Google has said it will be banning third-party data collection by the end of 2024. What this ban means for the advertising industry is still a question mark, as advertisers and adtech companies look for alternatives in a cookieless future.
That said, some of the question marks are finding solutions. Including, how to continue to provide personalized ads without access to third-party data. Hope lies in an industry that advertisers have been slow to infiltrate - gaming.
In an article titled “Video games have replaced music as the most important aspect of youth culture” the Guardian argues that video games taking a central role in pop culture is “due [in part] to desperate marketers hunting for eyeballs in a Covid landscape of cancelled events. Coachella wasn’t happening, but Animal Crossing was open for business”. While gaming has been mainstream for years, as many of us sat at home in forced isolation during the pandemic, we discovered a new online community.
As Bartosz Skwarczek, co-founder and CEO of online gaming marketplace G2A.com said, “gaming has so often been painted with the wrong brush – stereotyped as being isolating and unsociable. However, the pandemic has shown this could not be further from the truth.” And with the number of gamers worldwide predicted to increase to over 3.3 billion by 2024, it’s a growing audience for advertisers to target.
Already, 93% of advertisers have seen an increase in video game advertising spend over the past 12 months.
It’s an exciting opportunity. But, as a traditionally ad-free zone, will the intrusion of advertising be accepted by the gaming industry and its players?
It’s a potentially divisive topic so it seemed only right to invite perspectives from the two camps at the heart of it. So, we posed the question to our adtech specialist Bradley and gaming specialist Jarrod to get their views.
“While the move to in-game ads in video games is a relatively new area for some brands and advertisers, gaming advertising has been around for some time”, said Bradley. “Especially mobile gaming advertising. What the industry calls hyper casual mobile games - your Blob Runner or Jelly Jump - are mobile video games that are easy and usually free to play, with very minimalistic user interfaces and have been the gaming bread and butter for the ad world for some time.”
As a gamer, Jarrod has given a few of these games a go and admits “they’re catchy. The games themselves are so simple that you can easily get drawn into wanting to progress to the next level.”
Their simplicity makes free-to-play hyper casual games an easy platform for in-game advertising, so much so that U.S. mobile gaming ad revenues are projected to reach $6.26 billion in 2022. With high App Tracking Transparency (ATT) opt-in rates, the user base is also ripe for targeted advertising by allowing apps to track their use. Hyper casual games have the highest opt-in rate across all industries.
But while they may be popular with advertisers, free-to-play hyper casual mobile games “can be viewed as advertising in its most intrusive form by the rest of the gaming industry”, according to Jarrod. “The industry prides itself on delivering an amazing player experience. The in-game ads used in these games go against that goal by forcing the player to watch or interact with the ad before they can move to the next level or in order to collect extra coins.
“That said, there are some that do it well. They make the opt-out process easier and include in-game ads that feel much softer and more organic within the world that has been created.”
For Bradley, “the reputation of intrusiveness that Jarrod mentions is one that advertisers will need to try and shake off in order to become successful in infiltrating the rest of the gaming industry.”
The key to shaking that reputation will lie in the kind of gaming advertising brands and ad companies choose to implement and how they work with game developers to integrate in-game adverts.
“Developers often spend years creating a new game. And while, of course, player experience lives at the heart of game development, they also need to make money,” said Jarrod. “One of the best ways to monetize the game is to join forces with advertisers. But it has to be done in a way that doesn’t interfere with game play. Gamers simply won’t accept pop-ups or un-skippable videos.”
“Native advertising – ads that seamlessly fit into the media or the function of the platform on which they appear – has to be the route that advertisers take,” believes Bradley. “Rather than the “ad breaks” that we’re used to seeing in hyper casual mobile game advertising, in-game ads for video games need to be built into the gaming world so subtly that players don’t necessarily know that they’re being advertised to.
“This could be pitch side advertising hoardings in a football game or billboards in a car racing game. Some companies are even experimenting with replacing video ads with audio ads in games to make them as least intrusive as possible. While the ads are there, they are not interrupting the gaming experience. In fact, the best in-game ads actually enhance the experience by delivering an added layer of authenticity to the virtual world.”
Providing authentic gaming advertising is where SDKs (Software Development Kits) can offer real value. The kit is made up of various software tools condensed into a package of coding that is easy to install.
“Importantly, SDKs can also collect information about in-game data and events, to give game developers and advertisers greater insight into players and what they do within the game,” said Bradley. “Here is the cookieless personalization that advertisers are so desperately on the hunt for. Without collecting personal data, advertisers can deliver gaming advertising that is tailored to how players of that particular game tend to behave and act in the virtual world”.
Jarrod added that SDKs can significantly streamline the integration of native ads into games and as Bradley said, provide data for greater personalization.”
How infrastructure will differ – if at all – as advertisers branch into or increase in-game ads is a question for Bradley in particular.
“Latency is likely to be a growing issue for adtech companies moving into gaming advertising. Rather than showing an advert on a static screen or in unskippable video format, ads in games are generally going to be seen for a very short period of time – even a fraction of a second as the players’ car goes whizzing past a billboard,” said Bradley. “These worlds are created to be as real-time as possible, and the in-game ads need to fit into that real-time delivery. Adtech providers will need to look into improving the speed at which their platforms serve dynamic ads across a wide inventory.”
For Jarrod, “scalability by design will also be important. When we speak to gaming customers, we regularly bemoan the lack of a crystal ball in our industry because of the peaks and troughs that occur when looking at CCU (concurrent users). If a game announces a free access weekend or is featured on Xbox Game Pass for example, the CCU will explode during that time. Adtech infrastructure would have to mimic the rapid scaling that the gaming infrastructure is suddenly having to cope with. It will be important then that adtech companies and developers have open conversations on when peaks and troughs occur to manage their response.”
Bradley also believes that “keeping control of costs is going to be key to entering the gaming space. Adtech companies are used to having control of spend by keeping an eye on impressions. If impressions get too expensive, it’s easy for the adtech company to pull them. But if a new game launches and the in-game ad impressions are far greater than expected, adtech companies could easily lose control of spend. Understanding audience numbers during big moments or events will be vital to help predict spending as much as possible”.
To go back to the question of whether gaming advertising will be accepted by players, Bradley and Jarrod agree that it’s possible. But the advertising industry needs to learn from the mistakes made with the free to play hyper casual games and recognise that any in-game ads need to fit into the world that they inhabit as seamlessly and unobtrusively as possible.
If they get it right, they will open up a whole new world of possibilities across a diversifying range of demographics.
“I’ve seen the gaming world go from the domain of the traditional gamer profile to one that is attracting people from different walks of life. There are far more women playing video games than I’ve ever seen before and the average age of gamers worldwide is between 35-44 – not the 18-year-old you might picture,” said Jarrod.
On a geographical level, China is the biggest gaming market in the world, closely followed by the US. But it’s predicted that the biggest future growth will come from countries with growing populations, including Turkey and Pakistan.
To go back to the Guardian’s article, it boldly states that “if music was the most important form of youth culture in the 20th century, video games seem slated to be the most important in the 21st”. It seems to be too good an opportunity to miss.
If you are looking at entering the gaming advertising space and want some advice on infrastructure from specialists that live and breathe both spaces, take a look at our adtech industry page and gaming industry page.
As the name suggests, adtech and its success is firmly rooted in the infrastructure that supports it. Adtech companies are measured by their ability to deliver advertising services within the finest of margins and the minutest of milliseconds.