Is Using Ads in Video Games a Good Way to Monetize Them?

April 24, 2024
April 22, 2024

Free-to-play games dominate the mobile games market and are becoming more popular on other platforms. Because developers don’t receive an upfront payment for these games, they must find other revenue sources. Ads in video games are a popular monetization option for many developers, but how well do they work?

Key Takeaways:

  • Ads are a good way to monetize many games because they provide developers and advertisers with multiple benefits.
  • Advertisers enjoy a large, highly coveted, engaged, and easy-to-target audience that converts better than other media types.
  • Developers can use ads to diversify their revenue streams, monetize players who don’t make purchases, increase installs, and improve engagement and retention.
  • Choosing the right types of ads is critical for the success of any video game ad monetization strategy.

What Are Ads in Video Games?

Video game ads are digital advertisements that display images, videos, or audio to advertise a product in a video game. Developers commonly use ads in free-to-play mobile games, but some PC and console games also include them.

How Do Video Game Ads Benefit Advertisers?

Industry insiders expect mobile game ad revenue to reach $7.74 billion in 2024. The benefits of advertising in games are responsible for driving this growth.

Reaches an Engaged Audience

Advertisers benefit when people pay attention to their ads. Video game players are more likely to engage with ads in video games than users of other apps or consumers of other media.

A person watching television or other video content can easily walk away from the screen or pursue some other activity, such as scrolling social media or taking a bathroom break, during the ads. Video game players must stay focused on their games, making avoiding or ignoring ads much more difficult.

Accesses a Desirable Audience

More than half the U.S. population plays video games. About 75% of users in the coveted 18-24 age group play, outperforming television, which only accounts for about 54.5% of this demographic.

Targets a Specific Audience

Game developers have a lot of data about the players who play their games. This makes it easier for marketers to choose the games that best fit the audience they want to target and then specifically target their campaigns to reach those players.

How Do Ads in Video Games Benefit Developers?

The more video game ads benefit advertisers, the more they benefit developers. The more successful video game ads are, the more advertisers will pay for them. However, ads also help developers in other ways.

Diversifies Revenue

Studies have found that about 75% of people who play free-to-play games never spend money on them. Ads provide a way for developers to make money off their games that doesn’t rely on players spending money. Because developers can easily combine ads with other revenue sources, they don’t need to rely on a single revenue stream to generate profits.

Improves Engagement

Ads can enhance the user experience when developers use them correctly. Playable and rewarded ads are particularly popular with players.

Drives Installs

Players are increasingly reluctant to install games that require an upfront fee. Using ads in video games allows developers to offer games for free while still generating revenue from players. As a result, players tend to install ad-supported games more often than other types.

Reduces Churn

Games must be challenging to keep players interested, but some players get frustrated when they feel like they aren’t progressing. Rewarding players with extra lives or power-ups when engaging with ads generates revenue while reducing frustration. This keeps players playing games longer and reduces churn.

What Are the Different Types of Ads in Video Games?

How well video game ads work for monetizing games largely depends on choosing the right ads for a particular game.

Rewarded Video Ads

Rewarded video ads offer players a reward, such as in-game currency, for interacting with them. They are popular with players and advertisers for several reasons. First, players get to choose whether to interact with a rewarded ad.

This is good for players who don’t want to watch ads and advertisers who don’t want to pay for views from disinterested players who aren’t likely to convert. Second, rewarded ads boost engagement by providing players with something that enhances their game experience in exchange for interacting with the ads.

Infographic citing that 71% of players prefer to pay for games with rewarded ads

Interstitial Ads

Interstitial ads in video games are full-screen ads that display between levels or during other game breaks. The placement of these ads is critical.

Players generally tolerate interstitial ads during natural gameplay breaks but may abandon games that display ads too frequently or use them in a way that disrupts gameplay. If you use these ads, it is important to choose ads relevant to your player’s interests and avoid overusing them.

Advergames or Playable Ads

Advergames and playable ads are mini-games that advertise a product. A well-designed advergame creates an immersive experience that strengthens brand engagement.

A good advergame is also fun for the player, which can boost engagement for the game it displays in. Additionally, game developers can use playable ads to preview actual gameplay for other games they want to promote.

Intrinsic Ads

Intrinsic ads in video games are advertisements that are a part of the gaming experience, such as a billboard that appears in a game world. Because these ads are a native part of the game, they do not disrupt gameplay.

Additionally, they enhance the realism of some types of games. For example, real-life sports stadiums often have banner ads on the stadium walls. Including these ads in video game sports simulations makes them feel more realistic.

Product Placement

Product placement is similar to intrinsic ads, except developers include digital versions of real-world products rather than placing an ad in the game. For example, a developer might place a vending machine for a real-world brand of soft drink outside a store in the game world.

Developers can use product placement as a non-intrusive form of advertising or to boost realism. They can also use product placement as a tie-in promotion with real-life products.

A screenshot of a character drinking a can of Coke in the video game “Shenmue”

How Can You Optimize Your Use of Ads in Video Games?

Using ads in video games has many benefits but can be tricky to get right. Sonamine can help you develop highly targeted ad campaigns that enhance engagement and retention while avoiding potential pitfalls. Contact us today to get started.

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