Advertisers to go gaga over gaming

Marketers are beginning to latch on to games as a new vehicle for advertising, according to a study released Monday by The Yankee Group.

U.S. marketers are expected to spend approximately $260 million on ads for video games--excluding ads on game-related Web sites--in 2008. That's up from $79 million in 2003, the study said.

Businesses are looking to lure a much-coveted segment of the market. The game industry last year was made up of 108 million U.S. gamers 13 years and older, who spent a total of $7.4 billion on games, Yankee said. The research firm predicts that the market will grow to 126 million consumers, who will spend $8.3 billion by 2008.

"Surprisingly, given the size of this market, video games have largely been ignored as a platform for advertising," Michael Goodman, media and entertainment analyst at Yankee, said in a statement. "That is about to change, as advertisers realize video games are effective platforms for reaching consumers with their marketing messages."

Spending on in-game ads was about $10 million in 2003 and is likely to be $92 million in 2008, Yankee said.

Responding to this growth, in-game ad firm Massive on Monday announced a video game advertising service that helps marketers target gamers with real-time ads. The service delivers advertising to video games and reports back results such as every time an ad is seen. The company said RealNetworks is the first advertiser to participate in its network.

Yankee also predicted that advertisers will start pouring money into "advergames"--games that function as an ad. For example, RadioShack has worked with AtomShockwave to develop a series of games based on its ZipZaps radio-controlled cars.

While some of those games can cost up to $500,000 to produce and distribute, in general, the overall costs are "paltry, compared to the cost of print, radio or TV advertising," Yankee said.