Report: Video Game Ads to Reach $1 Bil. by 2012

NEW YORK The nascent realm of video game advertising is set to see spending double to $1 billion by 2012 — said researcher eMarketer — but the majority of growth will occur in casual Web-based games rather than in the more high-profile console game space — that of Sony’s PlayStation, Micorosoft’s Xbox and Nintendo’s Wii.

According to a new eMarketer report, last year marketers laid out $500 million-plus on video-game advertising of various forms, including ads which appear within games (i.e., in-game ads) and advergames (games built around a specific brand or product). Roughly 59 percent of that total ($295 million) was spent on pure in-game ads, while roughly 41 percent ($207 million) went to advergames.

With the explosion in popularity of Wii and social games like Guitar Hero and Rock Band, as well as the record-setting sales for titles like Halo 3, console and PC games would seem to be poised for tremendous ad growth. Yet within the in-game ad sector, over the next few years dollars are expected to flood to online games. EMarketer forecasts that in-game advertising will surge by 120 percent by 2012, buoyed by a 133 percent surge in Web based games.

“The big growth in in-game advertising will come not from console games but from the rapidly evolving casual and online game segments,” said the report. That gaming segment is simply more ripe for ads in its current stage — given the lower costs involved and the nature of the games themselves. “In this space, advertising is accepted not only as art imitating life but also as a trade-off for free game play.”

To be fair, console games are poised for a healthy 91 percent growth spurt of their own over the next several years, says eMarketer. But that segment is being hampered by several factors, found the report. First, despite the growing popularity of services such as Xbox Live, a limited number of console games are played using an Internet connection — limiting the opportunity for live or “dynamic” ad placements in those games. Plus, the industry still faces a lack of ad standards, according to the report.

Lastly, the jury is still out on whether advertising will ever belong in certain types of games. “One of these factors is the unwillingness of some gamers, particularly the more hardcore types, to accept in-game ads,” said the report. “For example, in action, sci-fi and role-playing games, players tend to look down on the presence of corporate brands.”