The increased sophistication of games will attract more brand dollars

Despite the fact that in-game ad spending will see relatively modest growth over the next few years, games still offer several opportunities for brands.

• Take advantage of a large audience with solid first-party data. We estimate that about 187 million people in the US across all demographics will play video games in 2024. Moreover, the high opt-in rate for ATT, better in-game analytics, and improved attribution make gaming an increasingly attractive opportunity for brands.
• Identify the developers investing in brand formats. The post-ATT transition has been expensive and requires a full-scale reimagining of game monetization. Large platforms, such as Roblox or Ubisoft, have moved most quickly, but they’ll eventually be joined by smaller ones as the prospect of brand dollars grows. It’s a virtuous cycle for brand advertisers.
• Explore AI’s impact on the burgeoning video ad space. Pre-game video, interstitials, and rewarded ads continue to increase, and the pace should quicken as AI permits more personalization and easier production. “[With generative AI], you just have much higher levels of output ... because it’s easier and cheaper to create videos,” said Daniel Tchernahovsky, vice president of global business development at AppLovin. He also mentioned that AI should make playable ads easier to produce.
• Identify the right format for your brand. “It’s about a pyramid of attractiveness for brands,” said InMobi’s chief business officer, Kunal Nagpal. Hypercasual and casual games are the most challenging game types unless, like Candy Crush Saga, they have a loyal following. Games where ads can slide into the game experience without being too disruptive tend to work well. This includes intrinsic ads in racing or sports games, or more elaborate game collaborations in virtual worlds.
• Shoppable formats are coming. Roblox has introduced ads leading to branded immersive experiences, an early form of shoppable ads. The performance ad structure of mobile games is geared toward installs, but as developers seek brand dollars, this will likely lead to additional shoppable formats.

Read the full report, US In-Game Ad Revenues Forecast 2024.