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After Microsoft acquired video game advertising company Massive late last month, the concept of placing ads in video games seems to have gotten more attention from the media and investment community. We’ve blogged at length about video game advertising and its targeting and contextual advertising possibilities. And Microsoft recently told us about its objective to integrate ads into Xbox Live games using its newly launched adCenter SEM platform.

Paid Content reports that video game advertising firm Double Fusion just received $5.02 million in funding from JVP and Accel Partners. comScore also just released a study that examines gamers’ attitudes toward in-game advertising across different demographics as well as the sheer volume and attractiveness of this audience. Among other interesting stats in the report is that 23 percent of heavy gamers are aware of the contextual placement of brands or products within games.

As targeting and graphics improve, more companies receive funding, and as Microsoft pushes this medium into a mainstream phenomenon, this number will go up. More importantly, gaming will increasingly become a vehicle for targeted advertising. For now it is mostly display advertising and awareness for national brands, but it could reach a level where e-commerce and cost-per-action models are baked into games and where local advertising could play a part.

Gaming companies will be careful, however, not to over-commercialize the experience. It will be interesting to watch this play out, and we’ll keep a close eye on the the technologies and companies that could push the medium forward.

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