In a year of dwindling video game sales, Venice agency Liquid Advertising scored bonus points for handling the launch of “World of Warcraft: Cataclysm,” which became the best-selling PC game in history.

Liquid, which specializes in selling video games online, has developed a highly effective way to target Internet ad placements. It now plans on applying the method to other niche markets as the agency tries to speed its growth.

Liquid’s clients include many of the big game publishers such as Electronic Arts, Ubisoft Entertainment, Culver City-based Riot Games and Burbank-based Warner Bros. Interactive Entertainment. Its biggest success to date is the latest “World of Warcraft” installment, which was released Dec. 7 by Santa Monica-based Activision Blizzard Inc.

In its first 24 hours, “Cataclysm” sold a record 3.3 million units at a retail price of $39.99. The game is a new edition of “World of Warcraft,” an online fantasy game with 12 million players worldwide. Each player pays a monthly subscription fee to access the online fantasy world populated by elves, trolls and dragons.

Liquid has worked for “World of Warcraft” since the game began in 2004. For “Cataclysm,” the agency was selected to manage the online portion of the campaign. The marketing effort kicked off months before the launch when a cinematic trailer for the game appeared on YouTube. It was viewed more than 10 million times.

Overall, video game sales fell 6 percent in 2010, according to Port Washington, N.Y-based market research firm NPD Group. But Liquid President Will Akerlof said video game sales depend more on specific title releases than overall market conditions or the health of the economy, and “Cataclysm” had an eager audience.

“It’s been a thrill to be a small part of such an amazing success story,” Akerlof said of “Cataclysm.”

Beyond the basics

To sell to gamers, Akerlof developed an approach that he calls laser-targeting. Most agencies purchase ad space by targeting an audience, such as 18- to 24-year-old males, the main buyers of video games. Alternately, they might target the subject matter by buying ad space on a site with content about video games.

Liquid goes beyond those basics. The agency determines, for example, the best sites for Xbox 360 players who like gory shooting games. Then it goes further and selects which of those few sites historically have produced the best sales, and concentrates its fire power there.

Raquel Basso, director of media planning at Electronic Arts, said Liquid produces great sales and return on advertising investment because of audience targeting.

“They have a great record at selecting the right sites,” Basso said. “We recently launched a casual pick-up-and-play game and we saw great results.”

Scott Steinberg, chief executive at video game consulting firm TechSavvy Global in Atlanta, said a major challenge for an ad agency focused on games is that the publishers often decide to handle marketing themselves.

“Many times the game makers know how to talk to their community better than anyone else,” Steinberg said. “The question becomes: Is it cost-effective to have media planning and creative staff in-house rather than use an agency?”

Steinberg also said that an ad agency must diversify its client base or risk going under if the entire game industry experiences a sales slump. Most game-specific agencies, he noted, move into other types of entertainment clients such as movie studios, TV shows and music labels.

Akerlof said Liquid’s experience with a wide range of game campaigns gives it data and insights unavailable to a single publisher. The agency recently took a step toward diversifying beyond games by signing a deal with Indomina Releasing, an independent film distributor based in Beverly Hills. Liquid will handle online promotion for several theatrical films and direct-to-video movies this year.

‘Hot girls’

For Akerlof, the biggest challenge for his agency is training new workers.

“We can’t just plug any media buyer or art director into our system and have them work out,” he said. “We have to grow our own people and that limits our growth.”

Liquid has 17 full time employees, including Akerlof and his two partners, Media Director Marlo Huang and Creative Director Alison Hamon. The agency has only added three new workers since 2009, despite plenty of demand for new work.

As sophisticated as its laser-targeting approach may be, the creative side of the advertising for video games remains simple:

“All our years of research on young males boils down to three conclusions,” Akerlof said. “Ads with hot girls do well; ads with interactive features do well; and ads with interactive features involving hot girls do exceptionally well.”

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