Red Herring reported last week that Google has bought in-game advertising company Adscape Media for $23 million. Red Herring said the deal is signed but not completely zipped up.

Adsense boasts two technology components, in addition to its experience and connections between gaming companies and Madison Avenue. AdverPlay allows for dynamic, customizable placement of ads in games. Real World/Virtual World Gateway enables two-way communication between advertisers and users via SMS, audio and video.

In-game insiders said the acquisition won't give Google much of a leg up in the sector.

“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.”

Adscape launched in 2006 with $3.2 million in VC funding but has yet to announce any customers.

WebProNews notes that the deal is an order of magnitude lower than Microsoft's acquisition of Massive last year.
That deal was rumored at $200-$400 million.

Microsoft has Xbox Live, the online game network where they could integrate Massive's technology right away. Massive also had existing deals with game developers like Ubisoft and Konami, giving Microsoft an additional potential outlet for their adCenter and other advertising clients.

Naturally rumors have been abounding for some time that Google Earth would make a swell Second Life. Michael Arrington pointed out a few weeks back that with SketchUp, Google has a 3D tool for creating models for Google Earth. Assume that Google buys Adscape more for technology than for access to the gaming world (Google isn't interested in being an agency), so it has the advertising/economy machinery. That leaves avatars by Arrington's reckoning.

WebProNews' David Utter fantasizes:

If Google were to turn [Google Earth] into a Neal Stephenson-like virtual playground with the sensibilities of that author's Metaverse, maybe socializing at Google's take on the Black Sun is just around the corner. Near a virtual billboard, of course.