I would add a big nuance to Katarina’s post. In-game advertising can be seen as spam by gamers. If noticed at all. The crowd that plays video-game is highly aware of marketing strategies so they’re expecting the brand to give them some added value to welcome them in their private game-field. (C.f. myspace/facebook post last week)

More about this topic in Business 2.0

The in-game ad push seems to be paying off. According to EA research, gamers who played Need for Speed Carbon were more likely to consider and recommend the T-Mobile brand than those who didn’t. Half of the gamers who saw the promotions said the ads actually added to their enjoyment of the game.

Still, this approach can backfire.

The billboards in Battlefield 2142 and Counter-Strike prompted customer rebellion in recent months when players felt they sullied gameplay. Fans posted angry messages on forums, along with tips on how to disable the ads. And research by Parks Associates shows that some gamers still aren’t convinced that ads won’t spoil the fun.

But if the new crop of ad brokers can strike the right balance, it could open up better ways to reach a prime audience.

And in Wired Magazine:

Merely slapping ads in games, however, doesn’t make them effective. Massive commissioned a recently released Nielsen study that shows good recall, but many ad people still suspect what Bunnyfoot found: Gamers are usually too busy swerving around corners to notice anything they don’t interact with. If an ad is too immersive, though, it will pull players out of the game — one thing nobody wants.

What advertisers need is another way to plant suggestions in gamers’ heads. They could embed ads in interactive objects, like cars in a racing game — but the technology to serve those up on the fly isn’t quite ready yet. Or they could do a deal like the one Massive made for Gears of War. Set on a grim planet overrun by subterranean mutants, that game was a bad match for conventional ads, but its over-the-top weaponry seemed ideal for Discovery’s FutureWeapons TV series. So Discovery paid to develop two new levels of gameplay that it offered free on Xbox Live. The result: Downloads far exceeded expectations, ratings were great, and fanboys sang Discovery’s praises.

The lesson applies as much to Need for Speed as to Gears of War, and it’s so obvious it’s easy to forget: “Gamers don’t want to be marketed to in a traditional way,” observes Chris Schembri, the Discovery executive who negotiated the deal. “They want to play the game. If you can enhance that experience, it’s the smartest thing you can do.”