IGA's VP of publisher relations offers a glimpse of the future of in-game advertising and outlines the key challenges and opportunities that lie ahead for this cutting-edge medium.

In my earlier articles on in-game advertising, I focused on the subcategories of this exciting new medium and how each could be used as part of an individual campaign or a consolidated marketing strategy.

But in this final part, we will look forward, examining how current technologies, media spending trends and consumer habits and attitudes might shape the in-game media landscape in the next few years and beyond, as well as taking a look at the opportunities this may bring to brands and advertisers.

Play and buy
Opportunity: One of the most applicable extensions of in-game advertising -- and one that also closes the loop between above-the-line awareness and-below-the line response -- is the ability to physically purchase or pre-order items experienced within the game world.

Obvious examples range from booking a test drive of a new vehicle in a driving game to purchasing clothing tested on your in-game avatar. However there are already people successfully experimenting with real world/virtual world transactions such as users of Second Life spending in-world currency -- Linden Dollars -- to make real-world transactions.

The combination of being able to sample product functionality in a contextual setting and then following through with a purchase is incredibly compelling, and would benefit many brands and a considerable number of consumers.

Challenges: With next-generation consoles already capable of one-click purchase and billing for content, the leap to purchasing real-world items is relatively small. However with many consoles shared among multiple users, a certain amount of work would need to be done to prevent abuse or mistaken purchases.

The primary challenge, however, is actually a creative one: namely, how to transition somebody seamlessly and contextually between using the product in-game and making a real-life purchase. Given that entering into any purchase scenario would obviously be 100% user choice, this should not be too difficult to achieve acceptably.

Dynamic music delivery
Opportunity: It is already technically possible to dynamically target and deliver audio content in real-time using the dynamic ad serving capability of networks like our own. However, with gamers among the largest consumers of music, this channel is currently significantly underutilized. In the future, it will become commonplace to stream live, up-to-date playlists to gamers -- which they could filter by genre, artist or label -- either as a subscription service or, possibly, subsidised by the game publisher, labels or even brands.

For an extra charge the user could save tracks locally for future playback use, either directly via the console or streamed back to their PC or MP3 player. Games such as SingStar for PlayStation 3 are looking to push the boundaries for in-game music delivery when it launches later this year, featuring its own online SingStore where gamers can download individual music tracks (complete with hi-definition videos) to their PS3 hard-drives for use in the game.

Although it is unknown at this time if downloaded tracks will be playable outside of the game, with over 7m dedicated fans of the original SingStar titles and similar plans afoot for the next-generation versions of Guitar Hero from Activision, this is one area that is showing significant promise.

Challenges: Unresolved DRM issues are an obvious challenge facing the entire entertainment industry, as is the standardization of playback formats. Additionally, publishers may also attempt to secure exclusivity rights, especially if they are subsidising content, which would limit reach to people playing specifically enabled games.

Rewards
Opportunity: With subsidized content such as Intel’s exclusive Battlefield 2 map and free downloads of new Lexus cars into Test Drive Unlimited already proving very effective, particularly in terms of generating chatter and "halo effect" amongst core gamers, the next logical extension is linking in-game achievements to real-world rewards and promotions.

Rewards could be offered for specific in-game challenges (branded or otherwise), as tournament or leaderboard incentives and prizes, or simply to allow product sampling, opening the potential for direct mail opportunities.

Challenges: Another opportunity that is already technically possible, the main challenge here is privacy. Whilst the consoles already store physical address details for billing, this type of service would need to be opt-in, and there would need to be foolproof ways of discerning the console user in each case from the registered console owner in multi-user households, especially where minors are concerned. However given the lure of free items and prizes, it could be expected that a significant number of users would sign up.

Real world / virtual world
Opportunity: Along with in-game advertising, virtual worlds must be the media talking point of 2007. Franchises such as Habbo Hotel and Second Life have generated huge press coverage -- and subsequent interest from media buyers and brand owners -- with companies such as adidas setting up virtual stores.

Despite a growing question mark over the ultimate reach potential at this stage (although Habbo boasts 8 million users a month), the future holds interesting new opportunities, not the least of which is Sony’s PS3 online portal "Home" due for launch this fall as a free download for registered users of the PlayStation Network.

With PS3 set to be in tens of millions of homes by the end of this decade (the majority no doubt living in the lounge), hi-definition game-style graphics and integrated billing through the PS3 registration system, Home is poised to be a marketers dream.

Outside of games, we are also seeing increasingly hi-fidelity attempts to digitize, populate and commercialize virtual facsimiles of real cities, which will offer very interesting opportunities for advertisers and end-users above and beyond billboards and street furniture.

Challenges: As with massively multiplayer online games (MMOG’s) and online social networks, virtual worlds demand a considerable amount of time and attention, with users rarely engaging with more than one at a time. The obvious question this raises is how many of these worlds can the market sustain whilst retaining the reach, frequency and demographic mix required for mass advertising? Of course, the world offering the most flexible and interesting creative palette to brands will also prove popular, but as with games, creative context will need to be king in any space populated with a high volume of media savvy users.

Conclusions
Hopefully this three-part guide to in-game advertising has given you a good grounding in the various opportunities and how best to use them, as well as some insight into the development of the market over the coming months and years.

With traditional media on a continuing decline as users demand more control, choice and interactivity, it is clear that advertisers must not only follow their audience, but that they need, in fact, to be one step ahead. Engagement and context are the cornerstones of this new landscape, but reach and ROI remain critical. With network reach on a rapid ascendancy and unrivalled reporting metrics for an ATL media buy, it’s no surprise that the in-game ad market is forecast to be worth $1bn by 2010. Are you playing?

Ed Bartlett is VP of publisher relations at IGA. Read full bio.