By Jon Fortt
July 24, 2007

Don’t worry about making in-game ads big and garish; gamers will notice them as long as the ads are close to the action.

That’s the conclusion from a study conducted by Interpret, and funded by in-game ad broker Double Fusion. The study tracked the eye movements of gamers while they played, and interviewed them after the experience. It found that gamers were more likely to notice ads – even smaller ones – that were close to the action, versus larger ads that were farther away from the center of attention. For more on the study, see this AdAge story.

This is valuable information for companies like Microsoft (MSFT) and Google (GOOG), which are beginning to make investments in online gaming ads. Microsoft bought in-game ad pioneer Massive last year for about $200 million, and Google snapped up Adscape Media for $23 million earlier this year. Rival IGA Worldwide announced earlier this month that it has raised $25 million in a second round of financing to build out operations.

Meanwhile Microsoft is also focusing attention on its Xbox Live online network, where gamers can compete against each other and, of course, view ads. As online games become more mainstream with consoles like Microsoft’s Xbox 360 and Sony’s (SNE) PlayStation 3, advertisers gain the ability to dynamically insert ads into the action. It’s fertile ground; Microsoft says 7 million Xbox Live users have racked up 2 billion hours in more than 2 billion gaming sessions.

But this looks like it will cut both ways for game developers. With numbers like Interpret’s coming out, game makers are sure to be fielding more requests from the marketing department to move that ad just a little bit closer to the middle of the screen. And if the games get too commercialized, a backlash won’t be far off.

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