The practice of using video games to promote a particular product or an organization is known as "Advergaming". Wired magazine first used this term in a column to describe the commissioning of free online games by large companies, in 2001. There are three categories of Advergaming: ATL Advergaming, BTL Advergaming and TTL Advergaming.

ATL Advergaming can be vaguely explained as a promotional video game. The business incorporates interactive video games on their website so as to create more awareness about their product among the website visitors. This method is also used to attract more visitors to the site and to increase the traffic flow on the website. If the games are made for product advertising, the product is highlighted in the game.

Before the invention of the internet, floppy disks and later compact disks were used as a medium to promote games and in turn a particular product. It started with floppy disk basically to create awareness as well as product promotion. The first Advergame was distributed by American Home Food, which was developed by Chef Boyardee. Taco Bell and Coca Cola followed it by giving customers floppy disks containing promotional games. The first Advergame to be distributed on compact disk was by Chex and General Mill. The graphics of these games have matured from arcade style flash to three-dimensional.

BTL Advergaming comprises of recruitment tools like In-game advertising, militiamen and edutainment. Usually the mascot of the particular company is depicted as the hero in such games. Pepsi man and Burger man were the mascots used in promotional games designed by Pepsi and Burger King respectively. The storyline of these games can be commercial, educational or political like the game American Army created to attract more youth towards devoting their life to army and also games meant to promote sports like Formula One racing are also a part of this technique.

In-game advertising is more commercial type and is purely targeted for promotion of the product via the game. This is really picking up and even movies are promoted by this method. Like on the website of the movie, The Mummy, there are games which have a storyline similar to the movie and the player is given knowledge of the facts about the movie and its subject, Egyptian Mummy. Educational Advergaming refers to games that portray a moral message to the players.

These games can also act as a medium of advertisement themselves like in the video game of EA Sports; banners of Pepsi line the frame of the game. By using this strategy the companies are able to provide low price or free games to the consumers. This is also effective in reducing the price of games that have a monthly fee.

TTL Advergaming or through the line Advergaming is the most rare form of Advergaming. URL links are embedded into a game that takes the players to the web pages, which has BTL Advergaming. Different methods are used to attract the player to a particular webpage. In the game " Enter the Matrix" URL hyperlinks are depicted in the background, which the player is forced to click to learn about the facts relating to the plot of the next level and at the same time advertises about the product. The curiosity to learn about the theme of the game attracts the player, although it might not be necessary to click to finish the game. Such kinds of games are usually known as link-chases as one link will lead to another. Website visitors are sometimes tempted with a prize to prompt them to click the URL.

This technique of advertising is really beneficial as it not only creates awareness among the player but also among his friends who lands the website upon friend's suggestion. The success of Advergaming is dependant on word of mouth and thus is also known as viral marketing. In the year 2004, this industry generated around $83.6 million and involved 105 million players.