Also, I can't believe the cost of running a server is displaced by the ingame ads, can users click them?
Whether they technically can or not, NO f'n WAY is someone going to interrupt a hot game to click an ad!!
So to be of any value, the advertiser would have to be able to do branding
with super skill, rather than expecting any immediate response. Lotsa luck in an FPS-type game, where being distracted from the immediate events means instant death!
It might go over in an RPG, though...another thing to read is fine (except during a battle scene), heck it could
even be cool to have ad fliers and stuff laying around that the character could pick up, if done right. The key there would be making the ads mesh with the game atmosphere instead of looking "wrong" like so many advertising attempts like this end up.
As for the expense, I'm not sure how it'd compare to other forms of branding-type advertising. People wouldn't stop playing to "click there," though, unless the game really sucked!!