Analyst: Game Ad Spending To Exceed $2 Billion In 2012

Representatives from research firm Parks Associates have released highlights of a new report forecasting that spending on video game advertising in the U.S. will grow 33 percent over the next five years to more than $2 billion by 2012. The report, titled Electronic Gaming in the Digital Home: Game Advertising, forecasts that the $370 million spent towards game ads in 2006 will experience a compound annual growth rate of 33 percent by 2012, an increase the firm notes as being much greater than that of other major advertising media, including television, radio, print, and the internet. In-game advertising is expected to demonstrate the greatest area of growth among game-related ads, with spending jumping from $55 million in 2006 to more than $800 million in 2012. This growth mirrors, more conservatively, other similar predictions of potential revenue generated by in-game ads, with eMarketer recently reporting that such ads could generate as much as $969 million by 2011. According to the firm, dynamic in-game ads, which represented 27 percent game advertisement expenses in 2006, are predicted to make up the majority of all game advertising in 2012, accounting for 84 percent of advertising spending. Much of this growth, according to the firm, is pinned on the industry's ability to address "several looming challenges" such as "lack of economy, lack of industry standards, and media fragmentation." "Advertising in electronic games had an average monthly household expenditure of less than 50 cents in 2006, while broadcast TV was at $37, meaning advertisers are not using the gaming medium to its full potential," said Yuanzhe (Michael) Cai, director of broadband and gaming, Parks Associates. "If executed correctly, game advertising can provide a win-win solution for advertisers, developers and publishers, console manufacturers, game portals, and gamers," he added.