Big brands, strange places

If you've ever seen a computer infested with spyware (not your own, of course), you know that it's not uncommon for ads from well-respected companies to start popping up on the desktop. How the money makes its way from a Fortune 500 company to a dodgy purveyor of spyware makes for fascinating reading and has been well documented in various magazine articles and on the Web. Sometimes the major companies involved don't know where their ads end up... and sometimes they just don't ask many questions. But even as the furor over spyware begins to die down (and better blocking tools become commonplace on users' PCs), the next battleground in the war between advertising dollars and ethics is already taking shape.

Advertising within video games, though generally a legitimate practice, does have its seedier side. This was illustrated this week with news that Subway ads had been popping up in the popular on-line game Counter-Strike without Valve's permission and in explicit violation of the game's EULA (end user license agreement). How did it happen? Who was involved? And who's liable? To answer those questions, let's take a peek inside this specific ad campaign. We'll take it apart and see how it works, then consider the implications for the nascent in-game advertising industry. So without further ado, let's follow the money.

The advertising food chain

We'll start at the top with Subway, one of the largest "quick service restaurant" (read: fast food) franchisers in the world. The firm has nearly 25,000 restaurants in 83 different countries, and with that much advertising to do, it's no wonder that Subway outsources the job. In America, they have chosen Messner Vetere Berger McNamee Schmetterer/EURO RSCG (say that three times fast) as their national ad agency, but they also distribute money to more then thirty regional advertising boards, who then hire their own ad agencies to address local concerns.

The ad agency hired to do work in Northern California and southern Nevada (think Sacramento, San Francisco, and Las Vegas) was J. Stokes, a large San Francisco firm that now represents more than 700 individual Subway restaurants. J. Stokes specializes in "representing national brands in local and regional markets and serve as the crucial communication connection between the franchisee, the local regional market and the national brand identity." The Subway ad contract is worth millions of dollars and goes to many places, but of particular interest for our story was J. Stokes' apparent decision to pursue in-game advertising as a way of reaching the coveted young male demographic with the news of a particular US$2.49 Subway sandwich promotion.



Is all that gaming making you hungry?

The company used for the campaign was another San Francisco firm, a startup called Engage Advertising, which specializes in "local" in-game advertising. A company press release explains that Engage is "pioneering localized in-game advertising programs in targeted markets." What this means is that Engage came up with a strategy to reach gamers only in San Francisco, Sacramento, and Las Vegas, and the strategy they settled on involved placing Subway ads into the game Counter-Strike: Source. After all, what young man doesn't work up an appetite for a good sandwich deal after a Saturday morning spent wasting terrorists?

Although Engage developed the advertising plan, they paid another firm to actually implement the campaign. This company was IGA Partners, which has offices in New York, London, and Berlin, and specializes in in-game advertising (hence the IGA in their name). They developed in-house a technology called the "Radial Network" which allows ad agencies to buy time for their various clients within many different video games at once, making the process much like doing an ad buy for television. Their Radial Network has the ability to "dynamically serve ads into games by means of a [sic] software that is included within the game," according to CEO Justin Townsend.

Though the description of the process is technically true in this case, Townsend's words suggest that IGA technology has been included in the game itself with the cooperation of the developer. For Counter-Strike, the code was "included within the game" by means of a special mod developed by IGA that displayed ads at various places in particular maps—but it was never cleared with Valve, the game's creator. Because Counter-Strike games are not hosted on a central server, individual server operators made the decision to include the advertising mod on their servers, and this is where the story grows a bit murky. Engage or IGA apparently recruited server operators to run the mod, though how this worked was unclear. Our best guess is that they sought servers in the California/Nevada region (hoping that these would attract other locals due to low lag times) or that the mod only served ads to players whose IP addresses were based in the target region.

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