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Why 2024 could be the year mobile gaming inventory goes premium

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Long considered the red-headed stepchild of in-game advertising, mobile gaming inventory is shaping up to be increasingly attractive in 2024.

Over the past year, as in-game advertising companies have looked to muscle their way into brands’ ad budgets, some marketers have focused on their ability to secure so-called premium inventory — ads inside the big-budget console titles published by major game developers such as Nintendo and Electronic Arts. Historically, the bulk of most in-game ad firms’ inventory is inside casual or hypercasual games, which brands consider less effective than the major console titles enjoyed by core gamers. 

But as 2024 ramps up, it turns out the returns of mobile gaming advertising are getting pretty good. Q4 2023 was the best season on record for mobile gaming advertisers, according to data shared with Digiday by the mobile marketing platform AppLovin, bolstered both by advances in artificial intelligence and a better understanding among marketers of what makes mobile gamers tune in.

Here’s a breakdown of some of the numbers — and what they could mean for mobile gaming advertising in 2024.

The key numbers:

  • Q4 is always the most productive quarter for mobile gaming apps, with the weekend following Thanksgiving typically yielding more revenue than any other period for mobile game developers. Even adjusted for this bump, however, 2023 was a banner year for the mobile apps using AppLovin’s MAX mediation platform, which measured a 10 percent year-over-year increase in spending between Q4 2022 and Q4 2023. “The growth that we’re seeing is excluding seasonality; it’s very much there,” said Daniel Tchernahovsky, a gaming expert and vp of global business development at AppLovin. “And this year, it’s actually much better than it was in ‘22.”
  • Mobile gamers also engaged more with ads in Q4 2023, with average ad impressions per user increasing by 7 percent, according to AppLovin data.
  • Casual (not hypercasual) mobile games in particular are growing more in revenue than other types of mobile apps, with a 23 percent increase in revenue compared to Q4 2022.

Changing definitions

At the beginning of 2023, in-game advertising companies were laser-focused on widening their inventory inside big-budget console video games, viewing those as the premium titles most attractive to prospective advertisers. But with mobile gaming continuing to rise in 2024, in-game ad firms are ready and willing to start promoting their more popular mobile offerings as premium inventory with a similar reach and audience to major console titles. It’s certainly a positioning that benefits them, given much of their inventory is already located inside mobile games.

“When you look at the breadth and diversity of gamers and the games they play, premium is relative,” said Sandy Shanman, COO of the in-game advertising company Frameplay. “At the end of the day, what’s most important is whether you can monetize that in a way that is good for all constituents.”

Crushing the competition

In 2022, Microsoft and Sony turned heads by reportedly looking to start their own internal in-game advertising divisions. Since then, many in the space have anticipated their entry into the in-game ad market with bated breath. But Microsoft might not need to follow through with these plans now that the tech giant has successfully acquired Activision Blizzard, whose own internal in-game advertising company, Activision Blizzard Media, sells inventory inside popular mobile titles such as “Candy Crush.” In Q2 2023, 43 percent of Activision Blizzard’s total revenues came from mobile.

“Advertisers have a fixation on having the big screen — they want to have the screen that is the center of the household. But the screen that’s been the center of the household has not been the TV for quite some time; it’s been the mobile phone, either in combination or on its own,” said ABM vp of global business research and marketing Jonathan Stringfield. “So, in the same way, the gaming experiences that are potentially going to be very meaningful for marketing will be on that screen. It’s not always the biggest one, but it sure is the most meaningful one for your average consumer.”

Wising up

One reason why users are engaging more with mobile in-game ads is simply that brands are getting more adept at using in-game ads in a way that is actually interesting to gamers. Although the rewarded videos of years past remain a significant source of ad revenue from “Candy Crush” all the way down, marketers are starting to ask for more when they activate inside mobile games, forcing both game developers and in-game advertising companies to implement brands into mobile games in more meaningful and creative ways. 

“The creativity, when it comes to advertising, is certainly not going down, and there’s technology that is being released, particularly at the end of last year, that’s only going to improve on it,” Tchernahovsky said. “In particular, when we talk about AI, systems like our own are much more capable of identifying the right ad for the right users, because AI has also increased the complexity of our targeting.”

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