Gaming and AR Companies Seek to Entice Brands Amid Budget Cutbacks

But advertising remains nascent despite the gaming industry rivaling other entertainment

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As augmented reality, metaverse activations and gaming formats of all kinds continue to grow as media channels, marketers are looking for high return-on-investment ways to advertise within the sector. But that’s proving relatively slow to materialize.

While interest in the metaverse has cooled off somewhat since the peak of hype last year, brands are continuing to run activations and ads within gaming-centric virtual worlds like Roblox and Epic Games’ Fortnite. And, despite innovation budgets receding in the face of economic uncertainty, marketers continue to mention augmented reality as a useful means of reaching people, both through more utility uses, like virtual try-on, and placements within AR-based games like Niantic’s Pokémon Go.

But the tenor of the conversations that these gaming and metaverse companies have had with brands has also shifted to match new economic realities, according to Ryan Griffin, Niantic’s head of brand partnerships.

“Obviously, the macroeconomic climate that we’re in isn’t the most welcoming to innovation,” Griffin said. “We have a lot of ROI conversations, whereas, in maybe better times, we might not go right to the ROI and have that be such primary evaluation criteria. But that is the context we’re in.”

In an effort to formalize the way ads are pitched within the gaming and mixed reality space, the Interactive Advertising Bureau (IAB) convened advertisers, creators and gaming companies in Manhattan this week for the trade group’s second annual Playfronts event. The showcase demonstrated how an expanding collection of brands is seeking reach in virtual worlds, as well as games and activations that mix the physical world with the digital.

“The challenges have always been getting a buy-side audience,” said Zoe Soon, vp of the IAB’s experience center. “But this year, we’ve really been blown away by the interest.”

Brands less likely to dive in

In a tougher economic environment, Griffin said that brands that have found some success with AR in the past are continuing to accelerate their spend, but advertisers are, on the whole, less likely to dive into the format for the first time.

“If they haven’t experimented before, perhaps this isn’t the environment to run that first set of experiments and take that first dip in,” he said.

While banking institutions might not be the first to come to mind as a natural fit for gaming, digital bank Ally Financial counts itself as one of those first movers that have found success in the space.

The company has launched a number of AR-based experiences, including a personal finance game based around Hasbro’s Monopoly board game. The bank also announced a new sponsored arena in Fortnite to mark the occasion.

“We certainly have wanted to try to gamify the financial space in some capacity with all of our activations,” said Beth Woodruff, the brand’s senior director of brand strategy, integrations, gaming and innovation. “We really try to find ways to integrate the topic of money in interesting ways.”

Still untapped potential

Woodruff said placements in the gaming and metaverse space fit the brand’s goals to embed itself in the culture at large, in which she said gaming as a medium has become increasingly ascendant. She was far from the only person at the event to mention HBO’s hit series The Last of Us, which was based on a 2013 video game, as an example of this phenomenon.

We’re just at the cusp of looking at advertising within gaming

Cathy Oh, global head of marketing, Samsung Ads

“For us, it’s such a natural fit, but it’s also for a brand that really cares about culture and being in culture,” Woodruff said. “We talk about this all-time on our team, just where the cultural landscape is with HBO taking [intellectual property] for The Last of Us. And I’m a huge fan of the book ‘Tomorrow and Tomorrow and Tomorrow.’ Gaming has embedded itself in culture, way past just the actual gameplay.”

Cathy Oh, global head of marketing for Samsung Ads, said that despite the growth of gaming in esteem among mainstream audiences, brands have still yet to catch up with its potential. 

While the video game industry has grown to rival Hollywood, the complexity has also grown as cottage enterprises around game streaming, mixed reality and esports have created a number of different opportunities with sometimes little in the way of concrete advertising buying structures.  

“Now gaming has become a multi-hundreds of billions of dollars business,” Oh said, “where we’re just at the cusp of looking at advertising within gaming.”

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