Gaming hits nearly $200 billion, but advertisers remain cautious

The global gaming industry is an untapped market for advertisers, generating nearly $183.9 billion (£144 billion) in revenue annually and surpassing both the music and movie businesses.

WARC Media’s latest Global Ads Trend report highlights how the gaming industry could be a huge growth opportunity for advertisers. With its ability to reach multiple age groups and offering full-funnel potential, it offers advertisers the potential to reach multiple age groups.

US advertisers are increasing their investment in in-game advertising, but it remains slow. Spend in 2024 is forecast to reach just $6.7 billion(£5.27 billion)–only up by 10% year over year.

The 2024 WARC Marketer’s Toolkit survey also highlighted how enthusiasm around in-game ads peaked during the pandemic with 72% of advertisers planning to increase spend, but has since fallen to 52%.
 

This is despite the average revenue for in-app gaming ads going up by 26.7% year-on-year. Advertisers that don’t invest their spend on in-game ads are missing out on reaching 3.4 billion people globally across multiple age groups, including 72% of 35-54s and 46% of over 55s that play games at least once a week.

In-game advertising is also considered a brand-safe channel, with 90% of advertisers surveyed by the IAB agreeing that it was due to improved tools like fraud deduction, context, age ratings, ad interactivity, and engagement metrics.

Alex Brownsell, Head of WARC Media, said: “Gaming is huge, both in audience and cultural impact, and its highly complex ecosystem spans devices and platforms defying conventional definitions of a channel. Gaming has long been heralded as a vital emerging opportunity for brands, particularly those wanting to reach younger audiences.

“However, in-game advertising spend remains low. This may soon change, with game publishers focused on improving ad monetisation. But evidence is needed to make the case for gaming as an advertising medium.”

According to WARC Media, advertisers are still cautious about heavily investing in the gaming industry because of its complex ecosystem, which spans different devices, genres, formats, and market preferences.

There is traditional in-game advertising such as mobile and reward-based formats, but there are other formats now such as creator content on Twitch, e-port sponsorships, and dynamic in-game advertising, which is written into the game as part of its scenery. 

To effectively see growth from investing in the gaming industry, EssenceMediaComX’s SVP Strategy, Media Futures Group, Jo Pereira, said that gaming is “more of a longer partnership opportunity than a straight media buy” and it would be better to invest in the audience consistently rather than “dipping their toe”. 

Pereira added, “Gaming is a whole entertainment ecosystem, not a channel, and is stealing share from entertainment platforms. However, clients haven’t grown up with gaming and feel less confident about the opportunities.”

Similarly, Dentsu’s corporate planning manager, Maure Nogaré, said that brands can select seven or eight different channels and touchpoints within the gaming ecosystem depending on their KPIs and what they are working towards.

Recently, the likes of Netflix and The New York Times have invested in the gaming industry and are seeing results. Netflix, which spent $1 billion on its gaming business that launched three years ago, has seen downloads going up 200% since 2022. The New York Times has been able to retain users across other digital platforms like LinkedIn by investing in gaming content.

The article originally appeared on Performance Marketing World.