By Ryan Olson


Google has made a foray into in-game advertising for video games with an agreement to acquire Adscape Media for $23 million, sources familiar with the matter said Thursday.


The move comes after news broke last month that the Internet advertising giant was in the final stages of buying the startup, a deal that could give Google an entry point into a new advertising category.


But sources familiar with the in-game ad business said an Adscape acquisition gives Google little beyond a few potentially interesting patents. While market conditions could change rapidly, don't expect the Internet giant to announce big in-game ad deals with publishers like Electronic Arts anytime soon.


“There is a whole world of difference between the form of advertising done by Google and Madison Avenue,” one source familiar with the in-game ad business said, comparing Google's familiar text-based ads to the rich media used in videogames. “While everyone appreciates the dollars Google can throw around, when it comes to [in-game ad] experience they just don’t have it.”


Google representatives reached Thursday evening said the company does not comment on market rumor or speculation.


San Francisco-based Adscape is a small startup that delivers so-called dynamic advertisements for video games. The company officially launched in February 2006 with $3.2 million in funding from Atlanta’s HIG Ventures. Adscape has not announced any game publishers as customers yet.


While Adscape’s price tag represents a solid return for the company’s backers, it’s still at the low end of a range first suggested last month. Nonetheless, the move gives Google access to a growing market (see Google in Talks With Adscape).


Though signed, the Adscape deal is not completely closed. Sources said the company’s executive team will likely remain together until the start of March, at which point select staff will move to Mountain View. Executives likely to make the move include CTO Dan Willis, Chairman Bernie Stolar, and VP of Marketing Eva Woo, but such details have yet to be confirmed.


When contacted Thursday, Mr. Stolar declined to comment on the Google acquisition.


Adscape was formed in 2002 by Mr. Willis, a former Nortel engineer. Mr. Stolar and Chris Gilbert, former Sega executives, joined Adscape in 2006. Mr. Gilbert served as CEO until he left the company late last year.