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.

Report: Gaming a $2 Bil. Market by 2012

Mike Shields

JUNE 28, 2007 -

Advertising in and around videogames is expected to grow exponentially over the next five years, becoming a $2 billion market by 2012, according to a new report released by digital market research specialist Parks Associates.

The report, Electronic Gaming in the Digital Home: Game Advertising, encompasses several forms of videogame related advertising, including product placement in games, banners in online games, dynamically inserted ads in console and PC games and even ads placed within mobile games. Overall, Parks Associates is bullish on the burgeoning ad medium, predicting that spending will climb from an estimated $370 million last year to more than $2 billion in 2012. Over that period of time, game advertising should achieve a compound annual growth rate of 33 percent, says the report – which should largely outpace the growth expected in other media, including the Internet.

Those estimates corroborates some of the more optimistic forecasts delivered in recent years by the industry’s biggest proponents, such as leading in-game ad firm Massive Inc., which is owned by Microsoft. And they’re based on the general notion that videogames are currently underutilized by marketers. “Advertisers are not using the gaming medium to its full potential,” said Yuanzhe Cai, director of broadband and gaming, Parks Associates. “If executed correctly, game advertising can provide a win-win solution for advertisers, developers and publishers, console manufacturers, game portals, and gamers.”

Among the various videogame advertising tactics that Parks Associates tracks in the report, it’s dynamic in-game advertising – where ads are automatically delivered within games as they are being played – that holds the most potential. The firm expects that dynamic in-game ads (the specialty of firms such as Massive, Double Fusion and others) will account for a whopping 84 of the ad market, versus just 27 percent of the market today.

Cai said that dynamic in-game ads appeal to brands give their similarity to online advertising. The tactic “offers several unique advantages, such as timeliness, scalability, measurability, and flexibility,” he said. “But the industry will also have to address several looming challenges, including lack of economy, lack of industry standards, and media fragmentation.”