VENDARE BUYS FLIPSIDE VIVENDI-UNIVERSAL UNLOADS GAMESTER.

Byline: Evan Pondel Staff Writer

SHERMAN OAKS - Direct marketer The Vendare Group has acquired Vivendi-Universal's Flipside Inc. to populate its portfolio of Internet games that function as entertainment for consumers and advertisements for companies.

The all-cash transaction enables Sherman Oaks-based Vendare to leverage its existing relationships with clients like Buick, General Motors, Universal Studios and Proctor & Gamble. Vendare would not disclose terms of the deal, though Vivendi purchased Flipside for $140 million in 2001.

``We purchased Flipside from Vivendi for considerably less,'' said Keith Cohn, president and chief executive officer of Vendare. ``It wasn't like we were looking for an acquisition. The deal was very opportunistic.''

The move will add 40 employees to Vendare's work force of 125. The agreement also introduces such games as ``Family Feud,'' ``To Tell the Truth'' and ``Match Game'' to Vendare's portfolio.

Known as ``advergames,'' Flipside has maintained a network of online game destinations that cater to consumers looking for fun and companies in search of engaging advertisement space. Those networks included Uproar, Virtual Vegas and iWin.

The games on these networks are culling a niche in the interactive budgets of advertisers, according to Gary Stein, an advertising analyst with Jupiter Research in San Francisco. Many of these games employ companies' logos to woo the consumer.

``It's like voodoo branding because people spend a lot of time looking at your logo and may be more inclined to buy your product,'' Stein said.

For example, there are three Buick games on Uproar's Web site including Buick Rainer Collapse, Buick Rainier Billards and Buick Rainier Golf Challenge. Prizes are awarded depending on how many points a player amasses. Some of those prizes include a plasma television, golf clubs and a digital camera.

Vendare's zeal for enhancing advergames with prizes was an attractive quality for Flipside.

``The Vendare Group is the established leader in attracting an audience of sweepstakes and gaming enthusiasts,'' Bill Glass, executive vice president of Flipside, said in a statement.

Forrester Research predicts that advertising from online gaming will reach $1 billion by 2005. Cohn said these games are an effective way of advertising because some consumers are likely to play them for hours. But it is often difficult differentiating whether the consumer is loyal to a particular product versus the game itself.

There are several companies that produce advergames. Some simply slap logos onto existing graphics, while others create an entirely new game for a company.

Among the more notable names in advergaming is Blockdot. The Texas-based company has helped brand AT&T, Nabisco, Cowboy Casino and the Boy Scouts of America.

``What's hard for some of these companies to understand is that the game is the key driving force and the company's name takes the second spot,'' Stein said.

Some products are usually more appropriate for the advergame format. Candy and cars have ample play as the two products already have a measure of moxie on their own, Stein said.

Evan Pondel, [phone]

evan.pondel(at)dailynews.com