In world of online flirting, virtual gifts are big business

MIAMI  - It's a trusted formula: Send your sweetheart flowers, chocolates or teddy bears on Valentine's Day to express your love.

But what about sending a $10 image of flowers, chocolates or teddy bears to someone's online profile?

How about spending $50 on an icon of a pile of cash to impress a stranger you want to date?

The concept of paying real-world money for a virtual good has been around for a few years in games and social networks. Facebook gifts is one of the most well-known forms of this: pay a few bucks to decorate your friend's profile page with a digital icon of some object - like a beer mug or balloon for a birthday.

But in the last few months, several online dating sites have introduced virtual gift stores - and users are jumping on the chance to buy them to woo a mate.

As mystifying as it may seem to traditional romantics, virtual gifts have become a $1 billion industry in the United States, according to the research group Inside Network. Spending money on virtual goods has been huge in other parts of the world - analysts estimate it to be a $5 billion industry worldwide.

Snap Interactive in New York runs the Facebook application "Are You Interested?" where users can find potential partners and send them virtual gifts as an ice breaker. The publicly traded company introduced a new gift store about two months ago, and CEO Clifford Lerner said the application is raking in "a couple thousand dollars a day" just from gift purchases.

More than 2.4 million people use the application monthly, the company said. Gifts start at about $1.25 for a heart and $1.75 for a rose, and get more expensive the more unique or animated they are - like $20 for a picture of an engagement ring or gold bricks, or $10 for a teddy popping out of a gift box with the words "Be My Valentine" appearing on the screen.

Lerner said introducing a $20 icon of gold was just a test to see if people would spend the money. And they did. Four were sold within the first hour.

"We really believed virtual gifts would add a lot to the site and we had a lot of interesting ideas," Lerner said. "It blew our mind that someone was going to spend $20 for a bar of gold, let alone four in the first hour."

So the site offered more expensive icons based on the demand, like "I'm Rich!" which shows a pile of gold, cash and jewels, and "You're Priceless!" which is a guy holding a suitcase full of cash. Both sell for $20.

In the world of online flirting, virtual gifts sometimes defy the normal laws of supply and demand.

"We've actually seen a lot of times that the higher cost of some of these gifts, the more we actually sell," Lerner said. "If a girl is not interested in a guy, and she sees he spent $20, she's probably going to respond. And that's worth it to the guy, just to get a response."

Dr. Eva Ritvo, vice chair of the Department of Psychiatry and Behavioral Sciences at the University of Miami Miller School of Medicine, said sending a stack of cash icon that costs $50 is just another way of a guy showing he can provide for the woman.

"It's another symbolic representation that I have money and I will be able to take care of you," Ritvo said. "It's a modern day equivalent of men going out for the kill."

Mark Brooks, a social media and Internet dating consultant, has seen companies recently introduce new features like virtual goods or mobile dating services. As the online dating space becomes more saturated, finding extra revenue is more important.

"It's more difficult to get started, it's more difficult to make money in this market," Brooks said. "Virtual gifts are definitely in right now."

One Web site Brooks works with is PlentyofFish.com, a free dating service headquartered in Vancouver. It introduced virtual gifts in January.

Last year the site ran a test to see if users would pay $10 for one gift. At that price, the users weren't biting. So the cost was lowered, but the staff discovered that as a gift's adorability factor increased, so could the price.

"The cuter they are, the more receptive they are," Kate Bilenki, Director of Love at PlentyofFish.com. "Teddy bears, hearts, bunnies, cute things like that."

Avid Life Media, based in Toronto, got the virtual gift ball rolling in the dating scene back in 2002 by selling virtual flowers on HotorNot.com, with flowers now costing between $2 and $10 a piece.

At one of its niche sites like AshleyMadison.com - for married folks looking to have an affair - users can send a virtual bottle of champagne or hotel room key.

"The growth rate is phenomenal," said Noel Biderman, president of Avid Life Media. "If it has the right impact, people will pay to replace words."

AshleyMadison.com, which has 5.2 million members after launching eight years ago, has seen spending on virtual gifts jump from 2.4 percent to 4.1 percent of total user revenue in the past year, Biderman said.

This kind of success is persuading other sites to give it a spin. Headquartered in Davie, First Beat Media oversees more than 100 online dating sites - many targeting specific niche interests, like BikerPlanet.com, GothScene.com, LatinaRomance.com and TattooLovers.com. It's testing virtual gifts with a small group of its members.

But seeing a ton of icons of roses and chocolates from other suitors on your page might turn people away from contacting you - doing more harm than good, said Stephen Ventura, director of operations.

"Our particular take on it is that we're approaching it very cautiously," Ventura said. "We feel it might detour some folk from the relationship finding process."

(c) 2010, The Miami Herald.

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