TRENDING NORTH: NOV ‘22
A monthly look at the marketing and advertising industry from NORTH’s point of view.
Gaming — The Next Big Channel
Landie Viljoen, Channel Strategy Director
Gaming reaches a large and engaged audience. However, despite the opportunity that exists for brands, advertising dollars are minimal. With the gaming industry value expected to reach $435 billion by 2028 and nearly 227 million Americans who play games today, gaming will become an increasingly important channel for advertisers.
In gaming, there are casual players and hardcore gamers. Casual players play mobile games that are simpler, don’t require a significant time investment or skill set, and are often web-based–think Candy Crush and Wordle. Hardcore gamers play games that require players to invest a lot of time to learn–like Fortnite and Call of Duty.
Historically, gaming has been stereotyped as a young male audience. However, in a report from NewZoo, 46% of gamers are women. The gaming audience is fairly diverse, with 40% identifying as Black, Latinx, or Asian-American and 16% of the gaming audience identify as LGBTQIA+. According to the ESA’s annual 2021 Essential Facts About the Video Game Industry report, 80% of players are over 18, and the average age of a player is 31.
Tech giants are taking note of the popularity of gaming and making moves to secure their space within the gaming industry. Amazon acquired Twitch, a popular gaming streaming service, in 2014. In 2019, Facebook launched Facebook Gaming and Google rolled out Stadia, its streaming gaming platform. Netflix launched games on iOS devices in 2021. And this year, Microsoft acquired Activision Blizzard, the creators of Call of Duty, Candy Crush, and a plethora of other games.
Gaming is a top entertainment activity for GenZs, and the youngest generation, Generation Alpha (as covered in our October edition of Trending NORTH), play games more than any other online activity. Popular social platforms among this younger audience have launched in-platform gaming to tap into this behavior. Snapchat launched Snap Games like Tiny Royale and Bitmoji Party to provide another reason for smartphone owners to use Snapchat over other social apps like Facebook and Instagram (although they have recently announced that they would be cutting investment to focus on other company priorities). And TikTok has started testing offering a small collection of mini-games within its app.
In a study by Anzu, they found that the majority (75%) of US gamers are positive or neutral towards advertising. In mobile games, where ad revenue has predominantly been focused to date, advertisers can buy banner ads, interstitials that appear between levels, and ads that let players unlock incentives. Brands can also create their own branded games. For PC/desktop and console games, brands can buy in-game digital billboards, posters, and other placements that are traditionally found in real-world settings, such as courtside banners within NBA 2K22. For in-game advertising, brands should be cautious as many gamers are sensitive to intrusive messaging; however, according to ComScore, they are open to placements that make games feel more real–the key is to blend into the game and not interfere with the game.
It’s also important to note that in-game advertising is a stepping stone into the metaverse. Gaming platforms such as Fortnite and Roblox are rapidly evolving to include a social interaction component as they evolve into their own metaverse. Getting comfortable with in-game advertising will help set the foundation for brands as they enter the metaverse with similar advertising opportunities.
Challenges Faced By Popular Social Platforms
Landie Viljoen, Channel Strategy Director
It’s no secret that most of the popular social platforms in the US are facing challenges. Meta (Facebook/Instagram) shares are down roughly 73% over the past year driven by the loss of ad dollars following Apple’s 2021 iOS privacy update and a steep decline in usage among young users as TikTok becomes the new home for entertainment. Brands are pulling away from Twitter advertising as the Elon Musk fallout continues (see Madelyn’s write up below for all the details). Brendan Carr, one of five commissioners of the FCC doesn’t see “a path forward for anything other than a ban” of TikTok. And Snap (Snapchat) has started laying off 20% of its workforce, cut production of original shows, and shut down investment in mini apps, games and its camera-drone project called Pixy after missing Q3 revenue goals. Pinterest, however, appears to be the only social platform without any current day challenges, exceeding Q3 revenue expectations.
With the challenges faced by the popular social platforms, we can expect to see a drastic change in the social landscape over the next year and beyond. Chat app Discord (150 million monthly active users), the live-streaming service Twitch (140 million monthly active users), and fitness-focused Strava (95 million active users) are gaining new users daily. And we may even see a new social app lead in popularity, including Gas, which has been downloaded over 500,000 times since its launch in August, and BeReal, up to 10 million daily users.
Elon Musk Takes Over Twitter
Madelyn Brennecke, Sr. Performance Marketing Manager
It’s official! Elon Musk officially bought Twitter for a whopping $44 billion, and he wasted no time in making some big changes. First up, he fired several top execs, including CEO Parag Agrawal, chief financial officer Ned Segal, and the platform’s head of legal policy, trust, and safety Vijaya Gadde, replacing them with close confidants and trusted engineers from his other companies. Musk is also preparing to make some massive layoffs with rumors that he could lay off between 25–75% of the staff. And he has a number of changes he wants to make to the app, although he’s already backpedaled from some of his original thoughts.
