In-game advertising (IGA) is seen by some in the games industry as offering a new revenue stream. Over the past 4 years the video game industry has increased consistently becoming one of the few recession proof industries, and this is reflected in IGA. In 2005, spending on in-game advertising worldwide was $56 million, and this figure has been estimated by DoubleFusion to grow to $1.0 billion by the end of 2010, and by up to 25% a year for the next 5 years.

According to a National Population Demographic (NPD) report, based on a 2009 survey, there are about 170 million Americans that play video games. This new way of advertising is seen as a prime way to target the 18-34 demographic.

One of the benefits of using video games is that no medium is more engaging and, unlike other media, there is very little multi-tasking. This means that if you’re playing a game, you’re playing the game – at most multitasking is usually listening to alternative music through headphones. This is a real opportunity for advertisers to achieve standout.

Some interesting stats to note:

• To date across Europe, there have been sales of 15.49m Microsoft XBox 360, 15.79m Sony PlayStation 3 consoles and 24.24m Sony PlayStation Portable consoles (source: VGChartz)
• 6.9% of time spent online in the UK is spent playing games, surpassed only by social networking and email. An increase of 15% since 2007 (source: UKOM, 2010)
• Game console usage was up 21% in June 2009 over the previous year with gamers spending an average of 12.8 hours playing games in the month (source: Nielsen Online)
• 40% of UK Adults play video games (SMG Research 2010)

Early examples of in-game advertising were static, and required the ad to be hardcoded in the game. Today, thanks to dynamic in-game advertising, advertisements can be tailored according to geographical location or time of day, allowing for the delivery of time-critical advertising campaigns, such as those publicizing a movie launch. Also because dynamic advertising campaigns do not have to be hard-coded into the game by artists and programmers, the need for advertisers to formulate and insert campaigns months in advance of a games launch is no longer necessary. This new flexibility will open the door for a much larger range of clients who may want to try the medium.

Microsoft (Xbox) and Double Fusion (PS3) allow not only in game advertising but also presence in virtual worlds (PS Home) and virtual concerts/events. More people attended E3 via Playstation Home than in person this year; a strong indication of how big these communities are. With sponsorships and partnerships in these events brands can reach an almost untapped market. Clients can also find a specific audience to target thanks to the variety of games available. With the gaming industry gaining market share and with the drop in other traditional advertising mediums I believe IGA should be something clients should seriously consider.

Personally I think that in-game advertising is very interesting and has lots of potential. As a gamer, I always thought these ads added realism and personally I think they are really effective.

If you interested in getting more info on the gaming audience in the UK, or if you want to learn more about in game advertising from our Gaming Research, then take a look at our research findings, or contact Donna Booth in our Research department for more information.