Forget the mall food court, the parking lot behind the 7-Eleven and the local bar when it comes to youth hangouts. For 40% of millennials and members of Generation Z, video games are the primary social outlet, a Deloitte study revealed. Deloitte Vice Chair Jana Arbanas explained that modern video games provide “interaction, socialization and utility and their popularity with younger generations could potentially transform the media and entertainment industry.”
Marketers aiming to reach this large demographic with its lucrative future got more good news from a recent Anzu study: 75% of gamers in Generation Z say that in-game ads actually make their experiences better, and 40% feel the same way about branded content. For a demographic raised on TV ads they can skip and online ads they can block, a medium where ads are positive elements can really stand out.
The basics of in-game ads
Since video games are the primary social venue for a lot of people, one main marketing technique uses similar strategies to those companies employ when advertising in out-of-home locations like billboards and stadiums. At their simplest, in-game ads let brands’ names and logos appear in digital environments — like the recent partnership between Intersport and EA, which placed promotions for the sports retailer into stadiums in EA Sports FC 25.
Pokemon Go creator Niantic has taken in-game ads a step further with Rewarded AR. Brands can set up experiences with in-game rewards, like the huge coffee cup Circle K sponsored, which had a 76% engagement rate and 96% completion. The game company is also offering full production process management for brands’ creative assets, a feature that may become extremely important as brands attempt to engage gamers on their own level. (Last year, the Snapchat AR game was looking to attract the interest of marketers.)
Larger gaming environments like Roblox, Minecraft and Fortnite have also proven themselves as ways to reach young consumers. A Roblox campaign helped the Cleveland Clinic offer tools for mental health, Nickelodeon used the platform for a concert and programmatic media seems to be a big part of its future. Over on Fortnite, Disney set up an ESPN Football Island for young sports fans and plans a “whole new world” of gaming and entertainment.
Measurement and new formats
Measurement is a crucial part of any advertising medium, so it’s no surprise that companies like Anzu are developing techniques for detailed and accurate ad metrics. Data points Anzu’s technology measures include whether other in-game scenery partially or completely obscures an ad, where in the virtual world it is and how much of the screen it occupies. As games and in-game marketing become more popular, other crucial factors may well reveal themselves.
Some companies have started running in-game ads that scenery can’t block–like Odeeo, which recently gained $5 million in a funding round for in-game audio ads. Odeeo’s 10-30 second commercials are personalized and don’t play if a user has their sound turned off. The company reports a click-through rate of 1 to 1.5%, outdoing other kinds of audio ads and showing that the in-game market still provides fresh, unexplored ground for marketers willing to think outside the pop-up box.
Conclusion
Historically, video games haven’t drawn as much advertising attention as other media. Even now, only 3% to 5% of ad budgets go to gaming, largely because of myths about the medium’s brand safety, ease of use and expense, as well as the difficulty of measurement. As a result, gaming is a valuable market and one that few companies have tapped so far.
That’s starting to change. More monitoring in online communities makes games safer for brands, games have developed entry points even for those who aren’t technologically savvy, and companies such as Anzu are developing sophisticated measuring systems. Marketers have started responding: a recent survey of advertisers found that more gaming investment is in the cards for 63%. Consumer packaged goods giant Unilever now spends three times as much on in-game ads as it did in 2021–and where the maker of Axe Body Spray goes, can the market in general be far behind?
If you liked this article, sign up for SmartBrief’s free email newsletter on Marketing Innovation. It’s among SmartBrief’s more than 250 industry-focused newsletters.