As in-game ads expand, ad tech firms look to level up their services

As gaming has gained in popularity during the COVID-19 pandemic, advertisers are moving further into games as a way to reach gamers and ad tech companies are rising to meet the challenge of this new audience. 

These vendors are looking to rejuvenate their offerings with in-game advertisements that allow players to interact with both the games themselves and the real-world products they promote.

A longstanding model for incorporating ads into gameplay is to allow players who lose a game to continue their run after watching a brief video. Though this is an older form of in-game advertising, it is still one of the most common due to its predominance in mobile gaming, where players are less likely to be distracted by another device while consuming an ad. It’s one of the primary forms of in-game advertisement used by mobile-focused ad tech firms such as Admazing.  “87 percent of the world’s population of gamers prefer to watch the video rather than remove the ad,” said Admazing managing partner Edward Castillo.

The drawback of this type of in-game advertisement is that there’s no guarantee that players are actually consuming the ads in real time. “I have a 13-year old, she plays — she can put her phone down and she will pick that thing up 29.8 seconds later,” said Mark Vange, CTO of technology solutions firm NextPlay Technologies. “She just knows now what 30 seconds [ad length] feels like.”

There is some evidence to contradict this anecdote: Jonathan Stringfield, vp of global business marketing, measurement and insights at Activision Blizzard Media, cites a Blizzard study that used data from players’ gyroscopes to determine that they weren’t putting their phones down, and Castillo mentions that some players willingly consume ads to support developers of free-to-play titles. Indeed, games are an inherently interactive media format, and brands are jumping to take advantage of gamers’ eagerness to interact more directly with their in-game ads.

Unlike social video ads, whose success can be measured through view count, shares and engagement, the only metric that matters for in-game advertisements is return of investment (ROI). And to convince gamers to interact with products in real life, advertisers must first get them to try them out in-game. Last year, for example, “Fortnite’s” new Marvel Knockout game mode gave players an opportunity to interact with an outside product  —Marvel IP — through the familiar framework of “Fortnite” gameplay.

Aside from bespoke game modes, another option is to place ads in a virtual world where they would normally be in the real world — a logical step as we move towards the Metaverse. “What we don’t want to do is break that immersion,” said Fran Petruzzelli, CTO of in-game ad company Bidstack. “We don’t want to put an ad where it just completely ruins the gameplay It’s got to fit and it’s got to feel intrinsic, like it belongs there.” Branded skins are another method that Bidstack uses to incorporate ads into games without splashing cold water in players’ faces.

At NextPlay, Vange hopes to take this immersion a step further by allowing players to acquire coupons by interacting with in-game ads modeled after real-life products, which can then be redeemed for a discounted version of the IRL merchandise. He used the idea of a power-up based on a Starbucks coffee cup as an example. “If I then walk away from that thing with a coupon for Starbucks, then I can go back into the store and actually drive some business for them,” Vange said. “That becomes a much more valuable transaction for the developer, right?” Such power-ups could be fungible: one player’s Starbucks cup could be a Twix bar for another player or a Bud Light for a third.

Since the Atari days, brands and game developers have attempted to replicate the widespread product placement of Hollywood and television. In the early ’90s, the Nintendo Entertainment System put out brand-themed titles such as the McDonald’s-branded “M.C. Kids” and 7-Up-themed “Spot: The Video Game”; in 2006, outlets reported a rise in video-game product placement as games became increasingly cinematic in scope and style.

But hindsight has shown that this kind of flat brand integration doesn’t play nearly as well with modern gamers. As the gaming audience has become increasingly wary of corporate influence, simply slapping a logo onto an in-game map or dropping in timed videos between moments of gameplay won’t cut it anymore. If “M.C. Kids” were to come out today, gamers would reject it as a novelty at best — and a blatant cash grab at worst.

Instead, developers and their brand partners are learning how to integrate ads seamlessly into today’s virtual worlds, using gamers’ comfort and familiarity with these worlds to get them to interact with the ads and increase ROI.

“A lot of the work that we do in the background is ensuring that any of these integrations aren’t interruptive to the gameplay experience or the viewing experience — and ideally work within it,” Stringfield said. “And then the highest tier, though it’s difficult to get to, can potentially improve the gameplay experience.”