Ad budgets for games are growing for 40% of marketers, per IAB report

Dive Brief:

Games advertising is a top growth area for marketers, according to a new report from the IAB that lands on the first day of its annual PlayFronts marketplace for advertising opportunities in the gaming industry.
Eighty-six percent of marketers agree in-game advertising is brand safe, while 40% plan on boosting investment in the space in the coming year. There are more than 212 million gamers in the U.S. and ad spend in games is expected to grow from $8.53 billion in 2024 to $11.49 billion by 2027.
The report, “Changing the Game,” found marketers rank games behind the leader social media when it comes to being excellent at generating conversion and purchasing power. Games outperform on click-through rates, with 67% of marketers ranking games advertising as excellent/good on this front, compared to the media average of 65%.

Dive Insight:

Gaming advertising has surged in recent years as video games grow in popularity, especially among young consumers. With 86% of marketers indicating that games are of growing importance to their company, understanding the space is crucial. The new report from IAB goes into the benefits of games advertising and how the industry is utilizing video game ads.

When it comes to plans for increasing spend in 2024, 40% of marketers plan to increase their budgets for games advertising, tied with digital video and surpassed by social, with 47% planning an increase. However, 10% of advertisers plan on decreasing spend for games, while 50% plan to keep their budgets the same. In comparison, only 7% of marketers indicated they plan to decrease spend on digital video and social marketing.

In-game advertising can take many forms, such as branded worlds, rewards, intrinsic in-game activations, advergames and sponsored content, among others.

Games advertising is highly measurable, per the report. Among survey respondents, 85% indicated they are confident in measuring games advertising and 68% use the same metrics for games that they use on other channels, indicating the channel is easily measured against other platforms. Ad engagement is the most popular metric at 43%, followed by click-through metrics (41%), conversions/sales (41%) and brand lift/other surveys (40%).

The report suggests that games advertising has moved beyond being an experiment or gimmick for many marketers, with 35% having a games-specific budget. Only 9% use research and development or experimental budgets to pay for games advertising. Other sources of funding include general media budgets (33%) and device-specific budgets (23%). Seventy-eight percent of advertisers use game advertising continuously throughout the year versus one-off activations.

“Changing the Game'' is based on a survey of 300 brand and agency marketing leaders. Questions related to how games advertising compares to other media, investment levels and how marketers can get involved in the space. IAB partnered with Advertising Perceptions for the study.