Virtual Sales or Virtual Advertising?

Soon, you'll be able to buy Coke in Cyworld.

Good for Cyworld, but is it good for Coke?

Now that I'm in the virtual biz, I've been thinking a lot about the promise of virtual goods.

It's certainly a very attractive idea...   put something up there that cost you peanuts to create, get lots of people to buy it, and voila....  99% margains.

But let's think about it for the brand.   Cyworld has 20 million users worldwide.  Let's say that half of these are active users, as oppossed to people like me that check out a lot of stuff and come back to very little.

Also, let's say that they could get 3% conversion rates on the Coke bottle, which even then is very generous, because not all of these people are active users.   

So, that's 300,000 Cokes.  Now, unlike regular Coke, you only need to buy one digital Coke, assuming the technology isn't there for you to drink it and need another.   300,000 virtual Cokes at what?   Fifty cents?   $150,000 in revenue for Coke plus the branding awareness within a closed network.

For a company that made $23 billion in revenue in 2005, I don't really think that's going to move the needle.

What if, instead of trying to sell these things, they paid Cyworld that money at a $10 CPM to put Coke vending machines in Cyworld for free. 

That would be 15,000,000 impressions of Coke among a lot more than 150k users.

Personally, I think Coke would benefit more by spending the money to push (or have users pull for free) their way into these virtual worlds than trying to get into the business of selling virtual goods.  Coke's business is to sell real drinkable soda, not 1's and 0's.   If you're a brand thinking of selling virtual stuff, I think you're going to be sort of underwhelmed with the results compared to the buzz you could generate by freeing up your brands within these virtual spaces and letting them play.