In the Saturday edition of the Wall Street Journal, this article: Google’s Next Ad Frontier May Be Inside Videogames.

The Mountain View, Calif., company is in talks to acquire Adscape Media Inc., a closely held San Francisco company whose technology allows for the delivery of advertising over the Internet and placement within videogames, according to people familiar with the matter. They added that a deal could be reached as early as next week.

While the possible terms of a deal aren’t known, Microsoft Corp. last year acquired Massive Inc., a company that delivers in-game ads, for close to $200 million. […]

People familiar with the matter say Google had looked at Massive prior to Microsoft’s acquisition of the company. A purchase of Adscape would add a new front to expanding competition between Google and Microsoft, which today stretches from Web search to word processing. Google could look to form an alliance with Microsoft’s archrival in the games console business, Sony.

The article doesn’t mention the most prominent place where Massive’s technology has been put to use since its acquisition — Virtual Earth 3D, in the form of in-world billboards. Now that the latest release of Google Earth 4 has much improved 3D city content as a default layer, I think it is entirely reasonable to begin speculating whether Google Earth will eventually see similar forms of in-world advertisement. (Via MIT Advertising Lab)