• by Larry Dobrow , Featured Columnist, June 22, 2005

The Electronic Entertainment Expo, otherwise known as E3, is the $8 billion gaming industry's annual 500-decibel megasummit.

As new consoles and handheld gaming devices take hold and online multiplayer gaming gathers steam, product placement within video games is topic A for marketers. "Let me clarify one thing: everyone's first question is about leveraging games," says Saneel Radia, director of integration for Starcom MediaVest Group's SMG Play.

While marketers are intrigued, many bemoan the lack of a reliable measurement system for such placements and worry about the implications of flogging a brand in a relatively uncharted landscape.

Still, this could be the year when marketing through video games comes into its own. Though advertisers spent only $35 million on in-game product placements in 2004, The Yankee Group projects that the figure will increase to $562 million by 2009. And placements have become considerably more sophisticated than before, when in-stadium product billboards reigned supreme in sports games. In "Tom Clancy's Splinter Cell," players must manipulate a Sony Ericsson phone as part of a pivotal sequence; in "Everquest II," online players can click a Pizza Hut icon and have a pie delivered to their home within the hour.

Yet despite all the recent enthusiasm, gaming and branding pundits warn that force-feeding a product into the video game environment can have dire consequences. "You have to be more relevant than ever," says Brad Scott, digital branding director for strategy and architecture at Landor Associates. "If the placement is condescending or forced, it's tenfold more detrimental than a misplaced radio or TV ad."

Adds Andrew Greenberg, CEO of Greenberg Brand Strategy and Greenberg Studios, which counts gaming behemoth Electronic Arts as a client: "You've got R-rated games now. That's new territory."

Landor's Scott suggests that the "mature" ratings on games may become a selling point for certain marketers: "Some of your edgier brands can really exploit this. If a game has an ma rating, you can go R-rated with your marketing."

Others point to the seeming receptivity of players to ads in games. Take Nascar, for instance. Given the ubiquity of logos and sponsors within the Nextel Cup, a video simulation might feel less authentic without ads. "The initial research suggests that [players] don't mind the ads. They make the games more real," notes Tony Kern, deputy managing partner of technology, media and telecom at Deloitte & Touche.

Product placement isn't right for every brand, according to Kevin George, director, anti-perspirants/deodorants for Unilever. The company recently launched "Mojo Master" to promote its new Axe Unlimited fragrance. Adds George, "It seems like a bunch of companies are going into video games because they're cool, which is dangerous. You can't let the technology drive your strategy." Larry Dobrow