In-Game Advertising Is Poised For A Growth Spurt In 2023

Could 2023 be the year gaming comes into its own as a fully mature media channel?

It might be a little premature to say “fully mature” – but the in-game ad market will continue gaining momentum in the year to come.

In 2022, top players in digital advertising finally started taking gaming seriously, and the groundwork was laid for programmatic in-game advertising to grow thanks to a long overdue update to the IAB’s and MRC’s in-game ad standards.

The scene is also set for in-game advertising to expand into console gaming, and we might even see the debut of the first sell-side platform dedicated to gaming, which could mean the availability of intrinsic in-game across open exchanges and not just via PMPs or direct buys.

Setting standards

One of the most significant developments for intrinsic in-game ads (i.e., ads that appear within gameplay rather than more traditional display and video formats) came in June when the IAB and MRC updated their in-game ad standards for the first time since 2009.

The new standards redefine valid in-game ad impressions and set criteria for measuring in-game ad placements.

Marketers had been clamoring for more standardization for in-game media since 2020 when the gaming channel exploded during the pandemic. Publishers were also keen on setting standards to encourage more brand advertisers to get into games.

Attracting more brands is a top priority for game publishers. Historically, most in-game advertising has been bought by rival developers looking to draw players away to their own games. Large brands also tend to have bigger budgets.

Laying the pipes

Following the release of the new standards, several big-name advertising companies rolled out specialized gaming offerings.

In August, The Trade Desk set up a team to help advertisers buy video game ad inventory across mobile, consoles and PCs. The Trade Desk said it expects video game advertising to be a $100 million dollar business for the company within the next four to five years, according to Natrian Maxwell, general manager of emerging channels.

Agencies, including Omnicom Media Group and Publicis, also announced specialized gaming offerings for buyers over the course of 2022.

Meanwhile, on the sell side, in-game ad platforms have been announcing strategic partnerships and setting ambitious goals for their businesses.

Anzu struck exclusive in-game ad sales agreements with NBCU in the US and UK markets and with Entravision in Latin America. Anzu also partnered with IAS to provide media quality measurement for in-game ad inventory, including measuring viewability and invalid traffic.

In November, Bidstack spoke with AdExchanger about its plans to build a dedicated SSP for in-game ads. Bidstack also partnered with GroupM’s Xaxis to connect the latter’s DSP to Bidstack’s in-game ad inventory and partnered with Adscholars and MMP Worldwide to bolster its programmatic offerings in the India and MENA markets, respectively.

New horizons

On the publisher side, metaverse-adjacent online games such as Roblox and Fortnite continue to make headlines for their branded in-game activations (and sometimes for their COPPA violations).

In addition to working with brands like Invisalign to create branded gaming experiences, Roblox announced its intention to roll out in-game ads across its virtual environments heading into 2023. And Fortnite has established itself as a leader in brand partnerships through its use of branded skins and assets.

Although advertising has been ubiquitous in free-to-play mobile and online games for years, the final frontier for in-game ads is console games. Advertisers want to be on the biggest screen in the house – hence the growth of CTV – and gaming consoles are their ticket to reaching gamers through their TVs.

This year, console giants Sony and Microsoft announced plans to bring in-game ads to free-to-play games on PlayStation and Xbox consoles. Microsoft has already filed a patent for serving personalized ads to gamers through its Xbox consoles and cloud gaming service.

But don’t expect programmatic to take over top-selling AAA console games like Call of Duty just yet. That prospect still seems far off on the horizon.

Consolidation and regulation

Speaking of Call of Duty, Microsoft generated a ton of attention in early 2022 with the announcement of its plan to acquire Call of Duty publisher Activision Blizzard.

Alongside Microsoft’s acquisition of video game holdco ZeniMax Media and its AAA game publisher subsidiary Bethesda Softworks last year, the Activision Blizzard deal seemed like a logical next step toward building an unassailable gaming content fortress. And with its purchase of ad tech company Xandr at the end of 2021, Microsoft seemed poised to eventually monetize its exclusive content library with ads.

But advertisers aren’t the only ones taking the gaming market more seriously than ever before. Regulators around the world are also paying more attention to consolidation among video game companies.

Case in point: In early December, the Federal Trade Commission filed a lawsuit to prevent the Microsoft/Activision Blizzard deal from going through because of antitrust concerns – specifically, the possibility that Microsoft could make Call of Duty games exclusive to Xbox as they plan to do for Bethesda’s IP.

The Activision Blizzard deal is also facing scrutiny from regulators in the UK and EU, and even some gamers are suing in an attempt to scuttle the deal.

Microsoft isn’t the only gaming company drawing unwanted attention from regulators. In late December, the FTC reached a $520 million settlement with Epic Games over Fortnite’s alleged violations of the Children’s Online Privacy Protection Act and the use of dark patterns in its in-game microtransactions.

As the video game ad market continues to grow through 2023, it could come under even more scrutiny from regulators eager to protect gamers from the ad industry’s shadiest practices.

Perhaps in gaming as in real life, maturity comes with more responsibility.