It’s not a surprise that “virtual goods” are big business.  They’re generally cheap to produce, have high margins and are simple to purchase.  The most recent data indicates that the virtual goods market will be roughly $1.5 billion this year.  Most of that market is made up of social games like Poker Rovals, Mafia Wars and the like.  The whole Farmville craze was the tipping point or lightening rod that really demonstrated to society at large, people have no problem paying for something that they only virtually own.

The other day I was meandering through a Target in Omaha, NE and was shocked to see this massive display when I first walked through the door:

Granted, the idea of giftcards isn’t new.  Target and other retailers have been selling iTunes giftcards for years.  However, seeing a retailer selling “real” giftcards that simply redeem virtual dollars (I know Facebook calls it points) that are then used to purchase virtual goods, was a first for me.  While it surprised me, it really shouldn’t have.  For years, I’ve been beating the drum that etailers and web based companies needed to leverage existing retail space and point of sale to grow.  As big as Facebook is, as big as Farmville is and as big as the Microsoft XBOX Live market is, they need traditional channels to grow and flourish.  It’s the reason the folks at Zynga, makers of Farmville, secured a retail partnership with 7-11.

Just like we saw in the post dot-com bubble burst, people still want to touch, feel and experience products before they buy them.  Yes, E-Toys, I’m talking to you.  We’re going to see more examples of companies figuring out how to leverage traditional retail channels to fuel the growth of their virtual goods marketplaces.  Have you seen any other examples of virtual and real worlds blurring?

A few weeks ago I shared with you a list of 5 brands that were succeeding without an investment in social media. This week, I want to share with you a list of 5 brands that are doing poorly despite their investment in social media.  The following is being written with sarcasm – please take it as such.

Delta Airlines

Let’s hope the merger with Northwest helps things. A recent Airline Quality Rating Report has Delta ranked 12th. Ouch. The stock price is hovering just over $7.00..sad when you compare it to the $20.00 + it was at 1.5 years ago. But, hey they’re on twitter, YouTube, and have a blog so that should ease the concerns of analysts and shareholders…right?

Target

Sales were down 6.3% in March…but that exceeded analyst expectations. When doing bad is perceived to be “good” you know things are bad. The 2008 holiday season didn’t pull them into the black and they recently had a few rounds of layoffs. But, don’t worry, they’re on Facebook.

Segway

A shining of example of hyperbole. Inventor Dean Kamen lauded Segway, “will be to the car what the car was to the horse and buggy.” Only 30,000 Segways were sold between 2001 and 2007. Considering Segway thought they’d sell between 50,000 and 100,000 in the first 13 months, that’s pretty bad. They still aren’t profitable, but they do have their own community network, a blog, Facebook page, and twitter account.

Starbucks

They have a site dedicated to consumer ideas and engage consumers on twitter, yet they continue to close stores left and right. 3 years ago the stock traded above $35, but today it sits at $12. New leadership, new decor, and a new menu haven’t helped. Maybe a blog could be the answer

Home Depot

As you’d expect, a soft housing market and declining economy haven’t helped them grow. Their stock has decreased nearly 40% in the last 3 years which isn’t surprising when you consider that both revenue and profit are both down significantly. But, maybe their YouTube page will be the tactic that turns that tide.

The sarcasm above is with good reason. Social Media seems to be the recommended solution for all companies. The reality is it takes more than an investment into Social Media to make a business work. Social Media isn’t for every company and even the companies that it’s right for need more than a presence on twitter to be successful.

I hope this dose of reality was helpful.