What are In-Game Ads? The Definitive 2022 Guide

Sarah Wheeler
Sarah Wheeler
What are In-Game Ads? The Definitive 2022 Guide

Expected to be worth $257 billion by 2025 with 2.5 billion gamers worldwide, gaming is a profitable industry with high ad monetization potential. And, yet, in-game advertising is relatively small: by September 2021, ad spend within video games drove $421 million year-to-date, while Twitter earned $3 billion in ad revenue all by itself.

Gaming platforms often resist in-game ad monetization for fear of disrupting the user experience. When there were rumors of EA launching TV-like ads, fans were livid. People were outraged at the thought of seeing annoying pop-ups while playing their favorite games.

In-game ad monetization, however, doesn’t have to involve terrible banner ads. There are many opportunities for user-friendly ads that natively integrate into the gaming experience. In this article, we define in-game ads, present opportunities for integration, and discuss how to launch your own in-game ad platform.

What are in-game native ads, and who uses them?

In-game native ads are ads inserted within gaming experiences. Ads could appear on in-game billboards, involve featured avatar items, and include brand-sponsored levels, all uniquely personalized to players.

Many game publishers already monetize with in-game native ads, like:

  • Epic Games: Fortnite is Epic Games’s battle royale game. In it, you can alter your avatar’s appearance with different “skins.” To drive revenue, Epic Games enables brands to sponsor these skins, such as Marvel’s Fortnite x Avengers event.Fortnite Marvel Skins
  • Nintendo: The third largest global gaming company, Nintendo partnered with Mercedes-Benz to include their GLA SUV as a cart in Mario Kart 8, a move to incorporate sponsored items within the in-game experience and drive new revenue.
  • Electronic Arts: By placing billboards within virtual soccer stadiums (FIFA) and basketball arenas (NBA 2K), EA Sports monetizes their in-game experience with ads. You can view these as the in-game equivalent of real-life digital-out-of-home advertising.
  • Meta: Though Meta’s virtual reality platform is still nascent, ads are Facebook’s main revenue source, driving $28 billion in Q2 of 2021 alone. Unsurprisingly, Meta is already testing out VR ads. Meta

Why monetize with in-game native ads?

Video game developers drive substantial revenue from game sales and in-game purchases, but driving new sales is expensive, and in-game purchases can slow down, pushing publishers to figure out what’s next.

Ad revenue, however, is a controllable and scalable source of revenue. If game sales go down, you can turn on advertising and make up for lost revenue, thereby increasing the revenue you make per gamer. And if you want to make more money, you just launch new ad units, integrate premium targeting options, and so on.

Indeed, gaming companies can drive substantial revenue by charging advertisers premiums to reach their engaged audience with immersive ads. Advertisers leap at the chance to launch ads with such non-traditional publishers.

Fearing ads hurt the user experience, though, many companies opt against ad monetization. But there are many ways to serve unobtrusive in-game ads:

  1. Sponsored items: Game publishers have the opportunity to turn any in-game content into branded content. Brands, for instance, can sponsor cars, outfits, battle gear, and more. Advertisers will happily pay premiums for these immersive ads.

    Within this, you could have static sponsorships, such as Fortnite vs Avengers or Mercedes-Benz karts, where the branded items are hardcoded and exist for an extended period.

    But you also could have dynamic auction-based sponsored items. If a player reaches for a soda can, for example, Coke and Pepsi can bid in real-time to have their logo appear on it. The highest-paying advertiser will win, and then this auction will repeat for the next user. Mario Kart Mercedes
  2. Sponsored levels or puzzles: More applicable to level-based or puzzle games (think: Candy Crush, Sudokus), you could have a brand sponsor a specific level or puzzle. Maybe you have a crossword that is Valentine’s Day themed and sponsored by Hallmark, or level 42 of your game just has “Brought to you by Nike” tagged to it. Below, Hidden Valley sponsors a level of FarmVille. Hidden Valley Sponsorship
  3. Billboard / signage ads: Like mentioned above, you could insert billboard or banner ads within the gaming experience. Such ideas include:
  • Billboards within sporting arenas / alongside racetracks, personalized to each user.
  • In massively multiplayer online (MMO) and open world first-person games, digital signage could exist as the player explores, including billboards, posters, storefront names, and so on. This would be more applicable for games set in contemporary times (Skyrim, for example, wouldn’t have billboards for Coke).

