Brands are constantly seeking new ways to interact with their customers in a deep and meaningful way,
and almost any brand with strong consumer positioning can benefit from Branded Virtual Goods. Social
media, virtual worlds, and online social games provide an unprecedented opportunity for brands to
engage their customers via a rich, one-to-one channel. How? Given the opportunity, brand loyal
customers are eager to flaunt their favorite brands to their online friends and rivals. Branded Virtual
Goods, designed and sanctioned by the Intellectual Property holder, enable
this kind of self-identifying behavior, and deepen the relationship between
brand and customer within a hip and relevant media environment.
Additionally, when users buy and integrate a branded item into their online
persona, it leads to greater engagement and a perception of authenticity
that translates into a more effective and valuable impression for the brand.
Brands also benefit from an additional source of revenue. The virtual
goods business model works in their favor since development costs are
low – a Branded Virtual Good can cost as little as $50 to create – and
decrease to zero after designing the first unit of any virtual item. In fact, with the user effectively paying
the brand for interacting with it, the overall CPM cost to the brand is negligible, if not negative – a
compelling economic argument for brands that are used to paying $3 or higher CPMs for other forms of
online marketing activity. Also, while costs decrease, sales – driven by viral behavior across the social
graph – increase. This buzz-inspired growth, when combined with essentially infinite online shelf space
(i.e. server capacity) and no real inventory management issues or costs, plus the benefits of new users
coming into these communities continuously, creates a powerful and profitable scenario for real world
brands. Finally, while virtual goods’ gross margins of over 90% may seem like a good enough return on
investment, the ability of virtual items to drive real world product sales is growing and may potentially be
the greatest prize of all.