As anyone who bought Reese's Pieces after watching "ET" knows, product placement can be an effective marketing tool. Fast forward 20 years as the concept has moved to video games.
Enter Quiksilver, a niche clothing manufacturer, whose intended customers are extreme-sport participants, teenagers and young adults who want to look like the skateboarders and snowboarders who snap up the company's board shorts and sunglasses.
The company advertised its wares by sponsoring and dressing popular extreme sports athletes. But then last fall, Quiksilver broadened its marketing by putting its shirts and shorts into several top-selling video games, produced by Activision Inc.
Today, even though Quiksilver items are not sold at mass merchants like Wal-Mart and Target, it uses those stores as a way to get its message out, says Taylor Whisenand, the company's director for marketing. When teenagers and young adults buy games like Tony Hawk's Pro Skater 3 at Target, they are also buying a virtual catalog of Quiksilver's clothing and accessories.
"The alignment with Activision enables us to get into the core shops," Mr. Whisenand said. "Most gamers go to Wal-Mart, and now we're there, too."
Quiksilver, which is based in Huntington Beach, Calif., joins a growing list of companies including PepsiCo, DaimlerChrysler and Nokia that are using video game product placement and advertising as a way to increase brand awareness.
And with revenue of video games closing in on yearly domestic movie box-office receipts - video game software sales reached $6 billion last year while movie tickets topped the $8.4 billion mark, according to the market research firm NPD - the list of advertisers is only expected to grow.
According to Forrester Research, video game product placements will generate $705 million by 2005, money that can ease the cost of video game development.
Today, the bulk of video game advertising involves bartered product placements like the Activision deal with Quiksilver. Under the agreement, Quiksilver's products including T-shirts and board shorts are placed within Activision's Tony Hawk's Pro Skater 3 and Kelly Slater's Pro Surfer games.
In return, Activision can distribute its games in Quiksilver retail stores. Buyers can play Activision games on a kiosk and buy the games if they like.
Paid product placements are also catching on, changing the way advertisers do business. In contrast to newspapers, radio or television, with video games there is no quantitative way of finding out how many eyeballs are looking. Advertisers and publishers can base rates on unit sales projections, but since most video games are used in group situations and some video games have longer shelf lives than others, it is not always practical. This creates the need for a new advertising pricing structure, said Beth Larson, vice president for advertising sales for Electronic Arts, the game developer based in Redwood City, Calif.
"We've gone to marketers and said, `Help us figure out how to define the impressions and how we can do the auditing.' " Ms. Larson said.
"We've done quite a bit of research about how many players touch the games and how many hours each game is played," Ms. Larson added. Electronic Arts expects to earn $1 million in product placements this year alone, she said.
Ads can be as basic as a billboard or banner that appears during the game and as complex as sponsored hidden levels that users can only reach by visiting an advertiser's Web site.
When video game consoles gain online connectivity - something expected to occur later this year - in- game advertising could include sponsored networked video game tournaments and direct links to online shopping sites, video game developers say.
But unlike movie or television product placements, video game advertising draws the user into becoming part of the entertainment. The difference is pretty clear: instead of just seeing a brand or product, video game players can interact with it, again and again and again.
Take Darkened Skye, due out for Nintendo's GameCube console later this year. The role-playing game has plenty of monsters and fighting, but it also uses Skittles candy from Mars Inc. as a magical catalyst. Given that most games can take several hundred hours to complete, that is a lot of brain candy reaching consumers.
Advertisers and agencies see the value in such deals.
"It's fantastic," said Jeff Odiorne, founder of the San Francisco-based advertising agency Odiorne, Wilde, Narraway, & Partners. "The reason is, you're not invading their space like a TV commercial or a radio commercial that interrupts something that they are enjoying."
Although there has been no official research on the effectiveness of video game advertising, game developers say their own research shows young users respond to in-game advertising in a positive manner.
"If a kid breaks through a sheet of glass that's got a Doritos logo on it, they associate that brand with something cool," Ms. Larson said. "Because the end user is interacting with the brand in a fun way, they tend to notice it more."
Indeed, some innovative placements take on lives of their own. For example, Electronic Arts placed an ad for Duff beer - a fictional brand from "The Simpsons" - in its baseball game Triple Play 2000. The small ad spurred Web pages and discussions that went on for months.
One executive says such advertising is integral to the video games because it makes them more realistic.
"Endemic brands in action and sports games lend authenticity," said Will Kassoy, senior director of global brand management for Activision's action sports division. "We've found the more games represent the real world, the cooler the game is perceived to be."
Virtual baseball stadiums therefore need billboards behind second base and race cars need sponsor logos on their doors and hoods.
But another executive cautions that video game advertising is only as effective as its presentation.
"It's both an art and a science," said Perrin Kaplan, vice president for corporate affairs for Nintendo of Japan, who is based in Redmond, Wash. "You have to look at how the ad was done and whether or not it's going to stick," she said.
So far, placements in general seem to be sticking. As a result, video game developers say there is no shortage of advertisers looking for placements or in-game ads.
"This is one of the first years we've got major agencies coming to us and asking us if they can place ads in our games," Mr. Kassoy said. "They are finally realizing that games reach a desirable audience."
Karen J. Bannan, The New York Times. March 5, 2002
Copyright © 2002 The New York Times Company. All rights reserved.