Microsoft is developing an advertising program for Xbox
- Microsoft is building a program to allow brands to advertise in Xbox games.
- It assesses adtech partners to provide in-game ad placement technology.
- Sources expect this capability to go live by the third quarter.
Microsoft wants to allow advertisers to place ads in free Xbox games, and it is currently identifying ad tech companies that can build in-game inventory and work with ad agencies to place the ads, two people involved have said. in the talks. .
This new program will increase Xbox’s limited ad inventory by adding more games that brands can advertise in and allowing more developers to sell ad space.
These sources said these ads would appear, for example, as digitally rendered billboards in a car racing game. Insider couldn’t find out if Xbox will also offer other types of in-game ad units, like avatar skins or video ads that run in game lobbies. Insider was also unable to determine whether Microsoft had already offered the Xbox deal to advertisers.
Insider sources expect this capability to be operational by the third quarter.
Microsoft has not confirmed those plans. A spokesperson said, “We are always looking for ways to improve the experience for players and developers, but have nothing further to share.”
While ads in mobile games are common, ads in console games are rare.
Xbox currently allows limited forms of advertising. Currently, advertisers can buy ads on the Xbox Dashboard, and they can buy in-game ads on select games, through third parties yahoo and Anzu respectively.
This new program, however, could open up Xbox to more advertisers who want to message people in games, as it will provide tools that any participating game developer can use to sell ads.
Both sources said the tech giant didn’t seem determined to cut ad revenue and seemed more interested in building out the Xbox ad network. According to these sources, ad revenue will be split between the game developer and the ad tech company placing the ad.
One of the sources speculated that Microsoft is currently not interested in collecting a reduction in advertising revenue, as it wants to provide more money-making opportunities for developers who create free games.
Microsoft began talks to create an Xbox in-game ad network around 2018 or 2019, but that process accelerated thanks to the 2020 release of the latest Xbox and the boom in free-to-play titles, the two sources said.
Microsoft is concerned that inserting ads into Xbox games could irritate people who don’t expect to see ads when playing on consoles, so it’s treading carefully and intends to create a “private market” , where only certain brands can insert ads into games in a way that doesn’t disrupt the gaming experience, the two sources said.
They also said that Microsoft is concerned about securing its customers’ data, so that other companies cannot use it.
While Microsoft has extensive consumer data, collected from Bing searches and behavior on its sites and software, one of the sources said Microsoft has no immediate plans to let the advertisers use this data to target people on Xbox.
“The problem with this is that there are regulatory controls and privacy notices relevant to each platform and they are not compatible across platforms,” the source said. “If I had to read between the lines, it would be like a 10-year goal, but that has serious hurdles and Microsoft is very strict about its data.”
While Microsoft’s advertising ambitions have waxed and waned over the years, its plans for Xbox underscore its current optimism. And it comes at a time when in-game advertising is gaining momentum. NBCU, for example, is in the first steps of a partnership with the in-game advertising company Anzu.
Industry analyst Eric Seufert said Microsoft’s acquisitions of Activision Blizzard (which has an advertising network) and the adtech platform alexandercould help Microsoft create a vast advertising network.
CEO John Higgins of game agency OS Studios said he believes all major game companies will eventually create private ad markets. If Microsoft follows through on its plan to launch an in-game ad network, it could require spending that could have gone to competitors like Sony’s PlayStation and Amazon.