What you didn't know about in-game advertising

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I wrote yesterday about the games and services I saw at X'09, Microsoft's annual fall showcase in Toronto. Above all the games and glitter was a small area devoted to Microsoft subsidiary Massive Inc., the unit that handles Xbox 360 in-game dynamic advertising. I thought I understood how this sort of advertising works, but it turns out I was mistaken about a few things. Massive's Adam Shinehoft set me straight.

We're all familiar with static in-game advertising, which is most popular in sports and racing games where players see licensed cars covered in decals promoting various brands, purchase clothing and equipment from authentic manufacturers, and visit stadiums and tracks ringed with signage for real-world sponsors. In these cases, publishers hammer out deals with companies that want their products and logos featured in their games and reap all the profits for themselves.

I thought the same was true for dynamic advertising-ads that pop up on billboards and signs scattered throughout game environments-but it turns out I was wrong. At least as far as the Xbox 360 is concerned.

Microsoft has a special advertising technology that they insert into games made by their partner publishers. Whenever your console is connected to the Internet and you're playing one of these games, this software grabs new advertising content and plugs it into appropriate places, like, say, a bus stop on the street in a skateboarding game or a billboard on the side of a building in an open world adventure.

These ads are created by Mr. Shinehoft's team at Massive. His people actively seek advertising clients, conduct research to figure out how best to meet their promotional needs (which is to say, what sort of ads should go in which games), and then approach a stable of more than 40 publishers that have deployed Massive technology in their wares to hammer out revenue sharing deals.

If you've seen Rogers and McDonald's ads in games like Spider-Man or Guitar Hero, then you've witnessed the results of Mr. Shinehoft's work firsthand.

Of course, plenty of gamers aren't cool with in-game advertising. I asked Mr. Shinehoft how they balance advertisers' and gamers' interests, and he said that their goal is to place relevant ads in places where people expect-and in some cases, according to him-even desire to see them.

An example of a successful campaign that satisfies both players and clients, according to Mr. Shinehoft, might be a baseball game in which Rogers ads pop up on the jumbotron during a Blue Jays game at the Rogers Centre.

Fair enough.

Personally, though, I've encountered some dynamic ads that have rubbed me the wrong way. Like the ad at the top of this post for Rogers in Saints Row 2. It bugged me because it was an ad for a Canadian service in a fictional city located in the U.S., hence, pulling me out of the story, and also because the ad's declaration that "lag sucks" seemed a bit ironic given the issues I've experienced with my own Rogers connection. (I tried to blow up the sign with a rocket launcher, but, alas, it was on a sturdy brick wall and remained unscathed.)

That said, if ads can help publishers offset the steadily increasing costs associated with game creation and allow them to spend more money on design, then I'm not much opposed. The key is keeping them from becoming egregious. And perhaps finding advertisers that don't provoke knee-jerk negative reactions from most players.