The dilemma: games set in the modern world are a natural fit for in-game advertising because
our world is filled with adverts for all manner of products, but advertisements don't really fit into games set in
historical periods when billboards didn't exist.
Blogger Dean Takahashi attended a conference on Advertising in Games in San Francisco this week, and learned that advertisers can still reach the elusive fantasy addict via several methods, including using game characters in real-world ads or putting ads into game lobbies where game immersion is not expected.
If trends in other medium are any indication, though, advertisers will become more and more aggressive with their campaigns. I doubt that we'll ever be asked to view a 15-second interstitial prior to looting items off of corpses, but Wüsthof-branded uber-swords can't be that far off.
