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Is in-game advertising ready to take the next step?

In 2006, marketers and analysts were predicting huge growth in the use of in­teractive or static ads in video games. But in-game ad usage stayed fairly flat year-over-year, according to Forrester Re­search. This year, game sales are pre­dicted to steady, so in-game advertising may have the potential to help monetize this market.

One critique of in-game ads is that marketers haven’t yet found a good use of the medium. Most marketers today have so many options and, by putting money into an untested medium, they may have to sacrifice the budget from a known and tested medium.

“The marketer hasn’t felt like there was a clear value to the advertising that they were doing,” said Shar VanBoskirk, principal analyst at Forrester Research. “It’s not clear enough what they’ll get testing it to make it worth trading off the money that is in a medium [from which] they know they’re going to get value.”

While it may not be worthwhile for a mainstream marketer like Procter & Gamble to take the time to figure out how in-game advertising could benefit its business, for marketers looking to reach a younger, male audience, video games are quite viable.

“Advertisers love the fact that it is in­tegrated in an interactive environment, so you can imagine a much richer expe­rience for the consumer,” says Darlene Kindler, director of network advertising at Sony Computer Entertainment Amer­ica. “If done well, it can be contextually relevant for the player — unlike $1 million television ads that may be [skipped].”

Massive, an in-game advertising net­work that was recently purchased by Microsoft, saw growth in the second half of 2007, with a 250% lift in revenue. Jay Sampson, VP of North America and Asia Pacific sales at the company, expects 2008 to be a year of growth. He said that 2007 was the year for putting the founda­tion of the business in place and 2008 is the year for that business to grow.

“I’ve seen the same sort of trajectory before, the online space kind of lit the fire and everyone was aspiring to get into the Web, but then we had someinfrastructure issues,” Sampson said.

The firm, which plans to have adver­tising in about 60 new games this year, is currently working with Nielsen on ways to measure the value of in-game ads.

As we enter 2008, in-game advertis­ers expect to see better integration with ads in other channels. Sony is integrat­ing gaming with movies, music, and an online social community. Its military game SOCOM features a Hummer in the game and an online contest, where the winner of a tournament receives a free Hummer.

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