A pink tractor costs $3.50, a Breton horse costs $4.40 and a chicken costs $1.40. What am I talking about? Farmville, of course. The biggest rage and the most popular application on Facebook, it is the magic pill which has set Zynga on track to pocket close to $835 million this year. Farmville and Mafia Wars are the latest success stories on the internet and they make money by selling virtual goods online; these goods help users move forward in the games. Today, Farmville has more than 60 million regular users. Put this together with the cost of a virtual pink tractor, for example. Then take into consideration the wide range of such virtual goods available. That should give you some idea about the revenue potential and popularity of this business model.
And thanks to iPhones, HTCs, Androids and the lot, users are now increasingly connected to these platforms, leading to a gradual fusion between their real and virtual lives. Today, purchasing flowers for your girl or placing an online order have become passé; send her virtual flowers instead. People are now willing to pay real money for a bunch of 0s and 1s. And it has got them hooked like never before.
Given the immense reach and depth which this platform offers, mainstream brands are not far behind and have started capitalizing on its popularity in a big way. A number of brands have started offering virtual merchandise online in an attempt to increase brand awareness and establish stronger ties with customers. A number of people today collect online virtual goods, just like real life collectors do. Brands are now MyTown attempting to establish a loyal following among consumers for their virtual products. For example, Volvo now offers virtual goods on the popular iPhone app ‘MyTown’ in an attempt to reach out to auto enthusiasts and thus promote its latest sport sedan model.
A number of famous brands are now looking to mimic this approach. MTV has started giving away replicas of celebrity accessories. Coca Cola has also entered the fray; codes found at the bottom of Coke cans can now be exchanged for virtual merchandise on Tencent, the popular Chinese instant messaging site.
Realising this potential, some companies have now taken up the task of bridging the gap between social networking sites and brands which seek to advertise through them. Appssavvy is a NY-based company which looks to leverage social networking and activity to connect brands and users. It has partnered with a number of prominent brands such as McDonald’s, J&J, Walt Disney, Coca Cola and Walmart and has helped them picture-45advertise through social networking opportunities. Appssavvy also works with social activity developers and publishers and helps put them in touch with big brands and advertisers.
A recent study by Appssavvy lends support to the argument that merchandising through virtual goods adds to the consumer experience and enhances brand image and loyalty. It has also translated into increased sales by influencing purchase decisions among users. It has helped generate positive opinion about the brands and improved brand recall. The study goes on to observe that brands which give away virtual merchandise enjoy increased popularity among consumers; purchasing intent and general acceptance of the brand also show significantly improvement.
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Virtual goods present an exciting chance for brands to increase their presence in the consumer’s mind space. It is an opportunity that cannot be missed.
(The writer is a PGDCM (2011) student at IIM Calcutta)