As game publishers look for more ways to pull in revenues, in-game advertising is catching on. Today, game publisher THQ is announcing that Microsoft’s Massive division will become the exclusive provider of in-game ads for THQ’s Xbox 360 and PC games.

The multi-year, multi-game deal means that Massive has landed a big account and that its business proposition is looking better for publishers under economic pressure. THQ has had a tough year and has had to close a bunch of studios because its games haven’t sold as well as those of its rivals. The deal with Massive will bring in more revenue for each game.

Massive was the pioneer of in-game advertising. Developers use Massive’s tools to insert places in games where ads can appear. The ads can be natural parts of the game, such as a billboard in a cityscape or a sponsor message on the side of a van. Since the games are often connected online, Massive can run dynamic ads. That is, it can cycle new ads into a game. Massive has its own network of more than 300 advertisers whose ads appear in games developed by the industry’s biggest publishers, such as Electronic Arts. And dozens of games use Massive ads.

The Obama campaign used Massive’s in-game advertising to put political ads in billboards inside Electronic Arts’ Burnout Paradise game before the election. Theoretically, on a $60 game, the ads can add a buck or two of profit that goes straight to the publisher’s bottom line. For advertisers, the attraction is that they can target the hard-to-reach young male demographic that plays more games and watches less television.

While the deal will make Massive THQ’s exclusive in-game ad partner for its PC and Xbox 360 games,  the game company is free to turn to competitors to deliver ads for its Sony PlayStation 3. Massive’s rivals include Double Fusion, IGA Worldwide, NeoEdge Networks and Google’s AdSense for Games. It’s not known whether Massive guaranteed money to THQ in order to seal the deal.

The deal is a good one for Massive, which has been relatively quiet since it was acquired by Microsoft for an estimated $200 – $400 million in 2006.