Video Game Ads Shoot for High Score

JULY 5, 2007

It's getting easier to reach players during play.

Video game advertising spending will pass $2 billion in 2012, up from $370 million in 2006, according to Parks Associates' "Electronic Gaming in the Digital Home: Game Advertising" report.

That is a compound annual growth rate (CAGR) of 33%, which is much more than other major ad types — including the Internet.

Yuanzhe (Michael) Cai of Parks Associates said, "Advertising in electronic games had an average monthly household expenditure of less than 50 cents in 2006, while broadcast TV was at $37."

In-game advertising will be the fastest-growing type of video game ad, passing $800 million in spending in 2012, up from $55 million in 2006.

Dynamic in-game ads will comprise 84% of the market in 2012, up from 27% in 2006. Such ads can be changed to target different audiences in real time by daypart, game type and other characteristics. This appeals to advertisers who want to target specific gamers while they're playing.

Video game advertising is still fairly new, which accounts for the steep growth projections. The fact that growth is estimated to surpass Internet advertising highlights the Web's comparative maturity.

eMarketer's own video game ad spending projections, made in April 2007, are somewhat more conservative. US spending on video game advertising will be $502 million in 2007, a 45% increase on estimated spending in 2006.

Despite much enthusiasm for video game ads, the fact is that ad models are still evolving. And getting the desired reach for a given ad can be a challenge.

For instance, Xbox Live's Massive is one of the most developed in-game ad-placement systems. It's great for reaching Xbox 360 owners, but it doesn't reach other console owners, and its PC gamer reach is piecemeal. Some other ad networks have even less reach.

As a result, marketers who want to reach all gamers at once are still playing a waiting game.

Learn more about the variety of video game ad types. Read the eMarketer Video Game Advertising: Getting to the Next Level report.