last year, consumers spent 32.5 billion hours “watching people play a game,” she said.

Some execs acknowledged that as more brands partner with gaming creators, there could be increased brand-safety risks. “Safety and alignment in the creator ecosystem now requires extensive amounts of vetting and research to properly qualify and validate if these creators, their channels, and platform are the right and appropriate place in your brand,” Unju Saffer, Bent Pixels’s VP of East Coast sales, said during the presentation.

Still, those considerations aren’t unique to gaming. Vetting is commonplace in most influencer and celebrity partnerships, so brands looking at the gaming creator space might see that kind of partnership as familiar territory.

“My prediction is as the creator partnership continues to rise, it will help brands see gaming in a way that’s less foreign to them, because they’ll understand,” Soon told us.”I think that’ll definitely be the way in.”