Next innovation? When in-game ads and virtual goods merge

In-game advertising is growing, but not as fast as virtual goods. When will the two join up for a 360-degree user experience?

Dave Rosenberg Co-founder, MuleSource
Dave Rosenberg has more than 15 years of technology and marketing experience that spans from Bell Labs to startup IPOs to open-source and cloud software companies. He is CEO and founder of Nodeable, co-founder of MuleSoft, and managing director for Hardy Way. He is an adviser to DataStax, IT Database, and Puppet Labs.
Dave Rosenberg

In a recent report, research firm Screen Digest says that in-game advertising will hit $1 billion by 2014. Not bad, but nowhere near virtual goods, which may already be worth $5 billion in Asia alone.

Virtual goods have a low barrier to entry but a huge swath of virtual-world competition is trying to monetize users. Game play, branding, and the overall offering have to all mesh for virtual goods to sell well.

In-game advertising is complex and there are a few major players that control the games, consoles, and monetization, putting up some serious barriers to entry. To date, most in-games have been custom deals that are lucrative but don't scale well.

I've written in the past that standards will drive in-game advertising growth as it's currently too difficult to deal with the varied walled-gardens of both console and online games. And there are some interesting experiments under way, including a recent IGA deal with Posterscope to simultaneously run in-games on billboards. I'm not convinced it makes sense, but it is a cool attempt to bridge the physical and virtual worlds.

The next big innovation will be when in-game ads and virtual goods merge--allowing users to interact with ads to purchase products.

Follow me on Twitter @daveofdoom