Let me give you some examples.  

Track racers: billboards and advertising boards at the side of tracks.  Adverts painted on the track. Sponsors on the car.  

Sports titles: advertising boards,  sponsorship message during replays.  sponsor on the ball. 

Sandbox games: in the city have adverts on the billboards, adverts on the radio or TV.  

So why isn't it happening?  What's stopping Adidas paying for adverts to be displayed in game on a gta billboard and maybe introduce some clothes to the game.  Or pay for an advert on the advertising boards around the pitch on fifa.  

In fifa for example this space is usually just occupied by the name of the game or something like ultimate team.  

Rocket league could have adverts around the pitch. Potential examples are endless.  But it doesn't seem to be happening.  

Easy money for the game publishers and a good unique way for companies to advertise to certain demographics in a certain way.  

Thoughts? 

Maybe it is because advertisers do not consider gamers good consumers. 

Game developers have to pay for using car designs, soccer roosters, gun designs and brands while in movies/TV-series it is the other way around. Even old-fashioned newspapers gets much of their revenue from advertisement. 

are you serious? play any Grand Theft Auto or Dead Rising game and there are billboards and ads everywhere for snack foods, cars, electronics, etc. etc. etc.

I am surprised it's not more popular myself. EA in particular has experimented with it since 6th gen. Like baloo said advertisers must not value it highly enough for it to be more popular in games. Not that I'm complaining; seeing real ads even in grounded games can really break the immersion.

RL does use their banners for advertising their own shit.

Why it's not done for 3rd party advertising? Have you met the current gaming community?

Capcom had to pay a licensing fee to have Playboy in Dead Rising. 

Here's another example.

Splatoon. This in Japan caters to a really focused demographic. Kids. Obviously all ages play it but the majority are kids. This is the perfect advertising platform for a company targeting this demographic.

A fast food company, or a soft drink company or a kids clothing / shoe company. They could sponsor an event, they could get adverts on billboards, banners or advertising boards. The shoe company could have thr characters wearing their shoes. So much potential.

I can't believe this medium hasn't expanded more. Publishers like money and companies like new and effective ways to advertise.

Some brought up the issue of contracts expiring. But can't they do it like in the movies? Paid product placement given a lifetime licence. So if coca cola have their drink in gta or Nike have their shoes in splatoon they're there for life. Just like a car is in a film for life.

Or they can have an expiry date on the billboard adverts. When the time limit is up they automatically revert back to a standard made up ad. Unless another company pays again and it gets patched in.

Maybe the adverts could just be streamed? So they're not actually on your disc. Another solution.

As long as its not targeting marketing, im fine with it.
If it helps pay for developement costs, so they dont have to nickle and dime with dlc or micro transactions instead.

This is probably not an actual issue. The ads would probably be fetched from servers anyway, and the server could decide what ads to provide. If no ads are found at all, the ad spots could just default to some imaginary ads. I think I've seen this approach somewhere like ten years ago already. This way, there's no need for patches when licensing deals expire.

Ubisoft, Square Enix, Activision and EA will plaster the game with in-game advertising AND still push for micro-transactions, season passes, expansions etc.