Unlocking the next level potential of in-game advertising and enhancing monetization

In-game advertising has emerged as a transformative force within the gaming and esports ecosystem, evolving from simple static billboards in early video games to immersive, dynamic, and personalized experiences that resonate with players. This form of advertising has become a vital monetization strategy, bridging the gap between brands and gaming audiences while complementing other revenue models like micro-transactions and subscriptions. As advancements in gaming technology and player preferences continue to drive innovation, brands from diverse industries – ranging from automotive and FMCG to fashion and entertainment – are leveraging in-game ads to enhance engagement, fund tournaments, and create interactive campaigns that align seamlessly with gameplay.

The evolution of in-game advertising

Rohit Jagasia, Founder and CEO, Revenant Esports, elucidated, “In-game advertising has evolved significantly in competitive esports titles across both mobile and PC gaming. For instance, we’ve seen partnerships in mobile games with numerous automobile brands. In games like Counter-Strike, custom maps often feature branding from skin sites and various D2C brands. Within the esports landscape, such advertising rarely provides a competitive edge to athletes, but instead enhances the cosmetic appeal in competitive esports.”

Karn Saxena, Founder and CEO, Goldon Studios, noted, “In-game advertising has come a long way since the days of static billboards in early games like Sega Rally and FIFA. With the rise of the internet, ads evolved into real-time updates, allowing brands to target players based on location and demographics. Today, ads are deeply woven into gameplay, appearing as branded events or character skins that enhance player engagement. In the esports world, advertising has become essential, funding tournaments, supporting teams, and even integrating into team names – a groundbreaking move in brand partnerships. Rage Effect embraces this evolution with features like in-game Guilds and Guild Wars, letting players form their own teams while brands seamlessly enhance the experience.”

Rohit Agarwal, Founder & Director, Alpha Zegus, pointed out, “In-game advertising is very tech-oriented, focusing on improving technology within the game that allows any element to become an advertising element or banner. One of the best examples is Fortnite, which allows extreme customization for brands, like HM doing an entire fashion show inside the game or conducting a concert, like Travis Scott did, or launching a movie trailer, as Christopher Nolan did. Fortnite is one of the most extreme examples of in-game advertising and technological advancements. Almost all games now feature simple banners or branded items, going up to Fortnite-level technicality.”

Rajkumar Sheth, Chief Product Officer, Deltatech Gaming Ltd, noted, “It is difficult to engage with younger and tech savvy gamers through traditional media which has led to brands shifting focus towards in-game advertising. The past few years have witnessed a significant change in in-game advertising. Earlier, the ads would disrupt the gameplay in between, but in the last few years, the format has evolved a lot. Advancements in gaming tech and player expectations have seen the emergence of virtual billboards and branded elements.”

Sheth further said, “The role of in-game advertising nowadays is to reach the demographic directly within their natural habitat, where the chances of engagement is much higher. This is often in the form of rewarding users with platform benefits in turn for viewing ads. This is one of its kind formats where engaged users get immediate gratification nullifying the intrusion created by the ad. At Adda52 we use poker-themed integrations like branded tables, sponsored leaderboards and much more to drive brand recall without compromising the gameplay.”

“We have noticed that in-game advertising works well in casual, hyper casual, mid core games and hard core games which are non-real-money in nature. Real money game users or serious paid game users do not respond well to in-game advertising,” he added.

Anurag Choudhary, Founder & CEO, Felicity Games, said, “In-game advertising has shifted from static, generic placements to dynamic, targeted, and immersive formats. Early iterations involved simple product placements, but today’s ads are seamlessly integrated, offering personalization through programmatic ad technologies. This evolution has been driven by advancements in mobile gaming and increased player expectations. Currently, in-game advertising plays a pivotal role in bridging the gap between brands and players. For casual gaming, platforms like Nostra by Glance enable ads to reach millions of players directly on lock screens, revolutionizing how games are discovered and monetized. In the esports ecosystem, sponsorships and branded content elevate visibility, providing immersive experiences that resonate with fans.”

