Gaming a $2 Bil. Market by 2012

Advertising in and around videogames is expected to grow exponentially over the next five years, becoming a $2 billion market by 2012, according to a new report released by digital market research specialist Parks Associates.

The report, Electronic Gaming in the Digital Home: Game Advertising, encompasses several forms of videogame related advertising, including product placement in games, banners in online games, dynamically inserted ads in console and PC games and even ads placed within mobile games. Overall, Parks Associates is bullish on the burgeoning ad medium, predicting that spending will climb from an estimated $370 million last year to more than $2 billion in 2012. Over that period of time, game advertising should achieve a compound annual growth rate of 33 percent, says the report – which should largely outpace the growth expected in other media, including the Internet.

Those estimates corroborates some of the more optimistic forecasts delivered in recent years by the industry's biggest proponents, such as leading in-game ad firm Massive Inc., which is owned by Microsoft. And they're based on the general notion that videogames are currently underutilized by marketers. "Advertisers are not using the gaming medium to its full potential," said Yuanzhe Cai, director of broadband and gaming, Parks Associates. "If executed correctly, game advertising can provide a win-win solution for advertisers, developers and publishers, console manufacturers, game portals, and gamers."

Among the various videogame advertising tactics that Parks Associates tracks in the report, it's dynamic in-game advertising – where ads are automatically delivered within games as they are being played – that holds the most potential. The firm expects that dynamic in-game ads (the specialty of firms such as Massive, Double Fusion and others) will account for a whopping 84 of the ad market, versus just 27 percent of the market today.

Cai said that dynamic in-game ads appeal to brands give their similarity to online advertising. The tactic "offers several unique advantages, such as timeliness, scalability, measurability, and flexibility," he said. "But the industry will also have to address several looming challenges, including lack of economy, lack of industry standards, and media fragmentation."g

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