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Why Brands Are Buying Into The Benefits Of In-Game Mobile Advertising

In March 2015, the IAB reported that a sizeable chunk of brand advertisers consistently shied away from mobile, still concerned about the unfamiliar medium’s potential privacy issues, device and operating system fragmentation, and lack of standardized metrics.

This year, however, we’re seeing a marked shift in attitude, according to eMarketer, as more and more brand advertisers embrace the mobile medium and reap its benefits, which include connecting with users on the go—and on a device closely linked to intent and action.

As that happens, we can expect games to constitute a great deal of that spend. In many ways, game inventory is a perfect fit for brands, promising advertisers one of the most engaged and lucrative audiences, according to Flurry, as well as offering an environment that consistently churns out innovative, cutting-edge ads. This year, brands seeking to connect with engaged users will be unable to ignore the benefits that in-game advertising has to offer.

Innovative Ad Units
Today, as the advertising industry scrambles to combat poor user experiences and the subsequent ad blocking frenzy, we’re seeing more advertisers embrace engaging and appealing mobile ad formats. This includes rewarded videos, playable ads, rich media ads, interactive ads, native ads, meta ads, and many more—most of which were first served in-game before ever reaching the larger mobile market.

Like many have pointed out, “game developers, as they often do, have pioneered a workable [advertising] direction.” Because only about 3% of a gaming app’s user base actually pays for IAPs (compared to 12% for shopping apps and 8.5% for utility apps), and because the severe competition among mobile games significantly drives down IAP prices, gaming developers have no choice but to figure out how to monetize in other ways. It’s this imperative to monetize that motivates the gaming industry to create innovative advertisements.

In 2014, mobile gamers started heavily ignoring banner ads. The result? Interstitials. That same year, a Forbes article dubbed interstitials and video as “creative ad units” since mobile games at the time used them as “new” alternatives to lower-performing banner ads.

Today, interstitials are beginning to follow the same path banners did nearly three years ago. In September 2016, a MediaBrix study said viewers were twice as likely to have a negative emotional response to an interstitial ad than to a rewarded, opt-in ad. In light of its poor engagement rates, gaming publishers are becoming some of the first to abandon interstitials in favor of newer, less intrusive advertising formats.

This innovative environment represents a huge opportunity for brands looking to translate the high impact of traditional brand advertising to the mobile medium in a measurably viewable way. If interstitials and video were considered creative just two years ago, imagine the advertising units that mobile games will inspire in the future.

Massive Scale
Since 2008, when the App Store first launched, mobile games have been not only the most popular category, but the fastest growing one, too. In 2016, there is an estimated 180.4 million mobile phone gamers in the U.S. That means, according to eMarketer, that 68.8% of mobile phone users in the U.S. are also mobile gamers, and 55.7% of the U.S. population are also mobile gamers. In other words, brands have a massive audience at their disposal. Julie Shumaker, VP ad sales at Zynga, for example, told eMarketer in 2015 that she can “leverage a program for Coca-Cola today that reaches 28 million unique users in the U.S. through one title.”

If brands want to access in-app audiences, they will have to buy gaming inventory simply because gaming dominates the app ecosystem. If brands excluded gaming from their advertising strategies, they’d have a severely limited pool of inventory to play with.

Most Engaged Users
In addition to constituting a sizeable chunk of the app economy, gamers are a great target audience for advertisers because they are highly engaged and are known to engage in long in-app sessions.

Mobile attribution company TUNE, for example, discovered that engagement across the gaming category is “consistently strong,” averaging 82% throughout the first six weeks post-install. This is in comparison with 62% for music and entertainment and even lower for social.

In terms of session length, gaming app sessions are the longest of all the categories as of Q4 2015, lasting 7.55 minutes, far above the general average of 4.35 minutes. The same goes for average number of sessions per users, which is second only to social networking apps, according to Adjust. In plain terms, this means mobile gamers are engaging with game apps more often, and for longer, than almost any other category out there.

The brand advertising campaigns that capitalize on this engagement are the ones that succeed the most. Gillette, for example, launched a brand awareness campaign, using interactive creatives to capture users’ attention and promote their product. In the ad, consumers could tap their screens to shave the face of Bruno Senna, an F1 driver. According to Millennial Media, the overall CTR was two times higher than industry standards, and 20% of users who interacted with the ad once, interacted again.

Rewarded Advertising
Additionally, rewarded advertising, which is an ad format typically used in mobile games, has the potential to benefit brands more than performance advertisers. This is because gamers appreciate that you’re helping them out. In fact, according to a Forrester study commissioned by Tapjoy, rewarded advertising almost doubles the percentage of users who feel positive toward brands.

In 2016, we began seeing brands turn to mobile. In the coming year, we can expect brands to spend more on mobile game inventory. It offers advertisers the highest engagement rates, largest user base, and a medium that is guaranteed to constantly innovate.

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