By now, we’re all aware of the phenomenal growth social networks are experiencing. Social media sites are now gathering places for millions of consumers, who frequent this interactive space on a daily basis to interact about any topic of interest. Among those topics is your brand.

Businesses are beginning to realize the potential that social media can have on their marketing efforts, including building brand awareness, monitoring brand perception and understanding customer needs. In the past, marketers could select among a few specific media channels to reach a target audience. Enter the Internet. Marketers responded by developing banner ads targeted to customers. Even social media banner ads that are based on behavioral and demographic data are proving ineffective. Consumers have become so immune to the presence of banner ads that such advertising is becoming influential and falling short of expected ROI projections. In fact, banner ads on social platforms are only seeing an average click-through rate of .04 percent.

As the online social space continues to flourish through more users, traffic and sites, marketers are finding innovative ways to make their brands part of and stand out in the online social explosion. One such way is through paid virtual gifts — a market valued at $1.6 billion through 2009, with a projected growth up to $2.8 billion by 2012 — that appear on the popular social site Facebook. “Call it a form of ‘socially endorsed marketing,’ which helps marketers pinpoint brand loyalists by allowing them to self identify and become brand advocates,” said Paul Martecchini in an article on iMedia Connection.

Perhaps you have been the recipient of a virtual gift, or branded icon that a fellow Facebook friend can purchase and send your way (a concept similar to instant messenger gifts/emoticons). These gifts come in both generic and branded varieties, from Godiva chocolates to bottles of Budweiser. The process is simple. A Facebook user chooses the virtual gift to send and customizes it for the recipient, who also receives a message about the gift and can send it to another friend. “Meanwhile, the item appears on the Facebook profile wall and news feed for both the giver and recipient, exposing it to hundreds of their friends and amplifying the viral effect.” The concept appears to be working, as the average click-through rate for paid virtual goods exceeds four percent.

While consumers seem fascinated by sending and receiving these virtual goods, marketers are finding this a “rare form of advertising that people like to receive.” As consumers spread these virtual goods across Facebook, brand perception is growing while marketers easily identify brand advocates. In today’s age of consumer-generated content such as product reviews and ratings, shoppers take seriously the recommendations by peers and social network friends. When consumers see their friends have endorsed a particular brand, they, in turn, see this is as a positive recommendation and may consider becoming a brand advocate. After all, a giver of a virtual gift is likely to actually purchase the physical product.

Consider, for example, the buzz surrounding a recent campaign by AdNectar Inc. for Johnnie Walker. “People sent virtual cocktails made with Johnnie Walker to their friends through Facebook applications. When sending the drink, the giver could open a branded Johnnie Walker [landing] page, where [he or she] could register to become a self-identified fan of the…brand.” On the landing page, consumers could answer questions that describe their associations with the brand, plus the company collected data about new and existing brand advocates to help further build the buzz. Furthermore, 80 percent of users of MTV’s Virtual Worlds website have purchased branded virtual goods, resulting in 50 million viral endorsements.As marketers continue to unlock the potential of brand awareness on social media platforms, expect new and innovative tools to surface over the coming years. Since social media is not showing signs of slowing, companies ought to consider connecting with potential customers in the interactive social space. Virtual goods are simple, yet interactive features to engage consumers.