Leveraging in-game advertising as a marketing channel

“We’ve observed IPL teams entering the gaming space; for example, we (Revenant Esports) recently partnered with the Gujarat Titans to host a BGMI tournament,” said Rohit Jagasia, adding, “Additionally, other teams have introduced in-game team jerseys. Celebrities are also partnering with games to engage and appeal to Gen Z and Millennials. Furthermore, many non-endemic brands, such as those in the automobile and D2C sectors, are leveraging gaming and esports as effective platforms to market their products.”

From tech giants to luxury brands, industries are increasingly turning to in-game advertising to reach younger, tech-savvy audiences. Karn Saxena said, “Gaming gear leaders like Logitech and Nvidia dominate esports placements, while fashion houses such as Balenciaga have partnered with games like Fortnite to offer branded skins. Food and beverage companies like Red Bull and Monster Energy target gamers with subtle product placements, and entertainment brands use games to promote their latest releases, such as Stranger Things crossover events. Automotive brands are also getting creative, featuring their vehicles in racing games as part of an interactive experience. In Rage Effect, this trend takes a personalized turn with partnered weapon skins, allowing brands to directly integrate into gameplay through uniquely designed, branded weapons that players can use.”

Rohit Agarwal remarked that at the moment there is a lot of real money gaming advertising that happens through a surrogate way, of course, within a lot of regular games. “What I mean is real money gaming advertisements inside regular casual games. Apart from that, we also see a lot of automobile brands, FMCG brands. These are the two major dominating categories when it comes to in-game advertisement. Actually, a third one I would also say is the entertainment sector, which is promotion of movies, shows, singers, artists, all of that. That is also very big in terms of in-game advertisements,” he added.

According to Rajkumar Sheth, “Players in the OTT space, fast food giants, consumer brands are more inclined towards in-gaming advertising are making headway in leveraging in-game advertising. They target young audiences through immersive and interactive campaigns in popular games which seamlessly blend entertainment and gaming. At Adda52, we do not allow in-game ads, but we do leverage other gaming platforms to acquire customers through in-game ads.”

Anurag Choudhary noted, “Tech, entertainment, FMCG, and automotive brands are at the forefront of in-game advertising. For instance, OTT platforms like Netflix and Amazon Prime use in-game banners and rewarded ads to promote new releases. Similarly, consumer brands like Coca-Cola and Adidas have made significant strides by creating engaging, immersive ad campaigns in games and esports tournaments.”

“In casual gaming, e-commerce platforms frequently leverage in-game ads during sales events to engage players directly. At Felicity Games, we’ve seen firsthand how dynamic ad placements can drive player retention and create meaningful brand interactions, particularly in regions like Southeast Asia, where mobile gaming dominates,” he added.

Ads enhancing the gaming experience

Karn Saxena believed that when done right, in-game ads are seen as a natural extension of the gaming experience. Subtle placements, like virtual billboards in stadiums, are often welcomed by players as they enhance realism. On the other hand, intrusive pop-ups or non-skippable ads are universally disliked for breaking immersion.

He said, “Developers now prioritize player experience by incorporating native ads that fit naturally into the game world, rewarded ads that offer bonuses for voluntary interaction, and interactive campaigns like branded mini-games or AR elements. Rage Effect takes a player-first approach by using rewarded ads and strategic product placements, ensuring that ads never come at the expense of gameplay quality.”

Rohit Agarwal added here, “In terms of how players perceive in-game ads, Fortnite does it flawlessly. People actually want to be part of the ad experience, like the H&M fashion show or the Travis Scott concert. They feel FOMO if they miss out on these in-game integrations. If the ad is integrated innovatively, players want to be part of it and enjoy it. However, in hyper-casual games, where you might need to watch pop-up ads to unlock the next level, those ads can become annoying. Even in those, gamification is being used, where you don’t just see the ad, but also play a small demo of the brand or game being advertised.”

