Intro to Value Exchange In-Game Advertising

Before we review a few easy to implement ways to Increase Video Game Revenue through ad-based monetization, let’s start with a bit of an intro to value exchange advertising within games: In recent years, gaming has undergone a significant transition. No longer is it a playfield of teenagers hunched over their consoles while locked in their bedrooms. In fact, researches show that adult women represent a significantly greater portion of the video game-playing population than boys age 17 or younger, and nearly half of all video game players are women (Source: Entertainment Software Association).

Gaming has not only evolved into a completely mainstream activity, but it is a HUGE industry:

The face of game monetization has changed significantly in the last several years as well. Up until merely a few years ago, most game developers were using either the subscription or pay-to-play sale methods.

Turning point is very much attributed to the launch of Farmville in 2009, which single handedly changed the industry’s view on the potential of freemium gaming. The typical freemium or free-to-play app is a free download that uses in-game purchases (IAP) to produce revenue rather than charging a flat fee for the game. Farmville soon racked up more than 70 million monthly players and generated between $500 and $700 million a year for Zynga from micro-transactions. Another great example is “Temple Run”, which reached the top 50 in the paid app charts in August 2011, costing 99₵ and containing in-app purchases, and yet the game saw revenues leap 4x when they went free to play.

Looking back at the Farmville example – Zynga (and other game publishers) soon discovered they may have many more users than before, but very few of them are actually paying: 1-5% of users, on average. The immediate solution, as you can imagine, was standard display ads, such as banners and pop-ups (Argh!). But not only that the revenue was not impressive, it got users upset, and banner-blind. Frankly, do you remember any of the 1,700 banner ads (on average) you were exposed to last month? It was clear that a better solution was coming, and indeed, this is where the gradual evolution of Value Exchange Advertising within games began.

So what exactly is Value Exchange In-Game Advertising? Value exchange advertising allows advertisers to subsidize premium content, virtual goods or game play in exchange for players interacting with a marketer’s brand in the course of their game play session. This means that users get to unlock premium content in return for engaging with advertisements, advertisers get access to highly engaged audiences while publishers monetize non-paying users. Value exchange ads can be many things including, but not limited to, app installs, long form video, custom mini-games, and branded in-game content. With all that being said – there are ways to do it RIGHT, yet there are many ways to get it WRONG… value exchange advertising must be implemented correctly, and advertisers must meticulously select the platform with which they partner, such that will run performance based campaigns and be committed to their KPI’s. The model of value exchange advertising does not at all, and MUST NOT at all translate into shoving whichever ad to whomever user at whenever moment! This will only lead to a lose-lose situation – where the user is spammed and either does not engage with the ad, or engages solely to obtain the reward, advertisers see very poor ROI with low-quality users as well as damage to their brand’s safety, and the publisher will end up losing revenue and players due to the poor and annoying user experience. However – value exchange advertising implemented the RIGHT way yields jaw-dropping results advertisers are amazed with!

When done right – the value exchange model is basically a contract between consumers and advertisers, under-which the consumer expresses agreement to engage with an ad, and for which he is rewarded with a pre-agreed upon value. If you think about it – it is a model very respectful of a user’s time and attention, while enabling him with benefits otherwise quite costly for him. Moreover, incredible innovation in the field of in-game advertising enables advertisers with incomparable targeting capabilities, and publishers with the ability to actually improve the user’s gameplay and increase LTV – through smartly placed ads.

WHEN YOU GET DOWN TO IT: If you agree to view an ad about a subject that you enjoy, while rewarded for doing so – can there be a more positive brand experience…?

The user’s control over the engagement and the opportunity to receive a valuable advantage within the game – has proven to significantly outperform other forms of both traditional and digital advertising:

• In game ads have been proven to drive twice the amount of post-ad actions than live TV.
• In game video ads are 22% more noticeable than live TV ads.
• Gaming ads have a X40 higher engagement rate than Facebook brand pages, and X5 higher than pre-roll video ads.
• In-game video ads are 75% more noticeable than ads in streaming video.
• Rewarded audiences are X2 more likely to interact with brands.
• 89% of gamers recall sponsored ads within games.

Nowadays, advanced forms of in-game advertising enable advertisers with even greater advantages, taking brand safety to the next level – for example targeting based not only on basic profiling, but also consumption habits, interests etc. Moreover – both advertisers and publishers are increasingly discovering that targeting the right audience is not enough, and that they need be attentive to each user’s likes and dislikes to obtain optimal results. Advertisers need to get to know their audience on a personal basis, such that will enable them to serve only relevant ad content to the relevant users – as per their own preference to receive such content (i.e a certain moment within gameplay, their mindset during gameplay, their receptiveness to engagement), and no less important – when not to serve such content as to not interrupt the user.

To sum it up: When done right, an advertiser can achieve extraordinary KPI’s and obtain incredible results through in-game advertising. When implementing cutting edge user profiling and targeting technologies combined with the ability to serve only the right content to the right user while in the optimal mindset to receive such content – you are bound to obtain significantly better results, higher engagement rates and overall client satisfaction – all contributing to your brand rating and overall campaign success!