Gaming advertising represents a still untapped opportunity for marketers facing television supply constraints as streaming migration reduces ad inventory while offering the scale, engagement, and demographics that traditional channels struggle to deliver.
“Gaming provides an opportunity for conversion in a way that could deliver lessons to the rest of Madison Avenue,” Terry Kawaja, founder and CEO of investment bank LUMA Partners, told Beet.TV contributor David Kaplan. “General marketers would be well-served to look at what’s taking place in mobile and casual and console gaming advertising.”
The television industry’s shift from linear to streaming creates supply constraints through lower ad loads and subscription-based viewing, making gaming’s massive engaged audience increasingly valuable for advertisers seeking performance outcomes.
Madison Avenue misunderstanding
The general advertising ecosystem has failed to recognize gaming’s role as an innovation laboratory for performance marketing, despite a decade-long track record of developing closed-loop attribution models that other channels still struggle to implement.
“I had a slide I used for about 10 years that described the ‘oil and water’ between mobile advertising and gaming and mobile advertising in the rest of the world,” Kawaja said. “A lot of Madison Avenue doesn’t understand [gaming], and would be well served to understand the opportunity there.”
Gaming advertisers can arguably be said to have helped expand ideas about the relationship between customer lifetime value and customer acquisition costs, creating near-perfect closed-loop data systems that transform advertising from discretionary expense to cost of goods sold, Kawaja suggested.
Still, the challenge of the all-important question of perceived “scale” on par with traditional media channels needs to be confronted by advocates calling for a shift in thinking as well as spending.
Absence of doom-scrolling
Gaming combines massive reach with focused attention in ways that other channels cannot replicate. Unlike social media environments where users passively scroll, gaming requires active engagement that creates opportunities for meaningful brand interactions.
“[Gaming’s] got enormous scale, like social media, even walled garden-like scale. But the engagement is off the charts. No one’s ‘doom-scrolling’ within games. They’re focused and they’re very interested in what they’re doing,” Kawaja said.
The demographic reach extends beyond traditional assumptions about young male gamers to include billions of users across age groups, capturing audiences that are otherwise difficult to find through conventional media channels.
Performance clarity
Gaming’s sophisticated approach to managing customer acquisition cost (CAC) and lifetime value (LTV) relationships has enabled advertising models where spending becomes directly tied to revenue generation rather than brand awareness metrics.
“The relationship between CAC and LTV was so tight that you were basically paying a dollar, and getting $2 back,” Kawaja said. “This explains why companies that specialize in this area, like AppLovin, now have a market cap in excess of $200 billion because they understand that premise.”
This performance clarity addresses the broader industry challenge of proving advertising effectiveness in an increasingly measurement-difficult environment.
Setting seamless conversion
Gaming’s natural dual-screen environment eliminates conversion friction by leveraging mobile phones as identity devices that connect with primary gaming screens. This setup avoids interrupting gameplay while providing conversion mechanisms.
“Having that dual screen functionality means that you don’t have to either have a format that is unnatural for users like a QR code,” Kawaja said. “You are not interrupting the user. They can continue to play their game and you can do messaging on your second screen.”
The mobile device serves as both identity connector and conversion path, enabling attribution tracking that connects gaming exposure to purchase behavior.
CTV supply constraints
Television’s migration to streaming reduces available advertising inventory through lower ad loads and subscription models, creating supply constraints that make gaming’s scaled inventory increasingly attractive for traditional TV budgets.
“We had a television landscape as a supply-constrained media channel as it moved to CTV,” Kawaja said. “In a supply constrained world, marketers need to find areas where they can get high impact advertising in a way with an engaged audience and a scaled audience and a valuable demo audience — enter gaming.”
Console gaming particularly represents an opportunity to recategorize inventory as effectively connected TV suitable for budgets seeking television-like reach and engagement.
“I think of gaming advertising… as an opportunity to recategorize that inventory as effectively CTV,” Kawaja said. “Therefore, it’s suitable for those budgets now looking for a home. Now that there’s supply constraint.”
You’re watching “Get in the Game: Why Interactive Entertainment Is the Next Big Play for Performance and Engagement”, a Beet.TV Leadership Series, presented by Zynga Ads. For more videos from this series, please visit this page.
