E3, the video game industry's annual schmoozapalooza at the Los Angeles Convention Center, is no stranger to violence and fisticuffs. The action, admittedly, is usually relegated to in-game virtual brawls, but this year, when a fistfight between a game designer and a reputed hacker erupted on the convention floor, the action was as real as a punch in the eye.

At least that's how it looked to witnesses. But what they really saw was the climax of another chapter in the alternate-reality game The Art of the Heist, sponsored by Audi. Heist is the story of three characters involved in retrieving an Audi A3 stolen from the New York showroom on April 1. Like all ARGs, Heist is part of a new advertising strategy that blurs the lines between active and passive marketing by embracing a host of new ideas, some of which are positively revolutionary in the context of a marketing campaign.

ARGs--also called unfiction, collective detection, viral mysteries, and TING ("this is not a game")--are immersive, interactive dramas featuring complex riddles, mysteries, and puzzles that use a variety of media networks, both on- and offline. They take place in real time, often over the course of weeks or months, and rarely acknowledge that they are games. They force players to create collaborative social networks, enlisting the aid of online support communities as a form of collective problem-solving. Further, they try to turn players into the very characters of the game by engaging the audience and investing it emotionally in the narrative.

The puppet masters of Audi's Heist have been recruiting and selecting players ("retrievers") to complete plot-related tasks at Audi-sponsored events nationwide. Prior to the "dustup" at E3, which Audi co-sponsored, three retrievers had been charged with following the (fictitious) game designer, Virgil Tatum, around the convention floor and reporting his whereabouts to Ian, the hacker character. At an event for the American Film Institute--also sponsored by Audi--in New York the following week, three retrievers created a diversion that permitted one character to steal an SD card from an Audi on display. In addition to the three "official" Heist Web sites, the game is actively discussed on sites like unfiction.com and argn.com.

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With such intimate participation in the plot development, "a commercial ARG casts the brand alongside the audience, allowing players to develop an emotional bond and create a sense of ownership with it," says Brian Clark, who is president of the Viral and Buzz Marketing Association and the media executive for GMD Studios, which created the game Heist.

Players join ARGs through various entry points, usually led by their own curiosity. For The Beast, widely considered the first sophisticated, cross-media ARG, the entry point was a curious credit for "Jeanine Salla, Sentient Machine Therapist" in the trailer for Warner Bros.'s 2001 Steven Spielberg movie Artificial Intelligence: A.I. Web trawlers searching for "Jeanine Salla" found a bumper crop of sites related to robot psychology and ethics in the year 2142 and learned about the mysterious death of one Evan Chan. Those intrigued enough to poke around further fell straight down the rabbit hole and into the game.

Though an ARG frequently bleeds into real life, as advertisers drop clues into ads, send text messages and e-mails to players, and even call them on mobile and public phones, an ARG's primary and most potent medium is the Web. The route into an ARG called I Love Bees was ilovebees.com, a URL flashed at the end of an Xbox commercial for the then-unreleased Halo 2. The discovery of the site provoked an instant viral reaction, says Jane MacGonigal, one of the designers of I Love Bees. "Within a day after the Halo 2 fan site was launched," she says, "the biggest thread ever compiled on the Bungie [Halo 2's developer] forums appeared. By the end of the day, all the servers had to be reconfigured."

MacGonigal tracked the community of players ("Beekeekpers") and collected statistics during the course of the game, based on more than one million tracked blog and forum posts. More than 10,000 Beekeepers were mobilized in public, 600,000 were actively solving puzzles online, and 2.3 million were keeping tabs on the plot, by MacGonigal's estimates. The endgame of ILB, she says, translated into a record $125 million opening-day sales for Halo 2 in North America alone.

"Anecdotally, I have spoken to several Beekeepers who were drawn into the Halo 2 story line from ILB and then ended up buying the game," says Chris Di Cesare, head of global marketing for Microsoft Games, which handles the company's Xbox division. "Plus, I know that there remains a community of Halo 2 players on Xbox Live that still identify themselves as ILB players."

There are three primary reasons for a marketer to create an ARG, MacGonigal says. One is to reward a loyal fan base. ILB provided a backstory bridging the gap between Halo and Halo 2, and those who followed ILB to its conclusion were invited to play in an exclusive four-city networked preview of Halo 2 at Loews Theatres.

Another aim is to broaden the target market by creating a cultural phenomenon around a product. ILB attracted ink and airtime from such national media outlets as The New York Times, CNET, and ABC News. Players of The Beast (who went by the ethereal tag Cloudmakers) numbered in excess of 7500. "ARGs are generally perceived as more than marketing," says MacGonigal. "There aren't many things you can do [as a marketer] that become so highly regarded by other communities outside of your target." And an ARG can promote other elements of the brand--explaining to consumers unfamiliar with the popular shoot-'em-up Halo series, for example, that there's a story to the game.

"People are getting savvier," Clark says, "and brands need an innovative way to deal with things like TiVo and ad-blocking software." For the player and cultural pundits, ARGs--whether commercially sponsored or independently created--are an incredibly powerful way to use the connective potential of the Internet to tell a story, Clark says: "They represent the first reproducible genre of interactive fiction." But as Audi, Warner Bros., and Microsoft have learned, ARGs offer marketers a new medium--one far more powerful and resonant than a 30-second TV spot--to spread their message.