Prospects for in-game advertising
Native in-game ad tech firm Bidstack recently fell into insolvency, and the executive team has since acquired the firm’s assets out of administration. This raises the question: what are the prospects for in-game advertising?
Dynamic in-game advertising has been the next big thing for at least 20 years, with Massive offering in-game ad tech in 2004. In 2009, GroupM and Screen Digest forecast that ‘dynamic in-game ads’ would account for 1.5% of all digital advertising expenditure by 2014. Yet even ten years later, mobile games are predicted to account for only 2.5% of US digital ad spend in 2024 (eMarketer), of which we believe only a small share is dynamic and native/integrated into gameplay vs. standard display (e.g. banners).
However, native in-game advertising could be turning a corner and poised for accelerated growth. Hygiene factors, such as measurement and standardisation, are being addressed. Games publishers are increasingly testing in-game ads, importantly on console titles as well as mobile. Brands are keen to reach gaming audiences. And investment is flowing into ad tech solutions (e.g. Anzu $48m round B in 2023). Programmatic is likely to play a role alongside direct-sold publisher/developer creative solutions.
We see opportunities for games publishers/developers, ad tech vendors, measurement and verification providers, agencies and video media owners/sales houses to diversify revenues into in-game advertising. And now is a good time to explore these opportunities.