With more hands bypassing the TV remote to reach for the game pad, there’s no doubt that marketers would love to get into video game brand placement in a bigger way. But the fact that the medium has no infrastructure for tracking ad effectiveness takes some of the shine off the proposition. That could all change very soon.

Nielsen Entertainment and game publisher Activision are in the very early stages of developing an initiative that will supply advertisers with audience measurement metrics for video games. Nielsen plans to break games down into bite-sized chunks – measuring ad exposure and recall when a player is in a particular game phase – and then chart these impressions by demographic.

For its part, Activision has been incorporating brand placements in its video games since the first Tony Hawk Pro Skater game was released in 1999. The company chose to partner with Nielsen because an unmeasured medium is typically undervalued outside of its own industry.

Michael Oxman, managing director for the Chicago office of Jam International, a media agency that secures in-game advertising deals for game studios such as Ubi Soft and Eidos Interactive, says brand placement has ramped up significantly over the past two years. Cambridge, Massachusetts-based Forrester Research goes one step further, estimating that annual revenues for this type of marketing will jump to US$700 million by 2005, up from a ballpark of US$100 million last year.

More companies have been encouraged to take the plunge by the video game sector’s burgeoning market presence. The NPD Group reported earlier this year that total U.S. retail sales of video games, which includes portable and console hardware, software and accessories, topped US$10 billion in 2003.

Tim Harris, VP and partner at Starcom Worldwide, says marketers have appreciated the growth potential of video games for a while now, but they’re still just on the cusp of investing their brands. A standardized measurement system would certainly add credibility to the medium, but Harris wonders how Nielsen plans to measure the difference between passive placements (such as background billboard insertions) and active integration (for example, choosing what brand of car to race in a game).

University of Wisconsin professor Michelle Nelson conducted a study with 62 adult gamers in 2002 to track brand placement recall and attitudes about advertising in computer and video games. She says telepresence, meaning the degree to which a player feels like a part of the game, is higher for active brand placements. When gamers created their own customized racing car, for example, the majority of the test group was able to name the brand of car they chose. Yet these same gamers were typically too involved with keeping the car on the virtual road to remember any of the billboard ads they passed on the way to the finish line.

Be it passive or active placement, Harris expects Nielsen’s plans to measure video game brand impact to help bring in more brand placement business. As long as the metrics can decipher where and for how long players were exposed to a brand, Harris says marketers will be able to draw their own conclusions from an effectiveness standpoint. But he stresses that, data or no data, agencies will still have to present compelling reasons to convince advertisers that they will see a tangible return on investing in this medium.