As more and more companies get into the act of supporting in-game advertising and product placement, it's worth taking a step back to think about what makes advertising effective in the first place.

	SWAT 4 features a bevy of ads.

The basic argument for in-game advertising is: you can't use TiVo to ignore it, it doesn't disrupt the flow of content like TV advertising, and its inclusion in an interactive medium makes it more subliminally powerful. But we know from experience that all in-game advertising isn't created equal. Product placements that sensibly enhance gameplay (like driving a Hummer in Grand Theft Auto) are far more effective than, say, random billboards situated around a virtual race-track. If people can learn to ignore banner ads in websites, why do some advertisers think so highly of the in-game equivalent?

Consumer marketing research suggests a better way to harness the power of in-game advertising. For example, studies have shown that an advertisement is more effective when the person watching it is smiling, nodding, dancing, etc. Our brains are hard-wired to positively interpret anything we experience during these states of being. Given that, building the MTV brand into DDR would probably be much more effective than slapping the MTV logo onto a billboard in Burnout 3. Imagine an MTV VJ playing the music and acting as announcer between dance rounds; if done right, it would definitely enhance the gameplay experience and represent tremendous value for the advertiser.

Conversely, depressing and/or fear-inducing moments are a less appropriate time to introduce in-game advertising. Imagine a first person shooter game in a real-world setting. You're running around a dark, abandoned shopping mall. Seems like a great opportunity to introduce real-world brands (on the entrances to stores, in posters around the mall, etc.). But does the Gap really want its brand associated with a player's fear as an alien monster leaps out from behind a storefront?

This isn't to suggest that adrenaline is bad for marketing. Studies have also shown that physical arousal can be harnessed – that's why some salespeople take important customers hunting; the arousal associated with firing a gun becomes subconsciously associated with the salesperson and the products they represent. (I wish I was joking, but I'm not.) So it might make sense to put a North Face jacket on James Bond while he's skiing down a mountain shooting bad guys, even though shooting people isn't what you'd call a positive activity!

People also involuntarily associate irrelevant environmental factors with their lives as a whole. Ask someone how much they like their job, and (in general) you'll get a more negative response on rainy days. What does this suggest for advertising in games? Put some advertisements in “happy” segments of the story arc. Imagine particularly dark segments of a James Bond game -- his female companion is captured, his headquarters is destroyed, etc. When Bond finally rescues the girl and carries her back to safety, he might as well celebrate with a bottle of Moët champagne. And Moët should pay for the privilege, of course.

Now, I don't mean to imply that virtual billboards and similar advertisements have no value. They do – just not nearly as much value as a well-conceived product placement. When companies spend millions on advertising, it makes sense to take extra time evaluating the context of an advertisement.

“Well-conceived” in-game advertising isn't a panacea to all a marketer's problems, either. For example, you can't use these methods to fundamentally contradict popular perception of a brand. Nobody is going to think a Buick is any cooler, faster, or “edgier” because you put James Bond in the driver's seat. In fact, there's a pretty good chance that doing so will make your game an absolute laughing stock. In-game advertising is most powerful (and enjoyable) when used to enhance a pre-existing brand perception.

It's also important for designers to recognize that this isn't simply a gratuitous money-making proposition; if done correctly, it can actually enhance the entertainment value of a game. We live in a branded world – enough so that many of us define ourselves by the brands we consume. (If you've ever purchased a shirt with a corporate logo on it, I'm talking to you.) We also use brands to frame the world around us. For example: many people believe that the presence of at least one major restaurant chain is what defines a “real” town. Given that, wouldn't it be funny if, when a SimCity community grew to 5,000 people, a little Starbucks or McDonald's automatically appeared in downtown? When I imagine little cars lining up at the drive-through, it really makes me smile, and I bet that other players would appreciate it, too.

Many people have quite legitimately expressed concern about the possibility of games becoming overrun with obvious product placements. This needs to be taken seriously. At the same time, we should recognize that product placements occur in television and movies all the time! Far more often than not, people fail to recognize them as placements. If movie and television producers can pull that off, so can game developers.

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