A Peek Under the Hood: What do game makers think about in-game advertising?

At IAB’s Upfronts this year, it was clear that while gaming is one of the hottest emerging media channels, much more education is required for it to become always on plan and achieve scale. So as well as understanding the different gaming formats available and key metrics, it’s also useful to understand more about the actual gaming ecosystem.

The owners of in-game advertising formats (publishers and developers) don’t exist to make money from advertising. The game experience has to come first. With free-to-play mobile games (where scale exists today) developers walk a daily balancing act of how to engage and retain players while monetising to pay the bills.

Free-to-play game publishers and developers have already dealt with their equivalent cookie-deprecation (much more swiftly!). When Apple deprecated its Advertiser Identifier (IDFA) in 2021, it forced the mobile advertising industry and game developers to adapt. 

More than three years on, the shift continues with adoption of privacy-centric advertising embedded and an evolving monetisation mix.

In-App Advertising (IAA) is only one monetisation model for publishers and developers, others include premium and subscription, but for free-to-play games where the scale comes for advertisers, the other dominant model is In-App Purchases (IAPs).

Our recent industry study* in partnership with Gamesforum, looked at the trend to mix models, using hybrid monetisation to increase sustainable revenue with a long-term focus on the player experience that can only benefit advertisers.
 

IAA & IAP models are not an either or scenario

The study found that over twice as many games makers questioned were able to grow their IAP revenue share (45%) this past year vs. IAA (17%). But publishers and developers are split when it comes to predicting the future, with both the IAA and IAP majority camps each forecasting a larger share of revenue next year (approx. 38% each). 

This mixed model will continue, with the survey showing that in the next six months: 

• 72% of game makers are planning to implement or advance their hybrid monetisation strategy
• 49% of respondents are planning to integrate immersive in-game ads
• 20% of publishers plan to go direct to brands for ad campaigns or in-game sponsored live-ops
   

So what does this mean for advertisers?

An increase in IAP-led games using immersive in-game gives advertisers access to even more quality inventory - often coming from bigger publishers with less hyper-casual gameplay and more diverse genres and audiences. 

It also shows developers care about longevity and player retention. Attention as the dominant metric for advertisers is very much aligned to this; a better player experience driving higher engagement.

Finally, developers care about ad quality, the flip side of brand safety. The report ranks ad quality and ad placement strategy as a top 5 challenge for publishers to improve the player experience. It’s the ideal brand safe environment - they care about players as much as advertisers care about brand safety and brand affinity.

The research clearly identifies the need for quality and unobtrusive ad placements as part of a developer’s hybrid strategy with intrinsic in-game advertising a key ad format. AdInMo’s latest InGamePlay 3.0 SDK introduces IAPBoost™ and CrossPromo, which enable game makers to integrate in-game advertising into their hybrid strategies.

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*The survey was commissioned in partnership with Gamesforum and was conducted in Q3 2024. Over 120 respondents completed the survey, of which 85% were publishers or developers of free to play mobile games and 15% were from the ad tech industry or other affiliated industries.