Marketing Fanciful Items in the Lands of Make Believe

Advertising ~ New York Times
By ELIZABETH OLSON

INTRIGUED by the willingness of millions of consumers to pay real money for things that do not exist, some large companies are testing whether they can raise awareness of their brands — and sell more actual goods — by creating and offering their own pretend merchandise.

Volvo Cars of North America, the clothing retailer H&M and MTV Networks are among the diverse brands entering the market for virtual goods — the make-believe items offered on social-networking games, smartphone apps or fantasy Internet sites.

“It’s all about constant connectivity. People live in real time, and established brands have to find ways to keep in touch,” said Marshal Cohen, chief retail analyst for the NPD Group, a market research company.

“Brands are beginning to dabble in reaching out, especially to the under-40 crowd — many still can make discretionary spends,” Mr. Cohen said, referring to the consumer.

So far, the virtual goods market largely consists of micro-purchases. Consumers typically pay $1 to $3 while playing games like FarmVille or Mafia Wars, both created by the social-gaming company Zynga, to get a jump on game rivals. Users also can give a gift, like flowers, or build a collection of items — just as collectors do in real life.

Those impulses will be worth nearly $2 billion in revenue or more this year, according to ThinkEquity, a financial research firm in San Francisco. Its analyst for new media and games, Atul Bagga, said his research found that the market could reach $2.6 billion next year.

Social game creators like Zynga, which said it made some $100 million last year, mostly from purchases of its virtual goods and game currency, are cashing in on a phenomenon that has flourished in Asia and is growing in South America and the Middle East.

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