Advertisers desperately need to reach young video viewers, but can’t find them at scale on TV because their screen time (hundreds of millions of hours weekly) is spent playing premium video games.
True, their casual mobile game brethren attract lots of ads, but those ads tend toward low-end, direct-response ads bought programmatically, which means that they don’t monetize well.
On the premium, console-driven side, many carry high-quality, high-value ad — but since those ads are heavily customized and integrated into the games themselves, it’s hard to build the same kind of repeatable scale that other ad-supported media companies can capture.
I believe the video game industry has an enormous opportunity to capture a massive amount of high value advertising, and the answer to its historical challenges is to pivot its ad businesses into the TV ad ecosystem. Simply, video game advertising needs to be less like “mobile app download DR” and more like TV advertising.
Gamers much more accepting of ads. It will have to be handled carefully, but with the rise of free-to-play games and the massive growth and acceptance of user payments for free content and cosmetics and faster play, permissioned video ads are likely to find lots of accepting gamers if they are done right: light ad load, tight frequency caps, and content relevant to gamers.
Games looking more and more like TV shows and movies where ads are common. With high definition and computer generation of entertainment, shows and movies are looking more like games, and games are looking more like shows and movies. And, when it comes to sports games, they are converging very fast. Ads won’t stand out nearly as much as folks think they might.
To be more like TV advertising, gaming needs to:
Standardise TV ad units. This means 15-second and 30-second video ads sold on impressions and reach by target.
Provide comparable TV measurement hybridized with digital measures. This means panel-based measurement, with full comparability and integration with TV (Nielsen), enhanced with the capacity to measure well beyond demos, adding digital behaviors, ad server counts, digital attribution, etc.
Sell to TV budgets and buyers. As much as the world talks about holistic video ad buying, the reality is still far away from that. TV buyers buy TV ads. Video game ads should fit into the market and be sold to folks buying TV, potentially integrated and packaged with linear TV ads.
Say no to bad ads. ABC won’t put bad ads on the Oscars. TBS won’t put bad ads in the Final Four. Premium video game publishers should never let the kinds of ads that show up in the causal mobile game world show up in their high-definition games played on big screens for hours at a time.
Say no to programmatic selling, and yes to scarcity-based premium pricing. Programmatic came into digital because supply exceeds demand there. Video game audiences are massive, but ads on those games should be managed to scarcity and sold as if they were ads on top TV shows. Will the video game industry pivot its ad business into the TV ad ecosystem? Just watch out — because if this happens, the result will be very, very big.
What do you think?
Dave Morgan, a lawyer by training, is the CEO and founder of Simulmedia. He previously founded and ran both TACODA, Inc, an online advertising company that pioneered behavioural online marketing and was acquired by AOL in 2007 for $275 million, and Real Media, Inc, one of the world’s first ad serving and online ad network companies and a predecessor to 24/7 Real Media (TFSM), which was later sold to WPP for $649 million. Follow him on Twitter @davemorgannyc
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