The IAB thinks brands should get in on game advertising ASAP

Video game ad spend is projected to become an $8.5 billion business this year, according to eMarketer, and with that in mind, the Interactive Advertising Bureau (IAB) has revealed what it calls the “first large-scale quantitative analysis” of games advertising.

The study–announced at this year’s annual IAB PlayFronts–found that 86% of brands and marketers think advertising in partnership with video games is of growing importance, and 40% of them plan to increase their budgets over the next 12 months. 78% of advertisers said games advertising is “good or excellent” at building brand awareness, and 65% of them said they think games advertising is good or excellent at driving sales.

The IAB also found that it’s important for brands and marketers to consider video games to be a separate channel. Brands who don’t consider gaming its own channel told the IAB it doesn’t yet have enough scale, that it has similar ad formats as other media, that it runs on multiple diverse devices (for example a single game can run on Xbox, Steam, and Nintendo Switch) and thus is difficult to buy as a single channel, and that it’s not cost effective.

But brands who do see gaming as its own channel said it does have scale, and more importantly that it “delivers immersive experiences” and “delivers consistent ROI.” 90% of brands surveyed for the report also said that gaming is effective at targeting hard-to-reach audiences.

Of the brands who consider gaming its own channel, 50% spent $2 million or more on games advertising last year; 44% of them plan to increase spend in 2024.

As for what hard-to-reach audiences games advertising can target, the IAB says there are nearly 215 million gamers in the U.S. alone. And many of those gamers are young: 90% of Gen Z and 94% of Gen Alpha play video games, per the IAB. With both those generations (and some Millennials, too) difficult to reach through other ad channels, the IAB thinks brands “can no longer afford to ignore this medium,” Jack Koch, the bureau’s Senior Vice President of Research & Insights, said in a statement.

“The study found that advertisers view games advertising as a measurable, brand safe medium that is effective across the entire consumer journey,” Koch added. “Impressively, games advertising consistently performs well across all stages of the consumer journey, showcasing its potency compared to other media channels. We’re excited to reveal where and how to harness its power in the marketing mix.”

While the IAB is solidly in favor of more brands getting into ad partnerships with games, it does have one concern: that game ads “still [fall] behind other digital media channels concerning easse of buying and planning.”

Right now, there is a need for “additional effort” when it comes to establishing and executing game ads, which are overall “more complex” to plan for “due to the diverse gaming landscape and the need for custom work,” the IAB says.

You can read more about the IAB’s findings in its 40-page study report here.