NPR's Marketplace radio show was headlined tonight by a story on Second Life, the online virtual world -- and a downturn in prospects for businesses setting up virtual shop there.

Second Life's endless possibilities attracted broad media attention in 2006. It was suddenly the virtual frontier, the Wild Wild West. The online population grew to 10 million.

Companies soon followed. They wanted their brands in front of these early adopters. Toyota and Apple among others, created stores to sell virtual products. But for some the payoff hasn't materialized.

In November, active user hours in Second Life were down 5 percent for only the second time in history. Brian Haven with Forrester Research says avatars and marketers are checking out.

Brian Haven: I just logged in a few days ago. I usually go and visit all these different brand sites, and most of them are either closed up, or if they're still open, it's a ghost town. It's a little creepy wandering around in the virtual space and there's just nobody else there.

While we at Timberline take a professional interest in social networks like Facebook and MySpace, we have to admit we get more use out of Linked In. As for advertising on the social networks, as direct-marketers, we're skeptical. Mostly, people go to social networks to goof around, connect with each other -- not to buy stuff. We may kick the tires on Facebook's paid text ads, because they're intriguing -- they can be closely targeted to audience interests and demographics. But for the time being, if you're looking for online ROI don't expect us to recommend you build a virtual island on Second Life.

[Tom Funk Linked In]