The video game industry used to be reasonably straightforward. Gamers would go to the shop, buy a cartridge (or, later, a disc), and then play on a console or computer at home. Console video games, which are played on systems such as the Playstation and Xbox, are still common. However, they are no longer the market's largest segment. Mobile games continue to consume a more significant portion of the video game market. The demographics of video game users have shifted as well. Exact figures are tough to obtain, but the Entertainment Software Association, for example, reports that about 41% of gamers are now female.

Here's how the video game industry is influencing marketing and brand interaction.

By far, the most significant change in the video game industry over the last decade has been the ability to play games on smartphones. The business models differ, but in most cases, game developers build "freemium" titles – games that are free to download and play but have in-app purchases (IAP) to improve the experience. Others use in-app advertisements, product placements, or a mix of the above.

Augmented Reality

The Pokémon Go phenomenon of 2016 highlighted augmented reality's potential as a marketing tool, which alters real-life interactions with graphics or data. People kept their phones up everywhere, trying to catch Pokémon or, in some cases, overrunning sites that are not suitable places to play a game. Regardless, the impact was real: Pokémon Go had 45 million daily users at its peak.

Other brands are lined up to see if they can use the technology now that the brand has made augmented reality mainstream. IKEA recently created an augmented reality platform that allows you to digitally put a possible piece of furniture in your living room to see how it looks, which has industry insiders excited about how AR can be used for marketing in the future. Others are positive about Apple's new phone series' ability to add virtual reality to the products.

Advergames

Brands hoping to use video games as a marketing tool go beyond basic ad placements. Companies are now creating their own games as a means of increasing customer engagement.

Chipotle, a restaurant chain headquartered in the United States, released The Scarecrow in 2013. The game, in which players had to help break up a monopoly, aided in promoting the company's principles and the connection with customers. It was also a big success with fans, with 250,000 downloads in just four days.

Advergames such as The Scarecrow are an excellent tool for increasing brand recognition, attracting fans, gathering data, conducting research and promoting products or services. Plus, who knows, you might even go viral.

In-game Advertising

Sponsors are increasingly seeking new ways to get their products in front of players, both on console and mobile games. Native and programmatic advertisements can reach gamers through in-game advertising.

For example, Visual Concepts' best-in-class tribute to professional basketball, NBA 2K20, includes a story mode loaded with sponsors and ads.
Another tool, dynamic in-game advertising (DIGA), the newest and most common form of in-game advertisement, enables media buyers to purchase real-time and geo-targeting capable advertising within video games. The advertisements appear inside a 3D game world, on simulated items such as billboards, posters, and bus stops – all of which would be expected to appear in a realistic sports or urban environment video game.

Ad networks may use an ad server to deliver dynamic in-game advertising in real-time, similar to how banner ads are served on websites and blogs. The technology also allows advertising to be inserted in previously published games, enabling game developers to receive an additional recurring revenue stream. In-game advertisement is a prevalent method of generating revenue for mobile games. 

Non-interruptive Brand Communications

The development and subsequent launch of in-menu advertising were intended to allow contextually appropriate IAB banner ads to be displayed on menu screens in-between gameplay. Instead of interfering with sessions, they encourage rather than pressure the end-user to engage. It is critical that all in-game advertisement is smooth and non-intrusive, and that it complements the immersive nature of virtual worlds. They have also been designed to allow the performance-based ads that marketers crave and have grown accustomed to. The units, which are a world-first format for advertisers, agencies, and game developers, are incorporated at the game design stage and can deliver programmatic or direct buys.

This new interactive format combines unobtrusive brand awareness with a possible call-to-action, allowing marketers to guide viewers to a direct path-to-purchase, such as a website. The innovative, patent-pending ad technology is unique in its ability to hold users inside the game during the entire ad experience rather than leading them out of the game and away from where they had wanted to be.

The future of programmatic ads appears to involve a mixture of both knowledge and performance-based approaches, considering that the most successful advertising combinations have long emerged from an expert blend of the two.

Indeed, marketers are more likely to see success when different in-game types – such as in-play and in menu – are used together. We look forward to brands leveraging the new inventory, allowing marketers to increase brand awareness, reach previously untapped markets, and increase conversions – all within a brand-safe and interactive background. New formats will undoubtedly arise as a consequence of emerging technologies such as AR and VR and increasing bandwidth.

Nonetheless, the vast majority of brands are also venturing into uncharted waters when it comes to in-game ads. In-game advertisement allows you to meet billions of people as they are most engaged and responsive – whether they are playing sports or racing games, single or multiplayer games. This is a media outlet that has been calling out for a strong advertiser presence for quite some time.

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