Virtual Gifting Creates Real Profits for Digital Merchants
Seems crazy that people will actually pay real money to send a “virtual gift”. After all, the gift is just a bunch of pixels that have no real value.
But, if the social networks are any indication, virtual gifts are creating big business opportunities. Take Facebook. During the first year virtual gifts were offered for purchase on Facebook, $15 million was spent buying them. That was 10% of the $150 million that Facebook generated in sales in 2007.
According to Viximo, Facebook will sell 60 million dollars in virtual gifts in 2009. And, $400 million will be spent on virtual goods in the US. Globally $5.5 billion will be spent buying virtual goods
As the economy continues to tank, the advertising revenue generating model for social networks no longer works. Social networks are jumping on the virtual goods bandwagon as a way to make money.
Like real gifts, virtual gifts lubricate social network interactions. Virtual gifts express feelings and communicate sentiments such as “I like you” or “I appreciate you” or “I’m thinking of you” The gifts show caring for and consideration of others.
In addition to demonstrating affection for an individual, virtual gifts can be viewed by the entire social network to which the individual belongs. The gifts are a public gesture that adds to the status of both the person who receives the virtual gift and the one who buys it.
Virtual gifts are low-ticket impulse items. Most virtual gifts sell for a buck or two. They are well suited for purchase via mobile phone. Social networks can pass the cost of the mobile billing on to the consumer. Or the social network can absorb the fees.
In either case, the cost is low enough and the social rewards are high enough that the purchase of a virtual gift is a “no brainer” for consumers. And a proven profit generator for digital merchants selling virtual goods. A good payment gateway is helpful for digital merchants.
