If Adscape Media is acquired, expect to see more in-game ads take a slice of the industry's expected $732 million in ad dollars by 2010.
Google may acquire in-game advertising company Adscape Media Inc., according to a report over the weekend in the Wall Street Journal, a move that would counter Microsoft's acquisition of Massive Inc., another in-game ad company, for almost $200 million last year.
A Google spokesperson said the company does not comment rumor or speculation.
However, failure to purchase Adscape or a competing company such as Double Fusion Inc. or IGA Worldwide Inc. would leave Google without a presence in what analysts claim will be a lucrative market.
Last April, the Yankee Group estimated that "the in-game advertising market is poised for explosive growth, garnering more than five times the current market value to reach $732 million by 2010." In 2005, in-game advertising generated $56 million in revenue, up from $34 million in 2004. The Yankee Group, in its April report, projected that 2006 revenue for in-game advertising would be about twice what it was in 2005. Final figures for 2006 were not immediately available.
One of the reasons in-game advertising looks so promising is that young men between 18 to 34 years old -- a desirable demographic for marketers -- are shifting their leisure time away from TV toward games, a point made last year at the Game Developers Conference Game Advertising Summit by Kevin Browne, general manager of Xbox New Media at Microsoft.
Another is that in-game advertising can increase game verisimilitude and lower game prices. "I think game players are interested in seeing brands in games if they feel like the ads are relevant and add to the game's atmosphere -- or if they feel like they are getting more content at a cheaper price because of the in-game ads," said Simon Carless, editor-in-chief of Game Developer magazine.
Google's acquisition of Adscape would dovetail nicely with the company's apparent interest in selling ad space on billboards. Last December, Google filed a patent application covering the allocation of ad space on a network of electronic billboards. Such a system might well be extended to serve ads to the virtual billboards seen in games.
Virtual ad-serving technology would also fit well with Google Earth, Google's very own 3D virtual world, which Google has been testing as an ad delivery environment.
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