Since the last draftee reported for duty in December 1972, Uncle Sam has had to hustle to staff an all-volunteer armed force. In the case of the U.S. Army, that meant recruiting 80,000 new soldiers every year—essentially replacing more than the entire workforce of BellSouth every 12 months.

Advertising did the trick initially. After "Today's Army Wants to Join You" fizzled, in January 1981, "Be All You Can Be" became the battle cry. For two decades, wrapped around ads that made this branch look as adventurous as an Outward Bound course, it resonated with 17- 24-year-olds (of whom the Army is the nation's largest employer).

Then, in 2001, that was scuttled for an "Army of One." ("Even though there are 1,045,690 soldiers just like me, I am my own force...") Critics scoffed that the new tin slogan was misguided (isn't conformity more valued than individuality in the barracks?); the Army countered that it was effective.

Then Iraq exploded.

Despite adding thousands of additional recruiters, upping the enlistment bonus and funding for college, fattening the ad budget, and ratcheting up the patriotic appeal, the Army could not fill its boots.

So the Army added more marketing weaponry. It hosted town hall meetings where civilians could meet soldiers and hear about their accomplishments. It tried product placement: Army mechanics on the Discovery Channel's Monster Garage tricked out a Jeep. And it launched a thoroughly engaging computer videogame that quickly became a gold standard of "advergames" for its effectiveness and realism. Gamers take such real military roles as Intelligence (18F), Engineer (18C), Communications (18E), and Combat Medic (18D) and fire the same weapons the Army has. And when they fire on the run, their aim is less accurate.

Before it was released on July 4, 2002, many expected the $7.3 million game would join the ranks of the $436 hammer and $640 toilet seat as a study of excess. Few predicted "America's Army" would become the artillery's most effective marketing tool, conveying the authentic military experience in a voice that prospective recruits want to hear.

More than seven million users have registered (anonymously so as to squelch any fear of recruiter harangues), with 10,000 to 50,000 new ones downloading the shoot-em-up daily. In a dozen running and gunning missions, players advance through the stages of soldierhood—drilling in basic training, target practicing with an M-16, learning about basic emergency medicine, and, finally, diving into combat. The game has been downloaded more than 16 million times, 20% of entering cadets at West Point have played it, and between 20% and 40% of new Army recruits have played it as well.

"They seek it out rather than the other way around," noted Chris Chambers, deputy director of the Army Game Project within the Army's Office of Economic and Manpower Analysis. At an average cost of 10 cents per hour versus $5 to $10 per hour for a TV commercial, it delivers immersion rather than mere impression.

"America's Army" has proven to be such powerful weaponry that an official game store does brisk business selling collectible action figures, clothes, coffee mugs, and other doodads emblazoned with the logo. The Army builds parties and tournaments across the country around it. A wireless version and sequels, including "America's Army: Special Forces," where players try to earn a Green Beret by completing Special Forces missions, have been released. Apple created a knockoff: Boot Camp. And the Army now even uses it extensively in training.

Uncle Sam Wants You... to play... and he's not the only one. Everyone is getting in on the virtual action. Some, like the Army, create a whole game that functions as a sales brochure. Just as the Army promoted its pro-military message through gameplay, the United Nations World Food Program aims to educate about its mission to combat hunger worldwide. In "Food Force," players steer a helicopter over the war-torn island of Sheylan, (a fictional cross between Sri Lanka and Somalia) and drop relief supplies to a population with little shelter and less food. Or they create food rations, schedule shipments, or take a supply truck through hostile terrain.

In the racing game, "Volvo Drive for Life" (playable on Microsoft's Xbox), players are rewarded not for finishing first but for avoiding accidents. Wander in for a test drive at a Volvo dealer, and you can try it in the showroom. Dealers can bestow game cartridges on select prospects and customers. After its royal mascot tromped through "Fight Night Round 3" (on Xbox 360), Burger King created action games around its bizarre king and made them available for just $3.99 to customers who bought a value meal. (Most games sell for at least 12 times that). Nike went beyond athletes' wearing its shoes in the videogame NBA 2K6: Tournament players are given different pairs of virtual footwear and choose which to put on from their Nike shoe locker, depending on the task. They can also personalize the shoes with the same customization feature that's on Nike's iD Web site.

