When it comes to online console services, Xbox Live currently reigns as king. Now roughly six years old, the online service has evolved from an online multiplayer offering to a service where players can download movies and TV episodes, buy additional content for their games and even purchase whole games.

Xbox Live's popularity attracts an entire generation of young men to their TVs at night. Games like Gears of War, Halo 3 or Rainbow Six Vegas 2 have pulled these individuals away from network television, a bastion of traditional advertising. Microsoft has recognized the potential in this demographic, and has helped advertisers reach these elusive consumers, a feat recognized by AdWeek.

We spoke to Microsoft's Greg Rivera, Senior Business Development Manager for
E&D Advertising Business Group, and Mark Kroese, General Manager of the Advertising Business Group, about the present and future of ads on Xbox Live.

There's much fun to be had in ad-funded titles
When Microsoft commits to a corporate decision, they don't do it halfway. When it came to launching a video game console, they sunk billions of dollars into the Xbox division in order to make it a success. Part of that of course includes an investment in advertising – the company acquired Massive to support in-game advertisements and started an Advertising Business Group to help populate Xbox Live with ads.

"As I'm sure you're aware, the Entertainment Devices Division is on a decade long mission to deliver connected entertainment," described Kroese. "We're aiming for a future where everything can free-flow across every connected device. There are three elements to this connected future; it is becoming increasingly personal, interactive and social, and as we see it, advertising plays a key role in it. When we started the Advertising Business Group, we were intent on delivering ads into the content experience with in-game and around game and through custom games."

"We like to say we put the 'fun' in ad-funded," he continued. "We take a very disciplined approach to preserve the end user experience while using ads to drive the experience. The assumption is that users are smart and there should be a method to reach them without talking down to them. There's also making sure there's relevance for the 18 - 34 year old audience; you're not going to see perfume ads on Xbox Live; having the right brands is as important as being inviting to the users and making it an extension of the user experience. The new Xbox Live was designed from the ground up to incorporate advertising into the experience. Advertising is part of the overall mix of business, though; we're going to be very restrained in our approach."

Gotta love those 'lean in' experiences
Xbox Live's placement on the Digital Hot List is noteworthy in and of itself, but it's even more impressive considering the company it keeps on the list. There are Internet heavies like Google, Facebook and YouTube on the list with reach across the globe. Xbox Live's appeal isn't quite as universal, but it does show how much pull the online service has with a very important demographic.

"We're excited about the acknowledgement," remarked Kroese. "It shows the growth of the Xbox Live audience, which has expanded of late from six million to over 12 million, so it's become a relevant audience for marketers to consider. This is not a passive 'lean back' experience; this is a 'lean forward,' dialed-in experience. Advertisers have had real success with the campaigns that they've run on Xbox Live; for instance, Doritos saw a 15 percent lift in favorability over the course of one year and our click-through rate is an encouraging 12 percent. We feel it's really been, in this world of diminished attention spans, success for brand advertisers."