SOURCE: eMarketer

April 17, 2007 09:00 ET

Video Game Advertising Reaches New Highs

Video Games to See Influx of Ad Dollars, But Measurability Lacking

NEW YORK, NY -- (MARKET WIRE) -- April 17, 2007 -- Video games are becoming a full-fledged advertising channel. This year, advertisers will increase spending in games by 45%, to $502 million.

A widening audience, especially women and older gamers, the growth of games with online connectivity, and the need for game developers to offset escalating production costs will be the primary drivers of growth, according to eMarketer's report Video Game Advertising: Getting to the Next Level.

eMarketer projects that $295 million of the 2007 total will be spent on in-game advertising and that spending on advergaming (the creation of games for the purpose of promoting a brand) will reach $207 million. By 2011, the balance between the two will have shifted significantly. US spending on advergaming will climb to $344 million in 2011, but US spending on in-game advertising will climb faster, reaching a total of $625 million that year.

"As marketers experiment with how to best reach gamers, advergames, in-game ads and game sponsorship will be among the models that survive," says Paul Verna, senior analyst and report author. "Now the question is how to standardize in-game ad viewing measurements across platforms -- including PCs -- and to figure out what works best where. When those issues are resolved, placements will take off."

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