Rajkumar Sheth pointed out, “Players often tend to be more receptive when ads have tangible value such as in-game rewards or benefits attached to an interaction with an ad. Similarly, players appreciate it more when the ads do not interrupt their playing experience or between gameplay sessions. To ensure better gaming experience it is imperative to use data analytics to tailor ads according to player preferences and be designed as games instead of normal viewing ads which do not have any adverse effect on customer experience.  Ads designed as games are one-of-a-kind innovations that are so engaging that even in the face of potential blockers, the churn percentage remains low.”

Anurag Choudhary said, “Players generally appreciate ads that are non-intrusive, relevant, and rewarding. Rewarded ads, for instance, are highly effective because they align with players’ goals, offering bonuses or in-game currency. However, disruptive or irrelevant ads risk alienating the audience.”

According to Choudhary the following are needed in order to ensure ads enhance gameplay:

• Contextual Placement: Ads should match the game’s tone and environment, such as branded items in a casual game or billboards in sports games.
• Reward-Based Models: Players opt into watching ads for tangible rewards, fostering goodwill and higher engagement rates.
• Minimal Disruption: Ads should appear at natural pauses in gameplay, like after completing a level.
• A/B Testing: Continuously refining ad formats and placements based on player feedback ensures a balanced experience.

“At Felicity Games, we’ve incorporated these strategies to integrate ads that feel like a natural extension of gameplay, improving both engagement and monetization,” he added.

How do in-game ads compare to other forms of gaming monetization

According to Karn Saxena, “In-game advertising stands out as a sustainable and scalable revenue model. Unlike micro-transactions, which can alienate players with pay-to-win mechanics, or subscriptions, which limit the player base to paying users, ads allow free-to-play games to remain accessible while generating ongoing income. They also complement other monetization strategies, subsidizing non-paying users while micro-transactions cater to more dedicated players.”

Saxena noted that avenues for revenue generation include:

In-Game Ads: Continuous revenue stream, scalable with a larger user base.

Micro-transactions: High revenue potential but can lead to backlash (e.g., accusations of pay-to-win).

Subscriptions: Stable income but limits the player pool to paying users.

Complementary Nature: In-game ads often coexist with other models, offering a balanced monetization strategy. For instance, free-to-play games use ads to subsidize non-paying users while micro-transactions cater to dedicated players.

“Rage Effect exemplifies this balanced approach by combining brand partnerships, product placements, and on-demand ads in its monetization strategy. These integrations are designed to enhance, rather than hinder, the player experience, blending naturally into the game environment. Whether it's branded weapon skins, interactive billboards, or rewarded ads, the game ensures that monetization adds value to gameplay,” Saxena explained.

Rohit Agarwal believed that in-game ads are still seasonal, happening mainly during product launches or festive sales. However, he felt that they lacked consistency, whereas micro-transactions and subscriptions are consistent. “Game publishers focus on increasing micro-transactions and subscriptions, while in-game advertising focuses on landing a big deal once or twice a year,” he added.

Rajkumar Sheth pointed out, “While real money games like poker and rummy, revenue largely comes from platform fees, but for games like fantasy the revenue comes through the customer deposit pool minus the prize money. For the non-real money games, the main chunk of revenue comes from in-app purchases, in-game ad revenue followed by subscription revenue for premium membership. In-game ads are great for earning from players who do not spend money, especially in casual games, by showing ads that give rewards or extra gameplay.”

Anurag Choudhary noted, “In-game ads complement micro-transactions and subscriptions, targeting the vast majority of non-paying users. For casual games, ads are often the primary monetization driver, contributing significantly to revenue while maintaining accessibility for players. Compared to micro-transactions, ads are less reliant on player spending power and instead leverage scale. For instance, platforms like Nostra have enabled Felicity Games to monetize millions of players effectively, reducing acquisition costs and increasing overall engagement. In contrast, esports titles may lean more on micro-transactions or subscriptions due to a higher proportion of paying players. However, the scalability of in-game ads makes them indispensable, particularly for free-to-play games catering to a global audience.”

Also Read: The Rise of AI in Mobile Advertising: Unlocking New Potential for Indian Brands