More NewsReport: In-Game Ad Spend to Exceed $1 Billion In Five Years

Report: In-Game Ad Spend to Exceed $1 Billion In Five Years

Market conditions will support accelerated growth of in-game advertising over the next several years.

In a down economy, marketers are reluctant to test, or even continue with, emerging media platforms. A forecast released by analyst firm Screen Digest and media firm GroupM suggests in-game advertising has fallen victim to recessionary media thinking, though the long range outlook for the channel remains strong.

In 2008 advertisers spent roughly $55 million on dynamic in-game advertising in 2008, according to the report. Though it doesn’t disclose exact figures, Screen Digest describes a short-term softness in ad spending on emerging formats but says that softness will give way to a sharp increase in spending — to $1.2 billion by 2014. That’s a more than 20-fold increase in spending over five years.

The growth will be driven in part by a dramatic increase in the addressable audience of gamers with Internet-connected consoles and broadband-enabled PCs. Connected consoles, including PlayStation 3, Microsoft Xbox 360, and Nintendo Wii, numbered 40 million at the end of 2008 and will likely reach 90 million in 2011, according to Screen Digest. The researcher also predicts the connected PC gamer market will grow from 400 million early in 2009 to 500 million in 2012.

Currently the Wii does not accept dynamic advertising. “If at some point Nintendo decides to open its platform, it will be a major boost because of the…demographics. It will reach a more mainstream audience,” said Screen Digest Senior Analyst Vincent Letang, who added, “We believe it will happen.”

In-game advertising is far from new, but it’s still treated as an experimental item in many budgets. It is often compared to mobile, and grouped into the emerging media category.

“While both are emerging media, [in-game is] different from the mobile advertising market. While very small, it’s very structured. You already have three companies aggregating a worldwide inventory,” Vincent Letang, senior analyst at Screen Digest told ClickZ. Letang added, “It’s a global media. The popular games are played all over the planet.”

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