Game Advertising growing at 33% CAGR - more than any other medium

Computer games, be they console- or PC-based, elicit a level of involvement far beyond anything man’s ingenuity has previously created. The ability to produce an instantaneous and appropriate response to every action can generate a realism and intensity of connection waaay beyond the passive experience of watching television, or the audio wallpaper of radio, with a passion approaching that of procreation. This has not escaped the world’s most creative and influential minds (aka advertising creative directors) who see this as the ideal circumstance in which to deliver a message that will stay with us – gaming offers both a wonderful new way to interact with a brand, and an opportune time to tattoo a brand name on the psyche while the brain is open and engaged. Right now, household penetration of game consoles is approaching mainstream media status, yet the average monthly household advertising expenditure of the medium is less than 50 cents, compared to US$37 for broadcast TV. Is it any wonder then that this seriously under-leveraged advertising medium will grow at a compound annual growth rate (CAGR) of 33% until 2012, much higher than that of other major advertising media, including TV, radio, print, and the Internet.

These new expenditure forecasts were published today in a new report entitled Electronic Gaming in the Digital Home: Game Advertising, from Parks Associates.

“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.”

In-game advertising will experience the highest growth rate among the various categories of game advertising methods forecasted, increasing from $55 million in 2006 to more than $800 million in 2012. Specifically, dynamic in-game advertising (DIGA) in PC, console, mobile, and casual games will grow from 27% of the in-game advertising market in 2006 to 84% in 2012.

“DIGA offers several unique advantages, such as timeliness, scalability, measurability, and flexibility,” Cai said. “But the industry will also have to address several looming challenges, including lack of economy, lack of industry standards, and media fragmentation.”

Electronic Gaming in the Digital Home: Game Advertising paints a complete picture of the fledging game advertising industry. The report includes analysis and forecasts for different game advertising models and provides profiles of 26 key players in the game advertising industry and comprehensive consumer perspectives.