In-game advertising is now a large and integral part of our gaming, but, unbeknownst to some, it has some rather humble beginnings, culminating in an epic and interesting journey.

Hit the jump to see how it all happened!

In-game advertising (IGA) is a subject of great controversy and one that often polarizes opinion. Of course, there are morality issues surrounding this form of advertising, such as the appropriateness of using a medium like video games to target young children with product placement advertisements.

However, using in-game advertising allows a developer to offset production costs, giving them the ability to take more risks and be more original, given a much higher budget.  Considering the average production cost of a game is estimated to rise to a massive $20 million for a 7th-generation console, some see IGA as a necessity for ensuring we still see high quality, original titles in the future.

It stands to reason that, considering it is the fastest-growing media on the planet, IGA should be on the rise within video games.  In fact, according to in-game advertising behemoth Massive Incorporated, the annual spend on this form of advertising will be worth $1.8 billion by 2010.

Philosophers have long been arguing that we live in a world increasingly governed by invasive media and advertising.  It’s seeping into every crevice of our lives and, as a means of reaching millions of people, video games have become a prolific medium through which advertising has become commonplace.

IGA often has a somewhat subliminal impact and many people believe that it is far too pervasive and invasive.  Whether you remain impartial or not, the use of video games as a means of advertisement has been around probably a lot longer than you think and is a rather interesting story!

In fact, according to Adverlab, the first example of a brand integrated into game play actually appears in a 1973 version of Lunar Lander:

“If you landed at exactly the right spot, a McDonald’s appeared. The astronaut would come out, walk over to the McDonald’s and order a Big Mac to go, walk back and take off again. If you crashed ON the McDonalds, it would print out “You clod! You’ve destroyed the only McDonald’s on the Moon!””

It is almost certain that this Easter egg was not endorsed by McDonald’s, but was rather a programmer’s idea of a practical joke, but it nonetheless marks the beginning for in-game advertising.  Five years later, Scott Adams programmed, into his text-based game Adventureland (1978), an advert for his forthcoming title Pirate Adventure.  And thus the use of video games as a method of advertising was born.

The term “advergame” refers to a title that exists primarily as a promotional tool – an interactive advert, in a sense.  If you have an Xbox Live subscription, there’s a good chance you have downloaded Doritos Dash of Destruction (2008).  Whilst this is about as blatant as product placement can get, it does provide a few minutes of fun and they do tend to be free.

You would be forgiven for assuming that advergames are a fairly modern method of advertising through video games, but it actually dates back to around 1983, when the boffins at Coca Cola realized that there was marketing potential within the gaming world, which was becoming increasingly popular within youth culture.

After approaching Atari, the computer giants came up with a branded version of Space Invaders, in which the aliens are replaced with the letters P – E – P – S – I and the message “Coke Wins” is displayed upon completion, to be given away to lucky attendees of Coca Cola’s Atlanta Sales Convention of that year.  Only 125 copies of Pepsi Invaders were actually produced, so I imagine it would now be something of a collectible!  A number of advergames followed in the same year, including the titles Kool-Aid Man, Chase the Chuck Wagon and Johnson & Johnson’s Tooth Protector.

PEPSI INVADERS

Product placement became popular during the ’80s, but it was from the ‘90s onwards that it slipped more definitively into the world of gaming.  In the UK, the original version of the hugely popular James Pond Robocod (1991) contains an early example of in-game product placement for McVities Penguin biscuits.  The game features penguins, as well as a level where you stand atop a giant version of the chocolate bar.

According to a PCGamer article printed in 1994, soon after the release of the game Penguin outsold popular rival chocolate bar KitKat for the first time in the product’s history.  This was news that shook the world of marketing, as it became apparent that video games were indeed a potentially very successful means of advertising a product.

The following year saw the release of Zool (1992), another game that was understandably criticized for its blatant, pervasive advertising, as the first three levels (The Sweet Zone) exist as a shameless advert for popular lollipop brand Chupa Chups.  However, it was in 1993 that product placement was taken to a new level, when a hyper cool new character emerged on the scene, in the form of Cool Spot.

This was actually a very good and deservedly popular game, but it received a lot of flak due to the main character being a mascot for 7-UP.  In fact, he was an anthropomorphised take on the red spot found in the 7-UP logo itself!

The implementation of a cool mascot into a platform title is typical of the early nineties, popularised by games like Sonic the Hedgehog, so it fuels the idea that Cool Spot was nothing more than an attempt at cashing in on the times.  After all, it was a pretty generic platformer clone, in which the character had to fire soda bubbles and collect spots to gain lives, not dissimilar to Mario’s coins or Sonic’s rings.

Interestingly, the 7-UP bottle was removed from the intro for the European release of the game, perhaps because the region already had a 7-UP mascot in the form of Fido Dido, the company’s official mascot since the ‘80s.

Crazy Taxi (1999) is synonymous with the field of IGA, and one of the first games that actually springs to mind when discussing the topic.  Passengers in the game request that you take them to real-life destinations such as Pizza Hut, KFC and the Levi’s Store.  Also, vans emblazoned with the WOW! logo roam the virtual streets.

