My father’s birthday is coming up this week and I’ll be damned if I didn’t get nostalgic when MediaMind (recently acquired by DG) passed me this case study for “Tee Box Derby,” a bit of advergaming created in partnership with ad agency MeringCarson and creative agency Illusion Factory. Commissioned by the San Diego Convention & Visitors Bureau to draw attention to the county’s golf courses, the companies created an in-banner game in which browsers raced around accurate renderings of these golf courses.

A leader in rich media ad technology since it was known as Eyeblaster, MediaMind seems to have a real knack for advergaming — last year, the company worked with ThinkJam on an extremely addictive advergaming banner unit for the DVD release of the film “Predators,” in which a browser had to defend against and attack one of the infamous alien hunters across his/her browser screen.

(Suggestion for a sequel to “Tee Box Derby” — a demolition derby in which you can take on other cart drivers armed with a full set of clubs and perhaps exploding golf balls. Sand traps full of mines would also be awesome — have your people call my people.)

On the eve of the 11th Annual Webby Awards I was able to sit down with Rob Small, CEO and co-founder of Miniclip.com, whose company is creating some lucrative and solutions for companies.

Miniclip.com was founded in a bedroom in London in 2001 and even though the company has grown organically – without a single dollar spent on advertising through word of mouth by gamers, today it is able to yield 35 million unique users monthly. The company’s main target is the tween market, meaning 8 to 16 year olds, although the site seems to appeal to users of varying age groups. The gaming site targets this demographic known for their “chatty nature” and uses games hosted and monitored by the site to continually grow traffic. The site provides games that do not need to be downloaded or purchased and are rigorously monitored as to keep the site safe for users. Miniclip.com has become a popular online entertainment destination to play browser based online games, participate in virtual communities and watch cartoons, by gamers ranging in ages from 8-29 around the world.

Miniclip is also leading the way in advergaming and has created a “platform that allows us to drive more users to a single piece of rich media content than any other site on online. That would include YouTube, MySpace, Google, whoever you want to name,” according to Small. He adds “Because their sites are quite fragmented it’s very difficult for them to push in one specific spot a piece of content because they have so much of it.”

With this model the company has a steady growth rate in a niche market that has not been frequently tapped into online. This is a very powerful group in that they are responsible for the highest amount of disposable income spent than any other, at an estimated $170 billion worldwide in 2006 according to Euromonitor. Many companies have been watching these statistics climb and seeing the success of Miniclip give them the opportunity to speak to these heavyweights of the consumer world.

More and more, advertisers have been opting to go advergaming route on games sites like Miniclip, which essentially allows them to design a tailored game around a product or brand and directly target an engaged audience who will actually enjoy interacting with their product – in single or multiplayer modes.

Advergaming (also known as “in-game” advertising and branded gaming) is a win-win for the advertiser and the gamer as it offers companies a more interactive, enjoyable and totally integrated choice, and also includes the capability of direct purchases while gamers enjoy playing a free quality game. Advertisers can also choose to display their own games and extend them across gaming sites’ networks reaching an even larger audience.

Companies who have taken the lead in advergaming on Miniclip include BP, Coca Cola, Disney, Starburst, Gillette and Momentum Pictures – to name a few — and game players responded by racking up 80 million game plays for Gillette’s ‘Jet Ski’ game making it the most successful advergame to date.

Another advertising use of the site has been film. Film companies have wanted to maximize their reach by using a single site with global range to promote films in one hit. As a result, Miniclip has given companies such as Disney and Sony Pictures alternatives in rich media promotions by creating games starring their film characters.

They’re definitely doing something right. Two new major advergaming launches being made soon with companies campaigns are on the horizon with RC2 and Unliever are going to bring a new dimension to future partnerships for the site.

Though there has been VC interest in the site due to its success, market and lack of ad expenditures, Rob Small assured me that there are no plans to sell the company any time soon. “It’s an exciting time for us and the beauty of it is that we don’t have many competitors in this market now. We’ve carved out quite a niche because we specialize in browser-based only.”

