Ad Nauseam

If you like video games (I confess I haven't played a video game since I was in high school), prepare for an ad assault. Sez BusinessWeek:

Yankee Group, a market research outfit, states that video games are the next frontier for advertisers, and projects that the real-time online video game industry's ad sales will reach $732 million by 2010. Yankee estimates that in 2005, advertisers spent about $56 million placing ads in video games, a 65% year-over-year rise.

"I believe the proliferation of advertising across new media is a plus for advertising agencies," Peters says of companies in his coverage universe, which includes Interpublic Group (IPG; 3 STARS), Omnicom (OMC; 3 STARS), and WPP Group (WPPGY; 4 STARS).

Peters says that while tech companies may benefit over the longer term from placing ads in software, "it is still the ad agencies that will be trusted by clients to tell them whether or not advertising in video games is more effective in reaching their target audience." He believes that's a big difference between the ad agencies and tech companies, such as Microsoft.

But wait, there's more:

Apple Computer is planning to introduce ads into the iTunes music store, according to a report Monday by Advertising Age.

The ads will be limited, at least at first, to a small area of the iTunes screen and will only be seen when streaming a podcast on a PC, according to the report. But it's not hard to envision ads spreading to other parts of iTunes as users grudgingly grow accustomed to the pitches. Satellite radio, once touted as ad-free, is increasingly filled with ads as the satellite companies struggle to make money, although that isn't a problem for Apple.

Some podcasts available on iTunes have radio-style ads that appear before or during the content, but this would mark the debut of a visual ad. The millions of users on iTunes are a nice market for potential advertisers, who are also thinking about how to reach consumers who bypass traditional advertising with things such as the TiVo service.