Whilst Crazy Taxi features some of the most notable examples of product placement to date, it was rarely criticized for this element because it makes the game’s city seem a lot less artificial.  With the licenses to use these companies having expired by the time of the PSP’s Crazy Taxi: Fare Wars (2007) release, the game features generic locations and, admittedly, a great deal of realism and enjoyment are lost, bringing into question the value of IGA in terms of the increased realism it brings.

The FIFA series, like a number of other sports series, has featured advertising billboards since its 1994 debut.  This is known as “incidental advertising”, in that it is not incorporated for profitability, but rather to retain realism.  Without them, these titles would arguably run the danger of appearing more artificial.

One of the most prolific examples of incidental advertising is that found in realistic driving titles. The cars you take control of are not examples of product placements, advertising their real-life counterparts, but are rather incorporated to simulate as realistic a driving experience as possible.  However, car manufacturers do not look favorably on heavy car damage, as it is seen as negative to display how easily their cars can be obliterated upon impact.  So, in effect, we sacrifice one form of realism for another.

With the rapid rise of dedicated in-game advertising agencies like IGA and Massive Incorporated, advertising in video games reached a new and highly technical level in 2005, with the release of Splinter Cell: Chaos Theory.  This is one of the first titles to feature “dynamic in-game advertising”, after Ubisoft signed up a number of agencies, allowing them to promote such companies as AXE, Nokia and AMD throughout the game.  Unlike static adverts, dynamic ones can constantly be updated by advertising agencies via your internet connection.

Dynamic advertising allows for a more tailored form of product promotion.  The latest music and movie releases, for example, can be advertised according to time of day or geographical location in order to achieve optimum advertising efficiency.  According to Ubisoft, this is a “thoughtful and selective way to enhance the realism of a game.”

But, as was the case with Electronic Arts’ Battlefield 2142 (2006), which received live updates via IGA Worldwide, this method of advertising is often labeled “spyware” and slammed due to its seemingly invasive nature.  After all, examples of information sent back from a user’s machine include time spent looking at an advert, the ad’s genre and even the angle at which it was viewed!

According to a study by Massive, the 18 to 34-year-old male demographic has shunned television in favor of video games, which are now played for more than 30 billion hours per year.  With Massive itself signing up such mega corporations as Coca Cola, Honda and Paramount, dynamic advertising appears to be the chosen method of ensuring this demographic is still targeted in the future.

Nine months after its January 2008 release, Barack Obama began to appear on billboards in the 360 version of the immensely popular Burnout Paradise, alongside such marketing giants as Burger King and Gillette.  Publisher EA has since confirmed that the ads were funded by the Obama Campaign, marking a historic moment in gaming history: it is the first example of a US presidential candidate purchasing in-game advertising space.  It seems that IGA has reached a new level, as it is now even deemed an appropriate medium for achieving political gain.

While the game does not feature examples of in-game advertising, I feel that Grand Theft Auto 4 (2008) is certainly worth a mention.  The game contains a world almost as visually fluid and vibrant as our very own, featuring locations such as the digital reincarnation of Times Square – arguably the epitome of invasive advertising.

But, instead of real ads, the streets are emblazoned with adverts for mock versions of real mega corporations, such as Liberty City’s cola company “E-Cola”, the sports store giant “Pro-Laps” and the continental lager “Pisswasser”.  This is a superb example of how a game can remain incredibly realistic, whilst having some fun with digital advertising and nonetheless sending out a satirical message about the intense level of advertising we face in reality and, indeed, in video games.

But what does the future hold for in-game advertising?  Well, one game that certainly sees IGA taken to another level is Second Life (2003 – Present), which features a unique and digital economy, allowing users to buy, sell and advertise items and services within its virtual world.  “Linden dollars”, the game’s currency, can be earned and converted into real-life money, and a number of people actually earn a full-time living playing Second Life.

In fact, as Business Week reported in 2006, Anshe Chung (real-life name Ailin Graef) became the first Second Life millionaire, with her virtual net worth equating to more than 1 million US dollars.  Chung made her fortune by dealing in virtual land, shopping malls, virtual stock market investments and even setting up her own in-game brands.

Not all brands in Second Life are contained solely within the game’s dynamic world, however.  Such companies as Lego, Starwood and Toyota have a presence within the game.  In fact, MMORPGs are becoming a prevalent target for the promotion of real businesses, as they provide constant, evolving worlds.

Virtual fly posting is now commonplace and some businesses allow real-life services to be accessed within games, such as the ability to order a pizza from Pizza Hut to your home through a command line interface within Everquest 2 (2004).  On top of this, we are now regularly faced with lobby adverts and sponsor-funded tournaments, so it is clear that in-game advertising has come a very long way since its humble beginning all those years ago!

As gaming evolves, so does the advertising that goes with it and companies are constantly adapting and finding new and inventive methods of placing adverts in our games.  Of course, a huge number of people are angered by the pervasive nature of IGA, but the game industry undoubtedly benefits from this ever-increasing revenue stream, too.

It is estimated that the incorporation of advertisements into a game can increase publisher profits from $5/6 to $7/8 per unit sold, which is a massive increase.  Some games (particularly in the field of mobile gaming) are actually entirely funded by advertising!  The big question is whether or not it is worth persevering with the pervasive and invasive side of IGA in order to allow for potentially more original and glossy titles.