Advertisers turn to video games to reach consumers

NEW YORK — Make that touchdown. Blast that alien. Buy that Sprite?

It all can happen in video games now that real advertising is increasingly finding its way into virtual worlds, appearing on billboards, soda machines and posters that once touted imaginary products.

Placing such ads is an embryonic industry, driven in pursuit of a growing population of players, particularly a generation of young men who have traded TVs and radios for PCs and game consoles.

"Advertisers are concerned that they are losing their reach," said Steve Farrer, conference director for the Austin-based Game Initiative, which put on the first forum dedicated to video game advertising on Thursday in Manhattan.

More than 200 people from gaming, advertising and technology companies attended to hear about how the once sporadic business of advertising through games is becoming organized and aggressive.

Last year, companies spent $10 million on ads placed in games and about $200 million on "advergames," in which the game itself is the advertisement, said Michael Goodman, a senior analyst with the Yankee Group research firm.

Estimates vary for in-game ad spending, but they all are minuscule in the $11 billion game market.

That will change, Goodman said, with spending expected to grow to about $800 million by 2009.

Game developers, once reluctant to include real ads, now see them as a source of realism and revenue, especially as production costs for some games climb into the tens of millions of dollars.

To drive the industry, analysts say, advertisers must be able to actively change ads in games and tailor them to specific regions and marketing campaigns. This can be done with Internet-based PC games and console games that connect online.

One firm that wants to make this happen is Massive Inc., a New York agency that this week launched what it calls the first network allowing advertisers to place and update ads in games.

"With a video game you know precisely who's watching," said Mitchell Davis, chief executive of Massive, the main forum sponsor. He said video games have active involvement, unlike television ads, where commercials are often skipped and many distractions take eyes off the screen.

Davis, who predicts game ad spending may top $1 billion by 2010, showed Massive's work in placing ads for movies, Sprite and the band Motley Crue on signs in the Ubisoft game "Splinter Cell: Chaos Theory." The company plans to have ads in 40 games this year.

Advertising isn't new to veteran gamers.

"Walking by a machine (in a game) you expect some kind of advertising on it. For a machine to just say 'cola' doesn't happen anymore," said Santos Gonzalez, 29, a lifelong gamer and manager at the Game Time Nation lounge several blocks from the forum. "As long as my game doesn't get stopped with a big pop-up that says, 'Buy such and such now,' I really don't mind."

Advertisers and game developers are cautious about alienating players with intrusive ads, particularly men 18-34 who account for most of the serious gamers.

Forum speakers warned of the "medieval factor" — the need to avoid ads that don't mold seamlessly into game environments — such as modern ads or product placement in a fantasy game.

One such discrepancy cropped up in a free version of the multiplayer Internet game "Anarchy Online," which recently began using the Massive network to place ads for companies like Intel on billboards and signs in its science fiction world.

The ads have been well received overall, said Terri Perkins, product manager for game maker Funcom. But one promotion that didn't make sense to some was ads for Motley Crue in a game set 30,000 years in the future.

Most players didn't mind the ad and a few came up with their own explanations, including a theory that the band had been cryogenically frozen and later defrosted, Perkins said.

Will all of this advertising work? Ultimately, it will be up to the gamers.

"It doesn't alter my buying habits any," Gonzalez said. "Just because I see Sprite in a video game doesn't mean I'm going to go, 'You know what? I feel like a Sprite.' Maybe that works on some people."

David Ho is a New York correspondent for Cox Newspapers.