Then there are the bits of advertising in games that are so overboard, they're memorable. Sort of. Remember the Skittles game? I don't either. But it was the most innovative way to shill candy since a young Henry Thomas laid out a trail of Reese's Pieces for E.T. And I seem to recall reviews pointing out that it wasn't as bad as you'd expect a Skittles game to be. I can think of no higher praise for so blatant a marketing gimmick.
But now we're getting into the tricky dynamics of licensing deals, which are a whole other can of advertising worms. The direction the money flows determines the difference between licensing and advertising. In the case of a Dodge Viper in Midnight Club II, I imagine the developers at Rock Star would have to pay Dodge to include a likeness of their car. Not that it matters. As a guy seeing a real world product a game, the impact is the same for me.
For instance, when the makers of the Aliens total conversion for Doom were Foxxed (i.e. shut down by Twentieth Century Fox for copyright infringement), they should have claimed they were offering free advertising. I don't know if that would wash, but we'd probably end up with something better than the latest movie-inspired mod, itself an instance of bad advertising: Neil Manke's Underworld tie-in, a multiplayer Half-Life mod called Bloodline.
The mod pits vampires against, umm, lycans (pronounced just like 'lichens' but, as far as I can tell, no relation to lichens, mosses, algae, or fungi). All I know from the mod is that vampires can move fast and lycans -- sheesh, can we just call them werewolves or does someone have a trademark on that now? -- can jump high. Both sides have the same basic guns and can't really be bothered with traditional stuff like fangs, claws, sucking blood, and turning into bats. It's the vampire and werewolf myths stripped to their bare essentials, which look remarkably like Counter-Strike. Manke's unique contribution seems to be slapping up some Underworld movie posters in the two levels he made for the mod.
Manke has done great work in the past, some of it advertising every bit as blatant as Bloodline. The They Hunger series, contracted by PC Gamer, featured some of the most graceful product placement this side of Wayne's World. Still, it was a great advertisement for the magazine, which demonstrated that it cared enough about gamers to fund these superlative single player mods marred by only a couple of groan-inducing plugs.
Because They Hunger was great, it was not an example of advertising done wrong. Bloodlines, on the other hand, is not great (there's a pun about vampires, bloodlines, and sucking somewhere in here, and I'd be happy to develop it for any paying sponsors). Instead, it's a multiplayer mod with no servers, no players, and therefore, no reason to bother downloading unless you want a look at what's destined to be a footnote in the Annals of Weird Advertising Strategies Done Wrong. Quick, someone hire Manke to wash this taste out of our mouths.