But what seems to be Miniclip’s strongest asset is their commitment to their users. That is what won them their third consecutive “People’s Voice Webby for Best Game Site;” Small said it all in his acceptance speech “Miniclip gamers are the best!” The future looks bright for this gaming site and the rich media advertising community.

The latest venture from 42 comes in the form of a novel. The brainchild of writer and 42 creative director Sean Stewart and chief creative officer Jordan Weisman (right),
Cathy’s Book: If Found Call 650-266-8233 purports to be the journal of Cathy, a high school senior for whom everything starts to go wildly wrong. It’s an entry point into a multimedia game of intrigue, something that 42 calls a “rabbit hole”. Readers will find codes, phone numbers and other clues in the book, and the included “evidence pack” online and over the phone, while calling the phone number in the title takes you to Cathy’s answering machine.

Unique initiatives like these all started in the new millennium back in 2001. Weisman, then a creative director at Microsoft, along with writer Stewart and game designer Elan Lee, unleashed “The Beast” to generate buzz and excitement for Stephen Spielberg’s then-new film AI: Artificial Intelligence. The Beast in turn touched more than 3 million people, according to 42 CEO Joe DiNunzio (left), and led Weisman to the conclusion that a company based around this new form of marketing was feasible.

The Beast was a half drama/half scavenger hunt set in the AI universe. Players were sucked in by subtle clues 42 calls “rabbit holes.” Promotional material for the movie included a credit for a fictional “Sentient Machine Therapist” named Jeanine Salla, encouraging potential players to search for her name. Other clues like hidden telephone numbers and mysterious phrases funneled users to Jeanine, a character who held clues to the death of a fellow robo-scientist.

Eventually, The Beast encompassed nearly 30 fictional websites and used the internet extensively to draw its audience together. But the campaign’s true immersive eeriness came from its use of other forms of communication like telephone, email, fax, TV, SMS, and newspapers, creating a form of entertainment now called Alternate Reality Gaming. In fact, there were even instances where characters in the game called the players over the phone.

Through The Beast, Weisman became familiar with the concept of the Hive Mind: the collective skills and intelligence of a human audience. “Puzzles [the team] thought were impossibly hard, and would take weeks or days to solve, were cracked in hours,” says DiNunzio. The Beast relied on social communication and required players to interact with one another. This element gave the collective users access to a huge pool of skills and knowledge. Through it all, Weisman and his team remained concealed, even from others at Microsoft, until the very end. Users even began referring to them as the “puppet masters.”

The percentage of men involved in some form of online fantasy sports is rapidly rising. Whether it’s the NBA, NFL or MLB, 18-34 males and beyond are savoring the ability to live vicariously through their favorite players while engaging in virtual competition in the process.

One of the upstart companies to capitalize on this popular medium is ProTrade, a relatively new sports “stock market” site that lets users buy and sell to establish a predictive market of athletes. Assembled by a team of MIT statisticians, economists and leading sports figures to develop, this patent-pending valuation engine quantifies on-field performance and assesses an athlete’s contribution to winning.

“You essentially are creating a stock market portfolio based on athletes you think are undervalued,” explains Steve Curran, creative director of Pod Design, the agency responsible for ProTrade’s latest branding effort. “It creates a market system that they then in turn award cash and prizes and builds a social networking community around a sports stock market. It’s similar to the Hollywood stock exchange, the way that created a really vibrant dynamic and a market for people to create a virtual portfolio of celebrities they’re investing in.” Curran adds, “That draws the attention of people who are inside the industry, and it gives them the beat on what people think and feel about players.”

While the industry gathers their thoughts and analysis on the ProTrade activity, Pod Design is helping the burgeoning company gain brand awareness by launching a viral campaign this week. “What we wanted to do is find the most viral concept we could,” says Curran. “We like to build on games where we can find a unique twist that makes it organic to the service or the product that we’re trying to create viral traffic towards. In this case, we didn’t want to get locked into any particular sport or real-world celebrities because there is obviously the licensing of players, teams or logos. So around the time we were brainstorming ideas, earlier this year, there were a number of articles about mascots behaving badly.”

