Advertising seems to be everywhere, but with the exception of promotions and tie-ins, video games have been relatively unscathed. Until now. Dynamic in-game advertising may change all that. Rather than pushing ads in front of the consumer, companies are trying incorporate them into the experience. So get ready for a sea of change, driven by the power and pervasiveness of the Playstation 3 console. Sony Computer Entertainment America recently announced that it will feature in-game advertising in selected titles moving forward, with IGA Worldwide being their first partner.

According to Phil Rosenberg, Senior Vice President, Sony Computer Entertainment America, current technology allows for advertising to be served in a way that can enhance the game play environment. “This is not about interrupting someone’s game play experience with a commercial for a fast food restaurant. It is all about integrating ads in a realistic way similar to the way product placement in the movies are,” he says. Rosenberg points to Playstation’s best selling Navy Seal franchise “SOCOM” as an example. “We have a new version for the PS3 that will be out soon, and what if, instead of driving a Jeep to transport your officers around inside the game - the officers were sitting inside of a Hummer? Wouldn’t that make the game more realistic?,” he asks. Rosenberg also points to how billboards could be enhanced around a sporting environment to be relevant to the athletic events and venues. “Doing these kind of things adds a realism to the game that might not have existed before,” he says.

Rosenberg says the PS3 currently supports the dynamic delivery of advertising into set spaces of games whether it be billboards, 3-D objects like the Hummer or bottles of POWERade in a sports game. Sony also uses the technology to promote their movies and electronics in the Playstation Network game “Pain.” “We’re just trying to prove how the technology works and help build the price points for our conversations with the advertisers,” he says.

“In-game advertisements can offer tremendous bang for the buck due to their inherent interactivity,” adds Scott Steinberg, founder of game industry consulting firm Embassy Multimedia Consultants and author of “Videogame Marketing and PR.” “Integration makes perfect sense - as long as there’s something of value offered in exchange for the players’ time and they’re given the choice to opt in or out. These marketing methods can be tremendously successful in terms of building brand recognition and equity. It’s in terms of extreme invasiveness where you run into problems: As any parent or sibling who’s ever experienced the wrath of an irate player can tell you, there’s a terrible price to be paid for interrupting an otherwise cheerfully preoccupied gamer.”

So how do advertisers feel about all this? Chris Morf, Director of Corporate Development, IGA Worldwide sees a desire from consumers for more realism in their games - with IGA able to provide this through selectively integrating advertising that is both game- and audience-relevant.

Additionally, it’s important to come up with products that are easily understandable, minimize the impact on publishers with additional development requirements, and add to the overall enjoyment. “This means once you have the game setting right, in order to maximize consumer buy-in, the brands should be integrated the way they are in real life, e.g., if you are driving down the street, you should see billboards on the side of the street,” Morf says. “Or if you are walking by a Circuit City store in a game, you should see Circuit City branding.”

Despite research from eMarketer which projects in-game advertising spending will increase from $295 million in 2007 to $650 million in 2012, Rosenberg says ads will only be used where it makes sense and where it can compliment the game play. “We’re not going to do anything that detracts players from their love of PlayStation 3,” he says. “We want to add value to the game and to the player’s experience - we’re not considering, for a second, taking anything away from their game play experience.”

While the knee-jerk reaction may be to frown on advertising, there’s a potential benefit. “Some consumers may balk at the concept, but consider: All too often it’s production constraints (time, money, etc.) that cripple a titles’ potential,” Steinberg says. “If the extra income generated by in-game adverts translates into sharper game play, added polish, more/better-executed features and a chance for designers to better realize their original vision for a specific desktop or console outing, we all score in the end.”