Theories from social psychology, consumer psychology, and Human Computer Interaction suggest that 3D gaming Virtual Environments increase users affective engagement with the stimuli/environment content due to their particular structural features (high immersion, presence, etc.). This, in turn, modifies the way in which embedded advertisements are processed by providing a direct, although virtual, brand experience. At the same time, product placements and blatant advertisements (i.e., virtual 3D billboards) were previously shown to be processed differently, given the increased reactance of media users toward messages identified as ads. A 2 (ad type: billboard vs. product placement) × 2 (IVE arousability level: high vs. low arousing 3D worlds) mixed factorial design was employed to test the effects of 3D billboards and product placements embedded within a 3D gaming Virtual Environment on brand recall and recognition, and brand preference.