With the light bulbs flashing, Curran and company devised an advergame, Mascot Kombat, which, as any gaming enthusiast will tell you, draws inspiration from one of the most legendary fighting games ever. “We were playing with this, and came up with the idea of doing a parody of Mortal Kombat,” Curran reveals. “We created a game where you can choose 1 of 4 mascot clichés to play in this fighting game. Similar to the console games, we have special games and attacks for each of the characters. So it’s a good combination of strong game play and humor. We think it will make a good viral because not only is it a good game to play, but it also has a sense of humor, the kind of things guys would send to other guys. It definitely has a point challenge to be particularly competitive.”

While no blood-soaked fatalities are involved, this Kombat game does parallel the inherent competitiveness of sports, and serves as a fun way to kill time during the lull periods of your 9-5. In general, viral campaigns and advergames are nothing new to Pod, which explains Curran’s straightforward approach to creating successful executions in this medium.

“With viral campaigns, the dream is to do one that converts to customers,” he says. “We always try to caution any [client] upfront that conversion off a click of a viral marketing campaign isn’t the most direct path. But we look at this as one of the most cost-effective ways you can turn to achieve one of those exposures. It pre-exposes you to something before you decide to buy it or check it out further. When it exceeds far beyond what you’ve spent in a cost-per-click type situation, it really goes beyond the cost of production, it’s unpaid media. So we push these things hard for a couple of months, but they generally take on a life of their own.”

With Pod’s amusing seeding effort and ProTrade’s PR spin, the site should hopefully see some of those desired traffic spikes in the near future. Curran hopes that Mascot Kombat, though, serves as just a tiny accoutrement to ProTrade’s overall service. “It’s a very sticky concept obviously. It’s something similar to fantasy leagues where you’re going to be checking back in on a daily basis to see how your portfolio is doing based on the real-world performance of your players. Fantasy leagues have proven to be an extremely popular thing to participate in online. It creates so many click-throughs, because people will come back all the time checking in, like day-trading activity.”

Want to indulge your flights of sporting fantasy, play day-trader, and kick butt all in one sitting?

Visit both ProTrade.com and MascotKombat.com.

The Unicast Advergaming product allows marketers to connect with and entertain customers through the creation of custom branded online games. Additionally, Viewpoint states that the technology allows branded games to be deployed as either site-side applications, or served as online rich media ad units.

With advergaming revenue estimated to grow from $200 million in 2004 to $1 billion by 2008, according to Gateway Reports and Wall Street Transcript, the timing seems to be right for a technology Viewpoint. In 2005, Pew Internet & American Life Project survey also reported that 81 percent of Web-connected teens played online games.

“Given our heritage for creating visually compelling, interactive online applications that educate and entertain, this new advergaming product rounds out our product offerings perfectly,” said Unicast VP/GM Jason McKayin a statement. “Once again we will leverage our core technologies to provide marketers with new ways to reach their target audiences on the Web.”

Unicast will offer three levels of advergames at three different price points based on game complexity and interactivity. The list includes Casual Online games, Custom Branded games, and the more complex Site-Side Advergames.

“Our focus on technology enables us to stay ahead of emerging market trends such as Advergaming,” adds Patrick Vogt, CEO of Viewpoint. “What’s more, gaming is a way to deliver a more immersive brand experience that can draw in users who ordinarily might skip over online ads. Viewpoint will continue to expand our lineup of IMT Product Series offerings as we see new opportunities emerge which truly add value for our customers.”

“We look forward to working with Gottaplay to extend the brand into the booming casual game arena. This transaction will allow us to continue our pioneering work in ‘in-game’ advertising, which happens to be one of the fastest growing media segments today,” said Skyworks CEO Garry Kitchen in a statement.

Gottaplay wants to expand the number of titles it offers to subscribers by adding Skyworks’s library of more than 100 mobile and online games to its own, while at the same time diversifying revenue streams though in-game advertising, subscriptions, and paid downloads.

