In-Game Ad Buys Getting Bigger

A recent report from Yankee Group pegged the average in-game ad buy last year at between $30,000 and $40,000. This year that figure will grow by a factor of 10, it said, to between $200,000 and $600,000, and in 2008 it will “approach $1 million.” That’s extremely rapid growth, and the first time I’d heard about so much money is going into individual media placements.

The report also found global in-game ad spending will near $1 billion by 2011, up from $77.7 million last year. It predicts 2007 will be the first year publisher revenue from dynamic in-game advertising will exceed what they make from static ads. By 2011, Yankee estimates static ads will represent less than a fifth of all in-game ads.

Parks Associates reached similar conclusions in a game-based ad spending forecast of its own late last month. That report examined not only in-game ads, both static and dynamic, but also advergames and marketing in virtual worlds.

I’m often skeptical about these in-game ad forecasts, since the market is still by and large ill-defined and chaotic. Many factors could hinder or accelerate its growth. Topmost among them is the problem of measuring ads in games, which was a hot button at the ARF’s Audience Measurement conference last month and which the measurement firms and game publishers have scarcely begun to address. Additionally, both the Yankee and the Parks forecasts were assembled by speaking with in-game ad networks, publishers, and other firms that have a vested interest in projecting heat around the channel. That said, the analysts of both reports have fundamentally sound methodology and close ties with the big players. In any case, take it for what it is: educated guessing.

Update: A comment on methodology from Parks Associates analyst Michael Cai: “One thing I want to point out is that our forecast is not really based on conversation with industry players. In fact, I sent my forecast to a few of them and they all felt my numbers are low. For dynamic in-game advertising, I forecasted the total audience for a certain platform, the average hours they will spend per month playing games, average impression per hour and then I made assumptions about what percentage of these impressions will be monetized based on the momentum behind DIGA in a certain year.”