Gaming's $184bn market undervalued by advertisers, Warc report finds

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Alex Brownsell, head of War Media, says: “Gaming is huge, both in 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 spend 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.”

In this report Warc outlines key considerations for brands wanting to explore advertising opportunities in gaming:

In-game advertising investment growth remains slow despite its 3.4 billion audience and cultural impact

The worldwide games market generates revenues of $183.9bn annually, far in excess of the music and movie businesses. Some 3.4 billion people globally play video games across age groups. Research by Newzoo has found that 72% of 35-54s and 46% of over 55s game at least once a week.

Nearly 90% of advertisers surveyed by the IAB agreed that gaming is a brand safe channel as a result of improved tools such as fraud deduction, context and age rating, ads interactivity and engagement metrics. Yet many marketers remain cautious of gaming as an advertising channel.

Enthusiasm around in-game ads peaked during the pandemic, but since 2021 the share of advertisers planning to increase spend on gaming has fallen by 20 percentage points, from 72% to 52% per Warc's Marketer’s Toolkit 2024 survey.

US advertisers are forecast to spend $6.7bn on in-game ads in 2024, up 10.0% year on year. This is equivalent to only 3.7% of total US digital ad spend, according to Dentsu.

Gaming is a complex ecosystem rather than a singular channel

The gaming advertising ecosystem is bewildering, spanning devices, genres, formats, and market preferences. This is contributing to the slow uptake of in-game ads.

Brands can choose between numerous touchpoints to reach gaming audiences, including creator content on Twitch, user discussions on Discord, and e-sports sponsorships, meaning they aren't reliant on nascent in-game formats.

Additionally, gamers themselves are not uniform. Over half (53%) play video games to escape from everyday life, while 63% see gaming as a good way to spend time with family and friends, per Microsoft-owned Activision Blizzard Media. Whilst mobile gaming is most common, nearly half (48%) play with more than one device per Newzoo.

Jo Pereira, SVP Strategy, Media Futures Group, EssenceMediacomX, says: “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.”

Game publishers are working to build ad capabilities and prove the effectiveness of in-game ads

Gaming offers full funnel potential. However, while programmatically traded mobile app inventory is dominated by endemic gaming advertisers, most larger brands use in-game advertising to drive mid- and upper-funnel goals.

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But understanding the overall impact of gaming can be challenging. Gaming companies and agencies are trying to step up, forming dedicated gaming practices to assist with media and creative requirements.


Gaming generates higher attention rates

Research by Dentsu, Lumen and Activision Blizzard Media found gaming environments generate higher viewability and attention rates, as well as more efficient cost. In-game rewarded video ads achieved a 100% on screen impression rate (exceeding the benchmark of 83%), an average of over 10,000 attentive seconds per thousand impressions.

Nina Fedorczuk , chief enablement officer, Omnicom Media Group Asia Pacific, says: “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.”

Gaming content commands active engagement

While Gen Z spends an average of 12.2 hours per week on games, there is also a generational shift to more active engagement: 53% of Gen Z consumers spend more than half of their time engaging with game IP in other ways than playing.

Consumers in markets like China, Hong Kong, Taiwan and Vietnam are more likely to use games to socialise, and according to data in Warc’s latest Spotlight South East Asia, 31% of Malaysian gaming consumers had bought a product they saw while playing games.

Game developers are moving to boost advertising revenue

In-app advertising has seen major growth in the past year. Data from Unity suggests a 26.7% year-on-year rise in average revenue per daily active user resulting from in-app ads, with simulation, casual and puzzle games seeing the biggest increase in in-app advertising.

Whilst gaming companies such as Roblox are working hard to boost advertising revenue, such expenditure may be ineffective without adequate support in other channels, particularly social, which are key to facilitating discovery and engagement.

Netflix has reportedly spent $1bn on its gaming business since launching three years ago, with game downloads up 200% since 2022. Investment in gaming content has helped The New York Times to retain users with other digital platforms including LinkedIn and YouTube following suit.

Read a complimentary sample report of Warc’s Global Ad Trends - Gaming: Advertising’s untapped opportunity here. War Media subscribers can read the report in full. A War podcast discussing the findings outlined in the report will be available from 20 August.

Global Ad Trends is a quarterly report which draws on Warc’s dataset of advertising and media intelligence to take a holistic view on current industry developments. It is part of War Media, a subscription service which provides rigorous and accurate benchmarks aggregated and verified from over 100 reputable sources, empowering media decision makers to plan strategies with precision.