• by Laurie Sullivan  @lauriesullivan, November 26, 2008

Imagine Nike, Puma or Adidas sponsoring clothes for avatars in the Microsoft Xbox Experience for the Xbox 360 console. Gamers could tie to a brand by choosing to dress their avatar in related sunglasses, T-Shirts, jogging pants and running shoes.

Although Xbox Experience launched last week has yet to offer brands this opportunity, Mark Kroese, general manager for Microsoft's Advertising Business Group in the Entertainment Devices division, told Online Media Daily that "it's something we are looking into providing."

Gamers logging into the New Xbox Experience for the first time need to make an avatar by selecting a generic template and customizing it. Players also come in contact with other avatars as they travel through games.

Microsoft will monitor how gamers use the Experience platform and build the next generation of advertising services based on those trends, Kroese said. The platform offers AT&T, Lionsgate, Paramount Pictures, Nike, Sprint and other brands interaction with gamers by reaching into the home like television and measuring the impact similar to PC-based ads.

Microsoft specifically designed the platform to look more like television from the ground up, taking into consideration future ad placements and offer brands a close connection to consumers than either the Sony PlayStation or the Nintendo Wii consoles. The ads are larger, bigger and more impactful. The platform ties into MSN and Windows Live.

Aside from a variety of standard banner and video ads throughout the platform, Microsoft built in geographical targeting and the ability to serve-up ads during a specific time of day. "With 14 million in the Xbox Live community, we think of it as the largest social network on TV," Kroese said.

"Day part" targeting, as Kroese describes it, lets brands choose a specific time in the day. If Subway wants to run ads just prior to lunch or dinner they can, similar to TV advertising. The service was developed from the idea that if television networks could run advertisements based on demographics and time of day, so could the Xbox Experience.

Kroese said the biggest challenge of transferring existing Microsoft advertisers to the Experience platform required close attention to the "devil in the detail." We had a team of people worked around the clock.

Many of the ads are clickable. They connect to microsites, landing pages for ads that historically average 3.5 page views. Some sites offer downloadable content. More than one million pieces of branded content have been downloaded since Xbox 360 launched. Click-through rates for ads have been as high as 14%, Kroese said.

"The Xbox Experience is the next evolution of game platforms," said Colin Sebastian, senior research analyst at Lazard Capital Markets. "You must be careful not to dilute the gamers experience, but I think Microsoft is uniquely positioned to tightly integrate search with Massive and in-game advertising efforts."

Earlier this week, THQ named Microsoft subsidiary Massive the exclusive, dynamic, in-game advertising partner for upcoming game titles on the PC and the Xbox 360 entertainment console. The global, multi-year agreement includes dynamic in-game advertising in several of THQ properties.