Spending on in-game ads set to reach $1 billion by 2014

The report, by Screen Digest and Group M, says that many brands have still to wake up to the potential of the gaming market.

It says that such ads will make up around 1.5 per cent of global adspend by 2014.

Screen Digest's senior analyst for advertising, Vincent Letang, said: "Dynamic in-game advertising offers brands the same accountability as other digital platforms but in a more controlled environment than social display media and through a more standardised value chain than mobile advertising.

"Like online video pre-rolls, in-game advertising fills a gap in online branding, bringing familiar formats such as virtual billboards and TV ads into the gaming experience."

The report said that the format provides numerous benefits to brand owners and digital planners, including scalability, accountability, high levels of audience engagement, and positive brand associations.

It added that in-game ads also allow the opportunity to communicate with demographic groups that are proving increasingly hard to reach via other media.

Adam Smith, the futures director at Group M, said: "Games are proven recession-beaters with an ad-funded online model that actually works."