Musk’s original desire was to privatize Twitter, loosen the content rules, and allow people to speak more freely. In Musk’s own words, “The reason I acquired Twitter is because it’s important to the future of civilization to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner, without resorting to violence. There is currently great danger that social media will splinter into far right wing and far left wing echo chambers that generate more hate and divide our society.”
However, many fear that loosening the content rules will lead to a surge in misinformation, hate speech, and other toxic content. Another concern is brand safety for brands and advertisers, leading many to pull their ad budgets for Q4. Furthermore, Elon has posted memes which sparked rumors that he is looking to merge Twitter with Trump’s Truth Social and Parler (which Kanye “Ye” West is currently trying to acquire). Merging with these far-right wing content platforms will certainly spark the “debates” that Musk is looking for, but will also certainly lead to a lot of toxicity that many users and advertisers won’t want to be a part of. After backlash and immediate loss of ad dollars, Twitter is now planning to set up a panel to review content moderation, with Trump’s account ban likely first up on the docket.
In an effort to be less reliant on ad dollars, and therefore beholden to their wishes, Musk is looking to revamp the subscription options for Twitter, hoping to ultimately generate 50% of Twitter’s revenue from subscriptions. On Tuesday, Musk announced that Twitter Blue would now be a subscription for $8 per month. Twitter Blue would verify users with a blue checkmark, allow them to see 50% fewer ads, have first priority in replies/mentions/search, share long videos and audio, and bypass paywalls at news organizations that team up with Twitter. Musk has also said he will charge subscriptions for business and government accounts. However, Musk seems to assume that users will simply pay to keep using the app that they’ve always been able to use for free, or that users value the blue checkmark enough to pay for it. In reality, Musk is going to need to increase the offerings for subscribers to make it worth paying for. Another of Musk’s goals is to remove bots from the site. By moving to a subscription model, Musk thinks it will be easier to ‘authenticate all real humans’ and therefore to spot and remove bot accounts that are unable to pay monthly membership fees.
Lastly, like all social platforms, Musk wants to update the Twitter algorithm to make content more relevant (like TikTok). Furthermore, Musk wants to give users the ability to define their experience by adding variable algorithms. As Musk puts it, “Our platform must be warm and welcoming to all, where you can choose your desired experience according to your preferences, just as you can choose, for example, to see movies or play video games ranging from all ages to mature.”
I anticipate a bumpy road ahead for Musk and Twitter as he refuses to learn from other platform’s mistakes and insists on testing these “original” ideas.
Do Political Ads Work?
Stephen Lawrence, Media Planner
With the upcoming midterm elections running full speed ahead, political ads continue to become commonplace across most media channels, including social media and streaming television. However, the outpouring of political ads bears the question — does it work? Does an ad showing a candidate speaking negatively about their competitor actually make a difference on election results, or is political media spending becoming useless in the currently polarized landscape? In a study by Northwestern University, researchers looked at both positive and negative ads in the 2000 and 2004 US elections to determine if ads impacted turnout and swayed voter decisions. Ultimately, they found that “in the 2000 election, allowing only positive ads would have increased overall voter turnout from 50.4 percent to 52.4 percent. Meanwhile, airing only negative ads would have decreased turnout to 48.8 percent. The gap between the all-positive and all-negative scenarios was about 10 million voters.” To understand the impact, they determined that “if all ads had been positive, Bush would have won Wisconsin, but Gore would have taken Florida and, with it, the election. If all ads had been negative, Bush would have simply gained a bigger lead over Gore.” Ultimately, positive ads get more voters to the polls, but negative ads impact the ways people vote. This is a good lesson in the current landscape, where negative ads appear to be dominating as competition for political power continues to grow.
Interactive Ads Could Fill the Gap in Audio Ads
Stephen Lawrence, Media Planner
Audio continues to be one of the most exciting channels for advertisers who are eager to capture share of ear — with companies like Spotify pushing out incredible, hugely popular shows like Archetypes, and music drops smashing streaming records, like Taylor Swift’s Midnights. However, with audio ads, there is the challenge of how to get users to interact with advertisements when most users use audio passively, either driving to work, doing the dishes, or in the shower (speaking from experience…). That’s why activations with a partner like ShakeMe are coming into the landscape to, literally, shake up the space. When a user is listening to an ad placement in the audio space, the user can shake their phone to “click” a placement and engage with the ad, versus unlocking their phone and clicking on an ad manually. “Interactive audio formats have enabled some brands to reach greater heights, such as a CTR (clicked and installed) as high as 0.97% with ShakeMe,” says AdWeek. Although interactive audio placements are still in the beginning stages of development, the addition of more engagement-driving opportunities in the audio space will continue to provide advertisers a peace of mind that audio works for driving both awareness and lower-funnel tactics.