Skyworks–a member of both the IAB and the International Game Developers Association (IGDA)–owns advergame.com, which brands both original and existing game content. Additionally, Skyworks is the parent of the Casual Games Network, which distributes free ad-supported casual games, and Game Development Studio, which creates games for mobile platforms like cell phones and the Nintendo DS.

The online game format appeals to Chinese gamers particularly because of its pay-as-you-go nature. In China, it is difficult for the majority of the population to afford expensive, home-based systems like the Xbox or PlayStation. Game developers similarly appreciate the online format because of its multi-player, multiple-location nature, making piracy much more difficult.

EA entered the Chinese market nearly two years ago with plans to make China the global center for its online game development. This year, China’s online game market is expected to generate nearly double the figures from 2005, which saw $500 million in revenue.

If you’re a race fan connected to Xbox Live, then you probably already know about the free downloadable Project Gotham Racing 3 (PGR3) Cadillac pack that contains playable versions of the Cadillac V-Series CTS-V, XLR-V, and STS-V automobiles. Part of the Cadillac Elite Campaign, it went live March 22, and it’s the kind of in-game advertising that both gamers and advertisers like to see.

Not only do gamers get great content (for free), but advertisers get their brands and products in front of millions of grateful gamers who are itching to take that 400 horsepower CTS-V for a spin on the Nürburgring. But what you might not realize is that the Cadillac pack is only the beginning of a push to brand the elite gamers as Cadillac Elite.

Cadillac Elite is being developed by Play, an operating unit of digital advertising and marketing firm Denuo, whose specialty is in-game advertising. The agency also ran the Pontiac March Madness NCAA 2K6 Virtual Final Four campaign. In addition to General Motors, Play also represents Proctor and Gamble. The Cadillac pack is a huge component of the initial Cadillac Elite campaign, but according to Saneel Radia, Play’s group director, there’s much more to come.

Building on its pack content, Cadillac is also sponsoring special Cadillac Challenge events where gamers compete for Cadillac Elite status by racing the V-Series cars on the Nürburgring F1 track. While the downloadable pack is available to all Xbox Live users, the overall campaign is aimed squarely at elite gamers. Only the top 100 Cadillac Challenge players gain Elite status and can claim the coveted Cadillac Elite gamer picture.

It’s a strategy designed to spur competition among gamers. As they scramble for “Elite” status, they’ll come to identify Cadillac as an Elite brand. “There’s an aspirational value to Cadillac as a brand,” Radia explains. “We need to convey how badass the Cadillac V-Series cars are. Everyone knows the Cadillac luxury, but what people might not realize about Cadillac is what it’s packing under the hood.”

PGR3 is a game of elites. Players race Ferraris, Aston Martins, Lamborghinis, Porsches, and now the Cadillac V-Series. Not only is free, fun, opt-in downloadable content good for getting players to interact with Cadillac products, but adding V-Series-specific events and Elite status is genius. The lure of Elite status will burn the Cadillac brand into the mind of anyone who gets pwned by a V-Series car.

“Our ultimate vision is to give these elite players access to exclusive events—Cadillac Elite events—where only certain groups are invited,” says Radia. “The gamer picture is step number one. Our ultimate goal here is actual physical game content.” That Elite gamer picture may eventually become a badge of honor, giving Cadillac Elite players access to events and content that other players will pine after.

Eventually, Play wants to bring the Cadillac Elite program to other online platforms in addition to Xbox Live. While Xbox Live currently stands alone, Play hopes to bring Cadillac Elite to the Sony online system once it’s developed. “Like any cutting edge marketing program, we’re in the process of evolving what Cadillac Elite is going to truly consist of,” adds Radia.

Saneel and his team want to eventually expand beyond Project Gotham 3. “PGR3 is basically version 1.0 of this Cadillac Elite idea. Hopefully, Cadillac Elite you’ll start seeing show up across multiple titles over the course of this next year,” Radia says. “The point is to associate with these elite gamers, [and] give them content that they like, but not necessarily only in a racing environment. We just started with that to kind of get that initial message out there about what the V-Series can do.”

