Analyst: In-Game Ads Grow To $971 Million By 2011

According to a new report published by Yankee Group analysts, in-game advertising could climb considerably to $971.3 million by the year 2011, up from just $77 million globally in 2006 and $56 million in 2005, as companies begin to target the video game market for static and dynamic commercials. According to the group's latest report, 'Advertising and Games: 2007 In-Game Advertising Forecast', the group predicts that the number of games featuring in-game ads will double annually through 2008. PC gaming is expected to continue to drive the market for dynamically served ads, which are expected to increase in popularity and “cannibalize” static advertisements. However, the Yankee Group notes belief that fixed product placements are expected to continue to grow through 2011. In addition, the analysts note that spending on traditional advertising media such as television, print, and radio, grew just $3.6 billion last year, while money spent on internet advertising increased $4.3 billion. This represents what the firm notes as a “significant shift” in advertising efforts toward new media channels, including video games. In particular, the report found that connected game devices “are becoming the foundation on which providers build dynamic in-game insertion.” The Yankee Group is not alone in its predictions, with other analyst groups echoing the firm's expectations for that game advertising will represent an increasingly viable advertising revenue stream in the near future. Market research group eMarketer predicted earlier this year that in-game advertising within the US alone will be responsible for $969 million by 2011. Similarly, PricewaterhouseCoopers reported last month that in-game advertising is expected to be among the game industry's key drivers in its growth by that year as well. “As ubiquitous connectivity continues to reshape the media and entertainment landscape, media fragmentation and clutter are a result, making traditional advertising channels less effective,” said Michael Goodman, director of digital entertainment in Yankee Group’s Consumer Research group. “Advertisers are increasingly finding in-game advertising to be a greater investment value because of the variety of opportunities that exist in and around games. Video games represent an ‘above the line’ opportunity, which means that video games should be used to build brands and not as a call to action that distracts from the game play.”