Advertising that "blends" is not as easy as people seem to think. Yes, the companies involved have graphic designers, that doesnt mean that they work for free. The more money a company has to spend on making the advertising, the less inclined they are to buy space in a game (which is fairly new, and incredibly volitile) than they are to just go buy another full page ad in Maxim or whatever.
Programming the ads is another challenge entirely. How do you force your level artists to allow for advertising? Do you tell them that this level has to have 50 billboards strewn about? Do you allow said billboards to be destroyed? Damaged? If things go the route of dynamic advertising (spyware or not), thats a whole other level of code that has to work, AND not impact gameplay.
Personally, I am fine with advertising, given the proper game. Ads in modern games, and even "modern" ads in old setting games doesn't bother me much. If I'm playing a racing game (F1, Rally, whatever), I EXPECT to see advertising. If Im playing WoW or some other fantasy MMO, I don't want to see an ad for Coke or Pepsi. To use an older example, Tag Heuer used to sponser the timing in F1, and the same Tag Heuer ads appeared in the F1 game, fine (although Tag might not have actually paid for them). Would I be upset if, for practicalitys (and if they were allowed) sake that it might be changed to Timex? Well, maybe a little, because it is F1, but no, not really. How many people do you know can afford a Tag watch? How many are WEARING timex? I play a Football game, or a soccer game, or whatever, Ads don't bug me, and companies using it to subsidize game dev cost doesnt bother me.
I do think developers need to be wary of how they implement it. Obviously a coke ad isn't going to feel right in a fantasy game, but what about a poster for a fantasy author?
A quick side note: I DO NOT CONDONE EAs "TARGETED ADVERTISING" AT ALL.
This doesnt mean I think its impossible for EA to sell ad space in the Battlefield games, however, I do think it should be done with tact. If Axe feels it wants to advertise to the demographic that buys games, then by all means, let them, and hopefully EA has the leverage to make Axe's ad design people come up with images that will fit in the game (and scale quality wise appropriately, I dont want some Axe or Old Spice ad killing my frame rate). They do have the artists to do it right, make it a condition of buying the space. EA might have this leverage, but a smaller developer or publisher might not have the sway neccessary to get an advertiser to tailor their ads. However, on the same note, you CANNOT expect Axe to make up ten different adverts for different maps because the maps happen to be in different countries/settings. Axe isnt going to make a one off spanish ad just because one map happens to be in Mexico. Thats a lot of work, a lot of money, and a lot of not going to happen.
Heres how I think ads could work, without spyware, and with minimal inconvienence to the gaming consumer, especially given the now online nature of consoles.
Ads are sold in blocks of time. Company X pays for six months of time on ten billboards and 40 posters in NewGameQ. At the end of six months, Company Y takes their place, users are made to download a small patch changing the advertisements (can even be rolled into a bug patch). However, I would think blocks of time would have to be sold in something like 3 month minimums. If we, as consumers, have to download an advertising patch every week, or even every month, it isnt going to go over well [with us].
In the end though, its up to the developers (and publishers) how they want to work it out. The only say we, as gamers, get in how it evolves is in what we buy. If the developers figure out how to make ads that vaguely fit with the atmosphere of the game, and consumers buy into it, expect to see a shift to that. If consumers buy a fantasy game with giant out of place billboards everywhere, well, then thats how it goes.
Just stop with all the "TEHY SHUD ONLY MAEK ADS THAT FIT TEH ENVIRORNRMENT!!1" Its not a practical solution, and accepting ads in one place, but decrying them arbitrarily in another is rather hypocritical. (But decrying EAs spyware is fine.)
Sorry, I kind of went in a bunch of different directions, so it might be a bit incoherant, but I believe my point is valid.
-Statik