Virtual goods – items with no intrinsic value in the real world – are a booming economy. 12% of Americans have bought virtual goods in the past year from an industry that analysts estimate to reach $1 billion in the U.S. for 2009 alone.
Payments for virtual goods are typically made through microtransactions, which allows users to spend just a few dollars to give a gift or get them ahead online. For instance, Facebook Gifts typically go for $1 each.
Until now, most social games have used fake brands for their virtual goods, but the opportunity for brands in the real world to make a virtual world impact has demonstrated its power. Similar to how we have seen brands impact more traditional video games, the presence of real world brands in the social gaming space will lend an extra bit of realism to the overall experience. As a result, branded virtual goods on Facebook are clicked on 10 times more often than their non-branded counterparts. At the same time, the brands themselves benefit from extra recognition, exposure, and consumer interest from simply participating inside the emerging media format.
We see brands as currently having three opportunities in the space:
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1. Sponsorships
– The brand presence in the space could be as simple as sponsoring a piece of the overall virtual good experience. Like other sponsorships, virtual good sponsorship does best at establishing leadership.
Purina brand pet food announced late last year that they act as the exclusive virtual kibble supplier in FooPets, a place where users can care for their virtual pet. As a result, every time you feed your little virtual Fluffy, a big bag of Purina is what pours kibble into the bowl, nourishing your companion.
2. Unlocking exclusive content
- A brand could act as a hero, giving social gamers deals on special or limited-run goods. The brand could be the provider of access, thereby building some affinity.
For example, Facebook recently expanded their virtual gift offering to include music, sports gifts, charity gifts and e-cards. While we haven’t seen it happen yet, a brand could be the provider of, say, free helmets for the teams in the bowl game that they sponsor, or a selection of holiday songs leading up to Christmas.
3. Selling branded virtual goods
- Branded virtual goods have the potential to provide an extra benefit for ownership. Not only would the user get a recognizable brand name on their stuff, but it could also unlock special advantages, creating a bit of realism and building brand equity. For instance, if Nike sneakers make your avatar run faster and jump higher in your social game, they might also in the real world.
Virtual goods are an emerging marketplace, creating many micro-economies from 1′s and 0′s that tap on our natural human need to give to one another and nurture what we have. As this marketplace grows, we expect that brands will be more and more prevalent in the space.
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