3 beliefs about in-game ads that clash with reality

With almost $37 billion in revenue generated by mobile games, it’s no wonder the digital advertising industry is in a frenzy over in-game advertising. Nowhere is this truer than in a mobile-first economy like Asia, with markets like Vietnam, Indonesia and the Philippines poised to enjoy annual revenue growth of over 50 percent from mobile gaming alone.

The key thing that stands out about in-game advertising is that it boasts benefits for both marketers and game publishers—a win-win situation that, in spite of our claims to be moving towards a more collaborative ecosystem, is admittedly still rare. With in-game advertising, marketers enjoy higher levels of user engagement. For instance, 4 out of 5 players are open to engaging with rewarded video ads. At the same time, publishers also stand to gain, as in-game advertising is essentially a means of monetizing apps, uncapping a completely new source of revenue beyond app-installs and in-app purchases. This is especially true of video ads, with over half of mobile game publishers identifying video ads as grossing the highest revenue per user compared to any other type of in-game advertising.

With so much to offer, it’s unsurprising that marketers are rapidly shifting spend to in-game advertising. However, this enthusiasm belies the fact that there still exist some commonly-held misconceptions, even amongst industry professionals.

1. The mobile gaming-millennial assumption

This assumption is an easy one to make. After all, research seems to suggest that the rapid rise in mobile gaming revenues in Asia is driven by young mobile phone users, with gamers between the age of 10 and 35 comprising the biggest proportion of players—a figure that stands at 50 percent for Indonesia, Thailand and the Philippines. However, in actual fact, the rapid proliferation of smartphones has enabled better access to mobile-based gaming apps across multiple age and gender demographics, driving greater adoption.

Take, for example, a game like Candy Crush, which enjoyed impressive response from women around the world. Middle-aged men have also been found to prefer card-based gaming apps, while children enjoy interactive click-based games. This diversified audience mean that brands need to think of ways to target different consumer demographics through specific gaming apps. Marketers need to understand the types of games that appeal to their target market, and push their ads accordingly.

2. In-game advertising offers low measurability

In an age of performance-based advertising, you can’t really escape the measurability issue. As spend on in-game advertising increases, the pressure is on advertisers to justify this deliberate reallocation of budget through tangible results. Fortunately, we’ve left behind the old days where the industry relied on outdated technologies like cookies and tags. Technology has evolved to a point that advertisers are now able to track the results of their in-game advertising according to KPIs and metrics that extend far beyond impressions, to completed views, CPA and attribution—just to name a few. Better yet, they are able to do so in real-time, and with greater precision than ever before. We are also seeing significant developments taking place in the app ecosystem that enable advertisers to measure differences in user behaviour before and after an app is installed. Going one step further, advertisers are now looking at ad IDs to identify users and their interests, enabling more accurate targeting, analytics and ultimately, delivering stronger ROI.

3. In-game ads don’t perform as well as other types of ads

Performance can be compared in various ways. First, bearing in mind that in-game ads are essentially a form of in-app advertising on a specific category of app, one can start first by comparing the performance of in-app ads to web/WAP ads. According to Integral Ad Science—which was recently accredited by the Media Rating Council (MRC) for mobile in-app display and video viewability measurement—in-app ad units actually tend to outperform web ads, achieving a viewability of 81 percent, compared to 50 percent for web ads.

Of course, performance also varies according to the type of in-game ad in question. Rewarded video appears to deliver the best performance, not least because of its popularity even with users. Far from being an interruptive experience, 71 percent of users actually prefer to watch video ads in exchange for a reward. Rewarded video also has massive impact on user retention, with 62 percent of game publishers seeing user retention climb after introducing rewarded video ads to their game. This is in contrast to the mere 6 percent climb in user retention experienced when full-screen picture ads were integrated.

With AR and VR technologies developing at breakneck speed, mobile graphics improving just as rapidly, and in-app investments in APAC continuing to flourish—amounting to a staggering 13 times that of mobile web in countries like Singapore and Thailand—in-game advertising is unlikely to be going anywhere any time soon. While there are of course many nuances that need to be mastered in order for marketers to seamlessly navigate this exciting new landscape, busting these three myths is a great place to start—and is crucial for any marketer looking to play the game.

Rohit Sharma is CEO and founder of POKKT.