Advertising in videogames, dominated in the past by static ads such as billboards and signposts, is beginning to look more like TV commercials.

For the past few weeks, Massive Inc., a New York company that distributes ads in videogames, has been testing an ad with full motion and sound in a science-fiction game called Anarchy Online. Today, Massive will roll out the full-motion ad capability to advertisers generally.

Massive’s move comes less than a year after it created a stir in the videogame-advertising industry by offering advertisers the chance to insert still ads into videogames played on Internet-connected computers. Massive uses the Internet to insert ads into spaces in the games. The ads can also be changed and withdrawn whenever the advertisers want. The technique was a big step forward for videogame advertising, which previously was restricted to ads inserted into games while the games were made. Because games can take up to a couple of years to be designed, this required advertisers to put their ads into games well before the games’ release.

The game-insertion technology opened the door for a broader array of marketers to promote their products on videogames. These ads are particularly suitable for Hollywood studios wanting to promote movies a week before their release date or retailers promoting holiday sales, Massive Chief Executive Mitchell Davis says. He says Massive has sold space to 35 advertisers, including Viacom Inc.’s Paramount Pictures.

Finding better ways to advertise in videogames is extremely important for many marketers, particularly those selling products aimed at young men, who often spend more time playing videogames than watching television. To be sure, the money spent on ads in videogames is currently only a drop in the bucket compared with television — $10 million compared with $10 billion on TV advertising aimed at young men, according to estimates from Harris Nesbitt Equity Research. But advertising in videogames is growing fast and expected to reach $92 million by 2008, according to Yankee Group, a global technology-research firm.

“We know the 17 to 34 audience, the male audience, is elusive and quite difficult to reach through traditional broadcast. … It is incumbent upon us to find ways to reach them,” says Gerry Rich, president of world-wide marketing for Paramount Pictures.

The introduction of full-motion ads on games gives advertisers more options. Massive’s Mr. Davis says Hollywood movie studios have shown particular interest in running 15-second movie trailers in online games. Mr. Rich says Paramount may be interested in such ads, but emphasized that the content of any such ads shouldn’t turn off gamers.

To be sure, Massive’s ad-insertion technique has some limits. Massive is so far inserting ads only into computer games connected to the Internet, rather than games played on any of the more popular consoles like Sony Corp.’s PlayStation, Nintendo Co.’s GameCube and Microsoft Corp.’s Xbox. A little more than a quarter of young men surveyed by Activision Inc. and Nielsen Media Research played videogames online.

Massive says its technology works for both online games and consoles, but it hasn’t yet negotiated a deal allowing for ad-insertion in console games. Mr. Davis says he hopes to strike a console game deal soon. Edward Williams, managing director at Harris Nesbitt Equity Research in New York, says the videogame ads won’t take off until console games are included.

One problem with the full-motion ads is that gamers can easily avoid watching them. The full-motion ads start playing when a player moves near the ad spot on the screen — and stop playing when the player moves away. As a result, gamers may see only a few seconds of the 15-second ads. Massive says it won’t charge advertisers unless the full ad has been viewed.

By Christopher Lawton

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