Virtual Goods have taken the internet by storm. People trade, buy and sell electronic images of coins, pets, flowers on the Web for both business and pleasure. Branching out of the Web 2.0 social networks, Virtual Goods have turned into large enough of a phenomenon to merit a summit at the prestigious Stanford University. In fact, just within the last year, Internet users spent $1.5 billion on Virtual Goods.

People on the social networking and dating site HotOrNot.com are paying anywhere from $2 to $15 to have a flower or bouquet delivered. As of February 2007, Facebook users can also send virtual gifts to each other. Facebook friends can select an item from the virtual gift shop, tag a message to the gift, and send it along to friends, who can then share it with others. In doing so, they reveal their interests, connections, sentiments and brands preferences.

Passing along an electronic symbol as such may seem like a simple gesture, but when large groups of people adapt the idea and join the fun, organizations can tap into the power of the masses. For instance, one of the earliest Facebook virtual goods campaigns helped raise money for the Susan G. Komen for the Cure foundation – a non-profit focusing on breast cancer research. Fifty percent of the proceeds from a Valentine’s Day themed virtual gift exchange were donated to the organization. According to Facebook spokeswoman Brandee D. Barker between February 8th and February 14th, users had already exchanged over 5 million gifts.

The results suggest companies can attain substantial fundraising goals, if they strike the right cord with social networkers. Virtual goods can generate word of mouth, increase brand or issue awareness and extend message lifetime as users proudly display their icons. These electronic icons also signal changes in consumer preferences--opening the door to researchers and digital marketers who can cull information from virtual good collections to predict the next big hit.

This entry was co-authored with Hudson Gaines-Ross.