Although gaming is more popular than ever, the in-game advertising market has not been able to keep up with the medium’s growth. Industry leaders believe that greater collaboration between in-game advertising companies could help fix the industry’s problems.
Gaming – and in-game advertising – exploded in 2021 as COVID-locked-down consumers spent much more time and money in virtual worlds. As the pandemic has ended, the gaming market has come back down to earth, and in-game advertising space has shrunk as well.
Nowadays, after turbulent events like the acquisition of Bidstack and Admix’s move to Web3, there are fewer active in-game companies in 2024 than in 2022 or 2023. Some of the remaining competitors in this space are Anzu, Frameplay, Gadsme, Adverty and AdInMo.
To make in-game advertising more attractive to both publishers and marketers, both Adverty and AdInMo are launching clickable in-game advertising units in Q3 2024 – and are informally teaming up to market the offering to potential buyers.
To better understand why these seemingly rival companies are working together to educate media buyers about in-game advertising, Digiday spoke with Adverty CEO Jonas Söderqvist and AdInMo CEO Kristan Rivers for a Q&A.
This conversation has been edited and condensed for length and clarity.
The goals behind their marketing collaboration:
Jonas Söderqvist: “Of course, on the supply side, we are definitely competitors, so we say a lot of different things to our publishers about our technology. But on the demand side, there are a lot of possibilities and opportunities to collaborate. We’ve met at virtually every event over the last two years, so it made sense to continue that dialogue.”
Kristan Rivers: “Competing with Adverty makes AdInMo better, and I hope the opposite is true. As Jonas said, when we talk to game developers, we talk about how we’re different and how we think each of our products is better for that developer. But on the demand side, the entire in-game industry needs scale, and scale also means standardization.”
On the importance of standardized formats for the in-game advertising market:
Kristen Rivers: “We – Adverty and AdInMo – all support the same IAB formats; we all support MP4 videos. Most of our competitors require custom creations and I think that’s one reason why we’re doing this together. We probably haven’t done a great job of explaining to advertisers that the standard formats already exist and that the next part of standardization is not the formats – it should be about how they buy it and measure it.”
Jonas Söderqvist: “We have to create formats that are already standardized by the IAB. We both only work with IAB-standardized formats, and we’ve been doing that since the beginning. Many brands and buyers today are using the same formats that they use from a 2D perspective; interstitials and rewarded videos and the like are not included in a 3D world. A big part of our revenue is educating our buyers to move from a 2D world to a 3D world.”
To introduce clickable in-game advertising units:
Jonas Söderqvist: “The click itself distracts the player from the game – it closes the game, end of story. So the game developer hates clickable ad units as a base, but they want more revenue and they understand why we want to make the click. And now I speak for both of us: we had to solve the problem of how to satisfy the supply side before we could talk to the demand side. Interstitials have always been clickable, but that’s the mediation – it doesn’t actively work with a 3D world. Now we’ve solved this with an ad unit that you click on and we open a window in the game and pause the game. When you close the ad, you keep playing.”
Kristan Rivers: “That was the nut that each of us had to crack to release a clickable ad unit that we both liked. The funny thing was, we had to be a little bit coy with each other, so I didn’t really know what their clickable ad unit was. Now we’ve both gone out into the world. We solved the problem a little differently, but it was the same approach: let’s focus on the player experience first.”
Among the ways in-game advertising companies can work together to improve their M&A prospects:
Kristan Rivers: “What happened to some of our competitors that left this space? I can’t comment on that, but the reality is that they were startups. They took risks that didn’t pay off for them, for whatever reason; I don’t think that impacts the market. Most companies in this space make more sense when we’re part of a larger company that has more influence within the ecosystem. So when you talk about acquisitions, I would love to see AdInMo or Adverty acquired by another, larger company for a lot of money, because that would determine the price for the other company.”
Jonas Söderqvist: “I would add to that a little more conservatively. I hope that what we’ve started here is part of a larger discussion maybe six months from now or a year from now. I really hope more of us get involved in that kind of discussion because today we’re getting the breadcrumbs when it comes to digital ad spend. We represent a social cause, but if you compare us to social media, they get billions of dollars, and we get nothing in comparison.”