In other advergames, marketers hitch a ride. In "CSI: 3 Dimensions of Murder," Visa's fraud-monitoring capabilities shine when a suspicious charge on a victim's credit card triggers investigation by a forensic-sciences team. In Tom Clancy's "Splinter Cell Chaos Theory," the protagonist, secret agent Sam Fisher, scales a bright neon sign for Axe deodorant and quietly enters a lunchroom inhabited by a Diet Sprite Zero vending machine. (Axe also created Mojo Master, an online game about picking up women.) In "Splinter Cell: Pandora Tomorrow," Fisher retrieves a message from a Sony Ericsson smart phone to learn who the villain is. In "Burnout Revenge," players drive and crash a Carl's Jr. delivery-truck. And players in Activision's "True Crime" titles take a break from fighting gangs to recover stolen Puma sneakers.

Some marketers install games on corporate Web sites or designated URLs, like "Life Saver Candy Stand," or, the Web site where a division of McDonald's posted "Shark Bait" (in English and Spanish). Players must protect the filet-of-fish sandwich from attacking sharks. For Wachovia, Carat's Fusion recreated the tricky 17th-hole par 3 at the Quail Hollow Club in Charlotte, North Carolina. Players evaluate distance and wind conditions on this 217-yard hole to pick a club: Crowd noise lets them know if they've made a good virtual swing. Wachovia has sponsored the annual PGA championship since 2002: The game was fashioned to promote that, sell tickets, and create viral buzz. H&R Block's "Deduct-A-Buck" game at the Web site is tax-time seasonal. Players who correctly answer questions about what they can legally write off in this Seventies-TV-quiz-show-style game win prizes.

Hollywood and Nashville hardly launch a movie or song anymore without serving up a side of game. And despite hefty royalty rates for movie titles, an action hit will almost certainly be reincarnated on a console. Turner's "Witchblade" promoted the TV series, and games built around Men in Black II, Spider-Man, and Crocodile Hunter: Collision Course were meant to promote the new releases. Along with ads for Sprite, the sci-fi game "Planetside" featured ads for the movie Deuce Bigalow: European Gigolo, and in the free version of "Anarchy Online" a 15-second trailer for V For Vendetta played in a continual loop. Ads for Batman Begins in "Splinter Cell" were timed to its release in local markets.

The Da Vinci Code got its own PS2 game. Paramount Pictures crafted a Mission: Impossible III game for cell phones, and Miami Vice had an accompanying game to play on Sony's handheld PSP.

This is about more than fun and games. Yankee Group estimates that by 2007 a serious gamer will lurk in every fourth home in America. Nielsen says three out of four residences with guys under age 34 have a game system. More people slay orcs in the medieval-style quest for virtual gold and power, "World of Warcraft," than live in Denmark. In 2006, gamers across the globe owned more than 100 million PlayStation2s and 40 million Xboxes. In the United States, videogames already raked in more money than the movie box offices, and Yankee Group says the industry will top $8.3 billion by 2008. PricewaterhouseCoopers says globally it will reach $55 billion by 2009. That explains why a cottage industry in Los Angeles builds game consoles into the backs of Lincoln Navigators.

Collectively, interactive ads embedded in quizzes and games made up more than $1 billion of the $12.5 billion in online ad revenue in 2005, according to the Interactive Advertising Bureau. Nielsen (which now measures the industry) expects advertising spending within games to jump from $75 million in 2006 to $1 billon by 2010. Mitch Davis, CEO of Massive, thinks it could be almost twice that—and will account for about 3% of all media spending, just shy of what advertisers now spend on the Internet.

This article is an excerpt from Watch This, Listen Up, Click Here, published by John Wiley & Sons Inc., April 2007. It is reproduced here with permission.

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David Verklin and Bernice Kanner: Verklin is CEO, Carat Americas, and Chairman, Carat Asia-Pacific. Kanner was a marketing expert and the author for 13years of New York magazine's "On Madison Avenue" column.