Virtual Goods: New Frontier of Online Merchandise
What Are Virtual Goods?
In their most basic form, virtual goods are any digital media—icons, video/audio, anything—that people buy, exchange, and display online or on their mobile phone. As more and more social activity moves online, social gestures like flaunting the latest fashions and giving gifts have become critical to the fabric of social media. Virtual goods, like a birthday cake or branded apparel, give users a more valuable way to express themselves than simple online communication.
Why Should I Use Virtual Goods on my Social Website?
Virtual goods are a revolution in interactive communication and monetization for online communities. Virtual goods have become increasingly common on social networking sites like Facebook, where users buy and send virtual goods as gifts to friends for display in their online profiles… or, as with 20% of Facebook users, they keep the goods for themselves. In either case, virtual goods are fast becoming the Internet's new revenue machine. Advertising is considered a distraction and interruption of a user's social experience, but virtual goods deliver real, monetizable value to the user and are woven into a user's social activity. Virtual goods have become the Internet's new revenue machine:
- In 2009, $400 Million will be spent on virtual goods in the US, and $5.5 Billion globally
- Facebook users are estimated to buy $60 million of virtual gifts per year
Major brands, media companies, and advertisers have set their sights on virtual goods. Kohl's, American Apparel, Sears, K-Swiss, Eberjey, and others all enjoy impressive results in the virtual goods arena. Kohl's, for example, sold 1.8m virtual apparel in a mere 16 days. They are an effective means of opt-in marketing that engages users in a way that advertising never could. What does this all boil down to for you?
New Revenue Stream — Virtual goods have proven to drive higher average revenue per user than advertising or any other form of monetization for online communities.
Increased User Engagement — Virtual goods make your site stickier by encouraging users to collect and flaunt their collection of virtual goods.