Research firm Yankee Group today revealed its forecast for the fast growing in-game advertising market. The firm predicts that in-game advertising is "poised for explosive growth" and will reach $732 million by 2010, representing more than five times the current value of the in-game ad market.
Yankee Group noted that in 2005 advertisers spent approximately $56 million placing ads in video games, up $22 million from the $34 million that was spent in 2004. By the end of 2006, the number of games with in-game ads is expected to more than double. The firm "anticipates approximately 200 games will contain in-game advertising, representing nearly all the major video game platforms."
"In a highly fragmented media environment, Yankee Group finds that video games present a promising window of opportunity as a growing advertising medium," the firm stated. "As television advertising loses its effectiveness, advertisers must reach a largely segmented audience with discerning tastes. According to the Yankee Group DecisionNote, Video Games Are the Next Frontier for Advertisers, advertisers are finding greater value and return on investments from in-game advertising."
"Although the in-game advertising market is still relatively untapped, its promising business model will lead to swift market development," commented Yankee Group senior analyst Michael Goodman. "Effectively competing in the interactive gaming market for the video game and advertising communities requires careful attention to the intricacies of the industry."
Furthermore, while the in-game ad space is currently controlled by a number of independent ad-serving networks (Massive, Double Fusion, IGA Worldwide, etc.), Yankee Group believes that the big video game companies, such as Sony, Microsoft and Electronic Arts, will eventually bring in-game ad serving in-house and will come to dominate the in-game ad sector.