In 2019, games are everywhere. The global number of people tapping into them across their phones is set to top out at more than 2.4 billion by December and is expected to reach more than 2.7 billion by the end of 2021. Now, game developers and marketers alike are taking notice—and thanks to the rollout of uniquely engaging ads unavailable on other platforms, in-game advertising is easier than ever.
In the past, the bulk of consumer cash in the gaming market was dedicated to in-app payments (IAP) where players could punch in their credit card information to buy boosts in-game. According to Itamar Benedy, CEO of in-game programmatic platform Anzu.io, the last thing game developers wanted was an in-game billboard that swallowed valuable screen real estate or a banner ad that distracts from gameplay. As one told The New York Times more than a decade ago, “I don’t want to pick up a sword and have it read Nike on the side.”
But recent years have seen dwindling numbers of players willing to pay for power-ups and extra lives—meaning these programmers are sparking new types of advertisements to drum up revenue without turning their customers off. For a lot of them, said Benedy, that means turning toward “rewarded ads” that offer an incentive in exchange.
“This was one of the biggest revolutions in the world of in-game advertising,” he added. “Here, you’re choosing when you want to see an ad so it feels less intrusive. And when it feels less intrusive, it’s easier to watch something that takes up 30 seconds of your day.”
Though the idea of incentivizing users might make some marketers wince, many are finding the benefits—high viewability and completion rates among them—outweigh any potential ickiness. In the U.S. alone, eMarketer forecasts that in-game ad spend is set to reach $3.25 billion this year, which is set to balloon to roughly $3.7 billion by the tail end of 2020.
“Playable ads are really the native format for games, given the ad itself is a game,” explained Julie Shumaker, vp of monetization at the AR/VR gaming engine Unity. “It’s an easy transition for developers and has continuity for the player, which translates into really high engagement.”
Meanwhile, a recent Unity survey of mobile gamers found that nearly three-fourths of these users cited watching in-game ads as their preferred way to “pay” for a mobile game, and a recent study from the market research firm Newzoo’s found that mobile gamers offer up “positive associations” about brands and advertising—to the tune of 33% more often than their nongaming cohorts.
To understand the boom in in-game ad dollars, marketers need to look no further than their phones. Consumers are primed to spend nearly 10 minutes longer browsing their phones than watching television on average, according to eMarketer’s 2019 forecasts, making this the first year the small screen will outpace the big box.
More time on phones means more time spent devoted to mobile apps, including games. While the gamers overall are expected to drop roughly $152 billion by the end of 2019, mobile games across tablets and smartphones are set to scoop up 45% of that budget—roughly $68.5 billion—by year’s end. The lion’s share of that money—nearly $55 billion—is set to come from smartphone games alone, which some estimates peg as a third of all apps downloaded nationwide, and roughly three-quarters of all consumer spend in the app store.
While brands might be squeamish about appearing in popular titles that are rife with bloody brand safety snafus, casual games that are mobile-first and brand-friendly have seen a boom among consumers and marketers alike. These are the games that are simple to develop, straightforward to learn and easy to squeeze into a busy schedule—think Flappy Bird or Minesweeper rather than Fortnite.
“You can get drawn into these games and spend a big chunk of time, but it isn’t required,” explained Yory Wurmser, who spearheads eMarketer’s mobile analysis. “It’s the type of thing you can do on your commute or while you’re waiting in line somewhere; it’s a very low commitment experience.”
The low barrier for entry comes with high rewards, too. By some estimates, these innocuous games that even grandparents can enjoy make up more than 60% of the most popular games available, generating between $2 billion to $2.5 billion in annual revenue.
Right now, Shumaker said, one of the biggest hurdles for ad buyers targeting this casual market is serving the right ad at the right time to the right player. Her hunch was that advancements in the world of in-game advertising will see more of a focus on managing the player’s lifecycle and more moves to personalize the player experience.