    Like with sponsored items, these signage ads could be hardcoded or auctioned and personalized in real-time. M&M Billboard

These ads are all native to the user experience and could even enhance game play (perhaps users enjoy the realism of branded items). Either way, native in-game ads allow you to drive incremental revenue without upsetting your players.

What are in-game ad targeting options?

Not all in-game native ads will involve targeting. Sponsorships like branded karts may appear for every single user, and if your game doesn’t require Internet connectivity, you may have ads that are hardcoded into the game from the beginning.

But many game publishers will nonetheless place ads in real-time, using targeting and priority rules to decide what ad appears.

There are many different options for in-game targeting, such as:

  1. Day/hour: Target based on the day/hour that someone is gaming. You could display Coke products at night and Folgers in the morning. Coke Billboard
  2. Geolocation: You can target ads based on the user’s location, like city or zipcode.
  3. Weather: Adding weather targeting lets advertisers personalize ads based on weather conditions — whether that’s the user’s local weather or the in-game weather itself.
  4. Ad frequency capping: Add this feature so the same ads aren’t promoted over and over to each user
  5. First-party data: You can target ads based on collected first-party data, allowing you to target based on past behavior, gaming interests, demographic, and more.

What about in-game native ad networks?

Given the level of customization involved with ad ideas like sponsored skins and branded items, you would need to work directly with advertisers for these placements.

For in-game billboards, however, there are ad networks you can connect with, who will provide turnkey access to advertisers willing to buy those spots. One such company is Admix.

The downside of partnering with a network is the middleman ad tech fee that could reduce your revenue potential.

Why many game publishers have been slow to build ad platforms

Building an ad platform to serve native in-game ads could take years, millions of dollars, and dozens of ad engineers. After this, you’ll still need to spend time and resources maintaining this ad server. With server costs, engineering resources, certification fees, refunds for bugs, and so on, the costs involved can scale greatly over time. build v. buy chart Additionally, building out needed targeting for an effective ad server can be challenging. You’ll want these features sooner rather than later to drive revenue.

Unsurprisingly, many game studios choose to avoid in-game ads altogether, focusing on other forms of monetization first.

How do you integrate in-game ads?

Though in-game ads can be a profitable revenue source, they are challenging to launch. First, you’ll need ad serving tech to store, serve, and report on these ads. While third-party ad serving tools exist for display ads, there is no turnkey solution for in-game because vendors require JavaScript ad tags or mobile SDKs, which don’t integrate with video gaming or VR platforms.

Given this, to serve ads within your game, you’ll need to build a custom ad serving solution. There are two ways to do this: build from scratch, or build faster with ad APIs. Here, we’ll weigh the pros and cons of both:

1. Building your in-game ad server from scratch:

Building from the ground up means full control over your in-game ad platform’s scope and vision, but requires a large team and could take years to launch.

You might consider building your own ad server if:

  • You want something that you own 100%.
  • You want control over feature prioritization.
  • You don’t want to pay vendor fees.

You might think twice if:

  • You can’t wait years. Building from scratch can take years, with no revenue while building.
  • You don’t have the engineering resources. A successful roll-out requires many experienced ad engineers, which is costly.

kevel build or buy

2. Ad Infrastructure APIs

The alternate option is building the ad platform yourself, but using ad APIs to save time and resources. You integrate via APIs to get instant access to the tools you need to design a native in-game ad product, including ad decisioning, tracking, targeting, management, and reporting.

You might consider using ad APIs if:

  • You want a native ad platform sooner than later. Using infrastructure APIs can cut down build time by 90%.
  • You don’t want to spend a fortune. Rather than paying engineers, server fees, and other expenses, these solutions charge a set SaaS fee.
  • You want truly native ads. Server-side ad requests allow you to integrate in-game ads that look exactly like organic content.

You might think twice if:

  • You have no advertisers. Ad APIs generally provide the infrastructure, not the demand, so you’ll need existing advertiser relationships.
  • You want to launch a new platform in a few days. Some engineering resources are required, and it’ll likely take a few weeks.

How to begin

Integrating in-game ads can be a high revenue source for your company. With native in-game ads, you can monetize your gaming experience without hurting user experience.

To launch your own in-game ad server, Kevel’s APIs can help you get there in just weeks. Kevel has helped non-traditional publishers like TouchTunes, Klarna, and more build flexible ad platforms in a fraction of the time and cost as doing it from scratch, with more control and flexibility. Let us know how you can start today.

Sarah Wheeler
Sarah Wheeler

Sarah is an experienced writer with a software background, allowing her to translate between ad tech experts and lay readers. As Kevel's content writer, she writes for the blog and social media.