Global Gaming Market Surges to $184 Billion, but Advertising Spend Lags Behind, Report Reveals

The global gaming industry, valued at an impressive $183.9 billion annually, engages 3.4 billion people worldwide, according to WARC Media’s latest report, Gaming: Advertising’s Untapped Opportunity. Despite this massive audience and significant cultural impact, spending on in-game advertising remains surprisingly low.

Alex Brownsell, Head of WARC Media, highlighted this paradox:

“Gaming is enormous in terms of both audience and cultural influence, with a complex ecosystem that spans multiple devices and platforms, challenging conventional definitions of a media channel. Despite being recognized as a critical opportunity for brands, particularly those targeting younger audiences, in-game advertising spending is still minimal. However, this could change as game publishers enhance ad monetization efforts, though more evidence is needed to validate gaming as a viable advertising medium.”

Gaming’s Untapped Potential Despite Massive Engagement

While the global gaming market surpasses both the music and movie industries, in-game advertising has not kept pace. Research from Newzoo shows that 72% of individuals aged 35-54 and 46% of those over 55 engage with video games at least once a week. Despite this substantial engagement, enthusiasm for in-game ads has declined since its peak during the pandemic.

WARC’s Marketer’s Toolkit 2024 survey reveals a 20 percentage point drop in the share of advertisers planning to increase gaming ad spend since 2021, from 72% to 52%.

Complex Ecosystem Challenges Advertisers

The report underscores the complexity of the gaming advertising ecosystem, which spans various devices, genres, formats, and market preferences, contributing to the slow adoption of in-game ads. With numerous touchpoints available, including Twitch, Discord, and e-sports sponsorships, brands are not entirely reliant on in-game formats.

Jo Pereira, SVP Strategy at Media Futures Group, EssenceMediacomX, commented,

“Gaming is a comprehensive entertainment ecosystem, not just a channel, and it’s capturing a share from traditional entertainment platforms. However, many clients didn’t grow up with gaming and thus feel less confident in exploring these opportunities.”

Ad Monetization Efforts on the Rise

Game publishers are increasingly focused on building advertising capabilities and demonstrating the effectiveness of in-game ads. Unity reports a 26.7% year-on-year increase in average revenue per daily active user from in-app ads, particularly in simulation, casual, and puzzle games. However, in-game advertising still constitutes only a small fraction of total ad spend.

In the US, advertisers are expected to spend $6.7 billion on in-game ads in 2024, representing just 3.7% of total US digital ad spending, according to Dentsu.

Higher Attention Rates and Active Engagement in Gaming

Gaming environments have shown to generate higher viewability and attention rates, with research by Dentsu, Lumen, and Activision Blizzard Media revealing that in-game rewarded video ads achieve a 100% on-screen impression rate, far exceeding the benchmark of 83%.

Nina Fedorczuk, Chief Enablement Officer at Omnicom Media Group Asia Pacific, noted,

Gaming demands full attention. It’s rare for gamers to multitask while playing; everything else becomes background noise. For brands, the challenge is to maintain that attention without disrupting the gaming experience.”

Growing Advertiser Interest and Investment

In-app advertising has seen a surge, with companies like Roblox striving to boost ad revenue. However, the effectiveness of this spending may be limited without adequate support from other channels, particularly social media, which plays a crucial role in discovery and engagement.

Major companies are also heavily investing in gaming content. Netflix, for instance, has reportedly spent $1 billion on its gaming business since launching three years ago, with game downloads up 200% since 2022. Similarly, The New York Times and platforms like LinkedIn and YouTube are investing in gaming to retain and engage users.

News Source: Gulf Business