Virginie Chesnais is CMO at the ad tech analytics platform Happydemics.
Gamers have long been wary of in-game adverts, and not without reason. Ads in gaming have a mixed reputation, with redirects to different websites or apps, deceptive content, or impossible-to-find close buttons all being common frustrations.
A recent eMarketers study found that 52% of gamers would quit playing if they encountered multiple disruptive ad features. Losing half your audience at the point of engaging them isn’t a great strategy.
But ads don’t have to be bad. Indeed, the same survey claimed that one in five gamers would play a title more frequently if in-game ads were of high quality.
So, with Xbox currently testing out its new ad-supported game streaming service and the cost of playing steadily increasing, high-quality ads may well find a happy home in gaming.
Why ads? Why now?
The case for providing some form of ads-for-games-type deal is more attractive than some may think, having been at least partially proven by linear media. As Netflix, Disney, and other streaming services have shown, there is money to be made by providing a consistent service while also offering ad-supported tiers. If Xbox’s approach proves successful, it will not only retain paid customers through its subscription service, but it will also unlock a brand new, previously untapped revenue stream at a time when the brand sorely needs it.
“Ad-supported tiers can open up a new way for players to enter the gaming sector without having to fork out for large upfront purchases”
This matters because console gaming is becoming much more of a premium service. The prices of games, consoles, accessories and downloadable content are becoming harder and harder for people to justify, creating a barrier for the everyday gamer.
As Xbox itself said in its announcement, when done well, advertising can help lower the cost of access to gaming. We’ve already seen from mobile gaming that ad-supported tiers can open up a new way for players to enter the gaming sector without having to fork out for large upfront purchases.
Plus, it’s important to remember that this is entirely optional. Players who don’t want to watch ads can do so if they choose, albeit through a paid subscription fee. By providing a two-tier system, Xbox is hoping to retain its loyal base of fans while also making games more accessible to newcomers.
Although no survey data on the news exists right now, I’m willing to bet that the vast majority of gamers would be willing to watch a 30-second advert if it meant playing one of their favourite games or a brand new title for an hour. Xbox will almost certainly know that’s true.
Ad-supported gaming: friend or foe?
Happydemics data for 285 in-game campaigns across the UK and North America show that in-game ads consistently outperform TV, social, and online ads for ad recall and attribution. The data indicate that in-game ads are much more likely to be remembered and be correctly attributed to the brands that showed them.
This is where Xbox’s around-the-game approach – that is, adverts that sit outside the game environment, for example being shown before the game starts – gets interesting as part of a bigger picture. Our data show that around-the-game formats have a clear edge on ad recall and attribution when compared with intrinsic in-game placements.
This matters because even though we can remember certain ads popping up when we’re watching TV or scrolling through social media feeds, this doesn’t always mean that we’re linking those ads to certain brands. Gaming, it seems, is in its own league in terms of this metric, which is probably the reason why Xbox and other companies such as EA are increasingly looking into ad-based gaming.
But it’s important to remember that Xbox’s ads aren’t in-game – they’re pre-game. In-game ad formats hold the advantage further down the funnel, outperforming on brand image uplift, consideration, interest, and ad likeability. Combining both pre-game and in-game adverts, with their respective advantages, might be the ideal for advertisers – but it would also risk more pushback from players.
“Gaming, it seems, is in its own league in terms of linking ads to brands”
Xbox has stated that the ads won’t be intrusive, which is simple to understand. Ads that come before the games themselves will ensure they won’t disrupt the immersive experience. It’s an important factor for not just the players, but also the advertisers, as they would want to ensure their campaigns are part of the experience, not disrupting it.
On the ads themselves, Xbox will have to ensure they’re relevant. No one likes seeing ads for cat food when they don’t own a cat or for games that they’ve already completed. By making ads contextual and giving a reason to show them, Xbox can ensure players won’t crash out at the sight of them, while giving brands the best platform to reach new audiences.
But Xbox is in uncharted territory here. First in regards to how players will react to adverts, and second in terms of whether the ads will earn the company enough revenue to see them become a long-term option.
X marks the spot
The exploration of ad-supported game streaming is a shrewd move by Xbox CEO Asha Sharma, who has shown she is willing to take risks and try new things. But only time will tell if the strategy works as intended.
Our previous work in gaming ads has mostly been built on ‘watch an ad, get an extra life’-type trade-offs. Xbox is asking players to watch an ad to reach a game they already own. Nothing in our data set tells us how that lands.
But similar research on ad format perception – asking people who remember the ad to pick from positive descriptors of the format – has shown that “non-intrusive” and “immersive” were among the two most popular responses. If Xbox, and potentially others in the future, are to make ads in gaming a success, these will be two metrics to pay close attention to.
My prediction is that Xbox will not be the first or last to test similar strategies. Ads in gaming have existed for a long time now, but not always with the player in front of mind. If Xbox can make it work, this could open up new avenues for similar gaming companies, while making video games much more accessible for the everyday gamer.