Why video game platforms are adopting programmatic ad buying

Roblox’s decision to sell ad inventory programmatically may signal a change in how video game publishers are catering to brands. The platform announced earlier this month that it partnered with ad tech firm PubMatic to facilitate a more automatic way for brands to buy ads. The video game industry has historically relied less on advertising than other revenue streams, said Zoe Soon, VP of experience center at the Interactive Advertising Bureau, making advanced advertising marketplaces such as programmatic less of a priority. But that’s starting to shift, Soon said, as publishers embrace new ad formats and brands show increased demand for reaching gaming audiences. Roblox’s programmatic system will service in-game video ads, which the platform began testing last fall. This format will allow brands to promote products and services to players while they are in an experience—a departure from so-called “portal ads” that transport players to new realms upon entrance. Roblox has spent the last year building out new ways for brands to get involved on its platform, which has increased pressure on brands to figure out a robust strategy. Read more: Gaming ad brand recall is below average “As we look for ways to thoughtfully enable all brands to connect with the tens of millions of highly engaged Gen Z users on Roblox, programmatic helps remove friction and offer advertisers a seamless process to buy video ads on our platform," Stephanie Latham, VP of global partnerships at Roblox, told Ad Age. Check out the latest Ad Age events and award programs The platform will begin offering video ads later this year through a private marketplace, meaning Roblox will have control over certain parameters, such as who is allowed to buy ads, before expanding the marketplace to an open exchange at some point in the future. Programmatic marketplaces are now offered by a variety of video game publishers, including Activision Blizzard, EA, Ubisoft and Zynga, according to Soon. Nearly 70% of games advertising is now purchased through some programmatic framework, including programmatic guaranteed, private marketplaces and open exchanges, as compared to direct buys, per a study published by the IAB last month. A primary reason for the shift to programmatic, Soon said, is to achieve advertising at scale, which is now a legitimate interest for many of these companies. Not only have increasing video game production costs put more pressure on publishers to attract ad revenue, Soon said, but recent acquisitions have also shifted incentives. Microsoft completed its purchase of Activision Blizzard last fall, and already has plans to integrate advertising opportunities in more PC and mobile games. This shift “follows the trajectory of a lot of advertising,” said Soon. “Automation moves the needle.” Skins, rewards and other ad opportunities The ad tech space has risen to the occasion by developing new ways for publishers to offer ads. At least 10 different ad formats are now available for brands in video games, including branded “skins”—which are most relevant to immersive social platforms like Roblox— and “reward” ads, which provide gaming-related compensation for a user for engaging with the promotion, according to the IAB study. The technology enabling in-game ads, such as Roblox’s new offering, has blossomed, and the rise of AI is helping to expedite the creation of these kinds of placements, said Logan Welbaum, founder of ad targeting platform Plai. AI image generators such as DALL-E and Midjourney, and soon video generators like Sora, can allow brands to quickly match the style of their ads with the style of a video game, so as to limit the likelihood that they disturb a user’s gameplay, Welbaum said. Moreover, in-game ads offer “ways for brands to get super creative in their placement and be contextually relevant,” Welbaum said, adding that targeting conducted automatically via programmatic systems could further improve brand relevance. Welbaum alluded to an effort made last summer by transportation company Schneider National, which placed recruitment ads for truck drivers on billboards inside the video game American Truck Simulator. On the brand side, however, the influx of new formats may also be a point of confusion. Many of these formats are not offered through other digital programmatic systems, Soon said, such as in-stream ads, which are placements within popular video game streaming feeds on platforms like Twitch. Some 40% of advertisers plan to increase gaming spend in 2024, per the IAB study, but measuring the efficacy of that spend may be another sticking point. Soon admonished against brands using known currencies that don’t apply to gaming. Clicks, for example, are not an ideal metric because forcing a player to “click out” and thus leave a game may be counterintuitive, Soon said. An alternative may be visits made to a brand’s website after its ad is shown in a game. A metric particularly useful for in-game advertising is “cost per play,” which measures the cost of an ad against its playing on a user’s screen, said Welbaum. Roblox already employs this metric for some of its ad formats. As the programmatic trend in gaming advertising continues to grow, publishers like Roblox are pushing their creator communities to get involved by leveraging revenue opportunities from brands wanting to advertise in their experiences. Social platforms that hinge on user-generated content stand to benefit the most, but publishers in different categories could still seek new ways to get in on the action. “It will be interesting to see how other video games can do this,” Welbaum said. Ad Age Breakout Brand Leaders New award honors the people behind emerging brands Enter here

Why video game platforms are adopting programmatic ad buying

Featured Stories

Latest News

See More in Technology