While gaming advertisers put the vast majority of their mobile budgets into video, other marketers embrace the format at a far lower rate despite its popularity and high retention rates in the app space. Stemming from that, there could be room to grow in categories ranging from apparel to pharmaceuticals by enlisting more game marketing tactics.
In the gaming segment, mobile video accounted for 93% of in-app advertising in the fourth quarter of 2016, according to a report from analytics platforms AppLovin and AppsFlyer. In comparison, across non-gaming segments, video ads accounted for just 58% of mobile ad spending during the same period.
Smart marketers are watching the gaming segment and learning, distilling a mix of direct response, music, action and dramatic tension to create fun, impactful mobile video ads of their own. The influence of gaming on mobile video ads is apparent with brands like Nike, which joined the likes of Pokemon Go, Mobile Strike and Clash Royale on YouTube’s list of the 10 most-watched ads in 2016.
"There’s a lot packed into 15 or 30 seconds," said Kris Nelson, COO of internet advertising company SRAX. "I'm not a core gamer but when I see video game ads I come away thinking, 'that’s cool I should try it,' even though I don't."
There are compelling reasons why marketers should pay more attention to video ads, including that apps that acquire users through video ads have 24% better retention rates than those that do so with other formats, per the AppLovin and AppsFlyer report.
While mobile gaming ads may not always be monuments to creativity, they are an important driver of the business.
“Mobile gaming is one of the purest forms of direct marketing [and gaming marketers] are on the cutting edge and adapted video very quickly,” said Mitchell Reichgut, CEO of video advertising firm Jun Group.
Part of what accounts for gaming’s high spend rate on mobile video is just the nature of the industry and the appropriateness of mobile video ads in a segment where customers are already spending so much of their time in gaming apps. In fact, 57% of all mobile app users play games and spend up to 1.15 billion hours combined doing so each month, according to a Verto Analytics report. Gamers also dedicate a lot of time to watching content on gaming-oriented platforms like Twitch.
With such an engaged audience, it only makes sense for gaming advertisers to drive downloads with videos.
“You’re in one game and see an ad for another game that says ‘download here,’ so it’s quite effective for [game marketers] to do that…and [the gaming industry has] become quite good at it,” said Reichgut.
Video ads are typically used by apparel and other categories with more of a branding focus. For brands, the financial connection between a video ad and a sale isn’t always clear cut.
“Brand equity is extremely valuable and it takes a long time to build a brand,” said Reichgut.
However, one takeaway for marketers from the gaming industry is the impact that a data-driven ad program can have.
“It’s a game developer’s bread and butter. You can make or break business based on app installs,” said Reichgut. “It’s down to a science: where to run, how to optimize […] it’s a phenomenal business. It’s [almost like] growing the business just by investing in it directly. It’s a profitable measure and the connection is clear.”
The focus on data also helps gaming advertisers be better storytellers because they know what resonates most with consumers. In fact, SRAX’s Nelson insists every successful gaming company is a successful storytelling company.
“They’ve become experts at telling stories — very data-driven stories,” Nelson told Mobile Marketer. “Gaming uses data to know what hooks and keeps people engaged, and that’s a huge asset in any marketing and advertising program.”
Branding meets direct response
Marketers can borrow from gaming advertising strategy and put a bigger focus on data by building in more direct response measurement opportunities.
Attaching incentives such as loyalty points or rewards to video engagement matters "because brands need to convince users to watch the ad,” according to John Krystynak, co-founder and CTO of AppLovin.
The fact that non-gaming marketers are currently investing in mobile video ads at a lower rate compared to gaming brands suggests there is an untapped opportunity and that budgets could grow. However, whether or not mobile video will approach more than 90% of brands' spend is unclear.
Still, the appeal of mobile video is big enough that it's extending into unlikely industries like pharmaceuticals, which is known for being a laggard in marketing, per Reichgut. While peddling medications via mobile could make the industry seem hipper and help brands reach younger consumers, cramming all the required disclosures into a short spot is likely to be a challenge.
“[The drug industry] is getting involved in a big way now and is able to come in and be extremely effective after having watched so many other verticals spend billions of dollars to learn the ropes,” Reichgut said. “The industry can come in and start with best practices.”