Report: $2B of game ads by 2012

Companies are spending more and more on game-related advertising, and a new report from market research firm Parks Associates suggests explosive growth in the field over the next six years. According to the firm's latest report, "Electronic Gaming in the Digital Home: Game Advertising," companies will increase their collective game advertising spending from $370 million last year to more than $2 billion in 2012.

Speaking with GameSpot, Parks Associates director of broadband and gaming Michael Cai explained that in-game advertising will grow to become the largest segment of the game advertising market in the coming years. The report splits the market up into six different categories, with in-game advertising currently ranking third in the amount of money spent on it.

According to Cai, the largest category of game advertising right now is display ads (both banners and videos) on game portal Web sites, followed by advertising-supported games created specifically to support a brand. The final three categories are game tournaments, virtual world marketing (having a company presence in Second Life, for instance), and a catch-all "other" category.

By 2012, Cai expects in-game advertising to jump from last year's $55 million to $800 million on its own. He also expects dynamically served in-game ads to vastly outpace the growth of static ads, eventually accounting for 84 percent of the in-game category's advertising spending. It isn't all good news, however.

"[Dynamic in-game advertising] offers several unique advantages, such as timeliness, scalability, measurability, and flexibility," Cai stated. "But the industry will also have to address several looming challenges, including lack of economy, lack of industry standards, and media fragmentation."