Gaming worth $184bn globally, but ad spend remains low, reveals report

Gaming is a massive global industry, generating $183.9bn annually and engaging 3.4 billion people worldwide, according to WARC Media’s latest global advertising trends report, Gaming: Advertising’s Untapped Opportunity.

Despite its vast audience and cultural impact, in-game advertising spend remains remarkably low, the report revealed.

Alex Brownsell, Head of WARC Media, highlighted the paradox: “Gaming is huge, both in the audience and cultural impact, and its highly complex ecosystem spans devices and platforms, defying conventional definitions of a channel. Gaming has long been heralded as a vital emerging opportunity for brands, particularly those wanting to reach younger audiences. However, in-game advertising spending remains low. This may soon change, with game publishers focused on improving ad monetisation. But evidence is needed to make the case for gaming as an advertising medium.”

Gaming’s untapped potential despite massive engagement

The global gaming market significantly outpaces both the music and movie industries, yet in-game advertising has not matched this growth. Research from Newzoo shows that 72 per cent of individuals aged 35-54 and 46 per cent of those over 55 engage with video games at least once a week.

Despite the substantial engagement, enthusiasm for in-game ads has waned since peaking during the pandemic.

WARC’s Marketer’s Toolkit 2024 survey reveals a 20 percentage point drop in the share of advertisers planning to increase spending on gaming since 2021, from 72 per cent to 52 per cent.

Complex ecosystem challenges advertisers

The report underscores the complexity of the gaming advertising ecosystem, which spans various devices, genres, formats, and market preferences, contributing to the slow adoption of in-game ads.

With numerous touchpoints available, including Twitch, Discord, and e-sports sponsorships, brands are not entirely reliant on in-game formats.

Jo Pereira, SVP Strategy at Media Futures Group, EssenceMediacomX, commented, “Gaming is a whole entertainment ecosystem, not a channel, and is stealing share from entertainment platforms. However, clients haven’t grown up with gaming and feel less confident with the opportunities.”

Ad monetisation efforts on the rise

Game publishers are increasingly focused on building advertising capabilities and proving the effectiveness of in-game ads. Unity reports a 26.7 per cent year-on-year rise in average revenue per daily active user from in-app ads, particularly in simulation, casual, and puzzle games. Despite these gains, in-game advertising still represents a small fraction of total ad spend.

In the US, advertisers are expected to spend $6.7bn on in-game ads in 2024, which is only 3.7 per cent of total US digital ad spending, as per Dentsu.

Higher attention rates and active engagement in gaming

Gaming environments have been shown to generate higher viewability and attention rates, with research by Dentsu, Lumen, and Activision Blizzard Media revealing that in-game rewarded video ads achieve a 100 per cent on-screen impression rate, surpassing the benchmark of 83 per cent.

Nina Fedorczuk, chief enablement officer at Omnicom Media Group Asia Pacific, noted, “Gaming requires attention. It’s unlikely that gamers multitask in-game; everything else is just background noise. For brands, it’s a matter of keeping that attention and not jolting gamers out of it.”

Growing advertiser interest and investment

In-app advertising has surged, with gaming companies like Roblox striving to boost ad revenue. However, the effectiveness of this expenditure may be limited without adequate support from other channels, especially social media, which is crucial for discovery and engagement.

Major companies are also investing heavily in gaming content. Netflix has reportedly spent $1bn on its gaming business since launching three years ago, with game downloads up 200 per cent since 2022. Similarly, The New York Times and platforms like LinkedIn and YouTube are investing in gaming to retain and engage users.

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