Zynga, the company behind Facebook's immensely popular "FarmVille" and "Mafia Wars," made an estimated $200 million last year simply by enticing players to buy and sell virtual seeds and chickens, according to Inside Network's Smith. In fact, some of FarmVille's vital goods, such as chickens, can only be gifted.
Facebook and Zynga would not comment on their financials.
Growth of online gifting is expected to continue, as the social gaming industry booms. Thanks to platforms such as Facebook and Twitter, consumers are more comfortable interacting with their friends online.
"It used to be weird to wish someone happy birthday on Facebook, and now it's a cultural norm," says Inside Network's Smith.
And while in the past virtual goods were mostly bought by teens and young men with X-Box consoles, women have started making a big dent in the virtual economy.
This doesn't mean that virtual gift-giving can ever replace the real thing, however.
Bruce Weinstein, an ethics expert and author of "Is it Still Cheating if I Don't Get Caught?" says virtual gifts don't add that much value to a real relationship, but don't do any harm either.
"They're similar to that boyfriend or girlfriend who isnt quite meeting your needs but is better than nothing," he says.