What initially triggered the following thoughts was a discussion that I had with a friend a few weeks ago in New York. My friend is the CEO of a rather well known software company that makes a web hosted application. This particular application is very popular with institutions of higher learning. However, as you may know, institutions of higher learning often have limited budgets or worse, whatever cutting edge technology you may be selling has yet to emerge as a line item on anyone’s budget.

(Oh, it’s lonely on the edge) The College crowd is a demographic that can be hard to get in front of and companies with goods and services to sell to this crowd are constantly seeking new ways to put themselves in the mix. Part of the problem with this demographic is that they are trend hoppers and tend to show loyalty in streaks. Therefore, if you’re selling enduring products that are not specifically trend oriented (foodstuffs, cars, etc.) you are constantly scrambling to re-brand and re-message so you can stay in the mix. By now, we’ve all heard how dicey and fickle the MySpace arena can be. So, what is a strategy that may provide longer term exposure?

Enter the ‘sponsored application’.

Ok, this is not an entirely new concept. My old friend Tod Collart made a company out of branding web interfaces for large media properties with his company Interactual (now owned by Sonic). Anyone reading this who has dealt with a company in the fortune 5000 range knows that style guides and branding rule the day when messaging vehicles are in question. ‘Skinning’, as the practice is generically known, is often overlooked as a revenue source.

What am I talking about? Ok, let’s put the pieces together. My friend who owns a company that sells web hosted applications to institutes of higher learning—but shall remain nameless for now–has some areas of market penetration that are being denied to him simply because his technology, while being recognized as beneficial to the learning and research process, is also too new to have a line item on traditional budgets. In the professional social networking arena, in which I participate, I often hear the same thing. “We’d love to have what you offer, we see the value, but we just don’t have the budget this year.” This happens. This hump will eventually dissolve if your technology is worthy.

However, you need to get over this hump until that occurs. Meanwhile, you’ve got companies that are trying to figure out who to get in front of specific target audiences and agencies that are trying to figure out how to get them there. Voila, Social software application sponsorship. Now, when I say social software, I don’t ONLY mean social networking applications. I mean any networked software that is used by a group or groups of people. Like a digital library application, or a social bulletin board system (think university-oriented Craigslist type apps), distance learning platforms, the list goes on.

The first two advergames, created in the heyday of Max Headroom and Miami Vice, were bizarre failures. Kool-Aid Man, created for the Atari, was labeled the “Stupidest Video Game of 1983″ by one magazine. Budweiser’s Tapper by Midway was an arcade game that became popular with children. When marketing ethics were invented later that year, the alcohol branding was removed.

The reality is that most advergames on the web are still absolute junk. Many are just casual web games with logos slapped in, little campaign integration and brand messaging that is delivered peripherally, rather than through game concept itself. The reason for this stems from the fact that advergaming is an advertising field in its infancy, one largely managed by game developers who don’t understand advertising who are working with advertisers who are still struggling to understand the dizzying array of changes in media.

But, we’re all learning together, and what we’re seeing emerge is a model of creative development that closely mirrors what’s happening with branded entertainment in television and movies, only this time it’s in a medium with fewer and fewer creative restraints.

This requires a fundamental shift in creative thinking for the development of good advergames once you move beyond selling cars and soccer cleats, which naturally lend themselves to traditional games like racing and sports. Developers and creatives now have to ask themselves how they can build a truly engaging game around a chocolate bar or a condom, and how to integrate it into a campaign.

The first step is understanding the technological capabilities that we now have at our disposal. Online games have evolved from Java applets to Flash and Shockwave — and we’re coming closer and closer to the territory of console quality gaming directly in the browser. In our case, the implementation of VirTools has allowed us to create stunning 3D textures and light maps that have never been matched by Shockwave.

Flash can allow us to create games in isometric 3D and experiences that leverage interactive animation, video, and photography. Shockwave and VirTools allow us to take that one step further and create online multiplayer worlds: first person shooters, MMORG’s — even a virtual world to just explore.