Advertising in video games is nothing new. As far back as the late 80’s, there have been movie tie-ins, product placements, and even full games based around advertising campaigns. Domino’s Pizza released a game in 1989 based around their ‘Noid’ campaign in which players had to “Avoid the Noid” (he ruins pizzas!).

Nearly 20 years later, the gaming industry has come along way. Up until now one of the big problems with advertising in games was that your ads had to be hard coded into the game and would remain there forever. Obviously this posed a problem; campaigns change, logos change, but there was no way to change an in-game product placement once it was there.

Enter dynamic ad insertion. With the advent of online gaming and downloadable content, games are able to receive updates on a daily basis. This applies to in-game ads as well. Ads can now take the form of anything from a bottle of soft drink a virtual character consumes to a large billboard inside a sports stadium. 2005’s Counter Strike on the PC was the first game to feature in-game dynamic ads.

Jump ahead to 2008. Gaming giant Electronic Arts (EA) is leading the charge, with dynamic ads in their widely popular sports and racing franchises Madden and Burnout, among others. The most notable campaign to date is presidential candidate Barack Obama’s in game billboard ads, geo targeted to gamers living in swing states in the upcoming election. EA also has plans for movie posters and actual placements in their February 09 release of their newest SIMS title.

So what does the future hold for in-game advertising? Analysts predict that by 2010,in game advertising will be a $1 billion industry, with no signs of slowing. The current economic recession may also be a key factor in growing the industry; “In-game advertising may become a popular means of marketing in a recession because it encourages an escapist mind-set”, said Amanda Richman, senior VP-director of digital services at MediaVest. The desire to “escape” economic woe contributed to a boom in the movie industry during the Great Depression, and video games may be filling that role during this time period.