At MTV's VLES site, kids in chat rooms are sipping on "virtual Pepsis." At Gaia Online, teens and 20-somethings are dressing up avatars in virtual Disney T-shirts. But is this strategy of "immersive branding" paying off for them?

NEW YORK CITY (BetaNews) - Virtual reality -- the keyphrase of the 1990s, adopted just after "information superhighway" started to deteriorate from the public vernacular -- is making a comeback as an advertising tool. This re-emerging category includes not just Second Life and other places for grown-ups, but online communities for the younger crowd, too.

And these VR environments for kids are increasingly becoming bigger targets for advertisers, according to speakers at this week's OnMedia NYC conference.

In one panel discussion, adults overseeing these Web sites for kids honed in on questions around how advertisers are using the VR sites to sell products, promote celebrities, and raise "brand awareness," and how VR experiences in childhood, teen, and 20-something years might -- or might not -- impact people later on in life.

MTV first started to experiment with VR-like concepts in the TV show "Laguna Beach," and then carried over this approach to a Web site called VLES (Virtual Lower East Side), said Matt Bostwick, senior VP for franchise development at MTV Networks. Kids clicking into VLES can now sip on "Virtual Pepsis" while they congregate in chat rooms.

Gaia Online, a VR Web site for 13-to-24-year-olds, this month signed a deal with Disney to sell branded virtual gear carrying brands such as "Spiderman," said Joe Hyrkin, Gaira Online's VP of sales. Teens and 20-somethings can now dress up their avatars in Spiderman T-shirts, for instance.

Until recently, Gaia community members paid for paraphrenalia online through the use of "Gaia Gold" points, according to Hyrkin. But now, they can use actual "cash cards" inside Gaia's online store.

For its part, Hobbo, a European-based VR site for the youth market, has served as the setting for "immersive branding" campaigns by some 200 advertisers, noted Timo Soininen, CEO of Sulake, the company which operates Hobbo.

Kids visiting Hobbo hang out at the virtual "Hobbo Hotel," and they can buy virtual items for decorating their hotel rooms, for instance.

"Brands become a topic (of chat conversations) between end users," according to Soininen.

But Soininen also suggested that, as he sees it, these sponsored VR experiences can have positive educational ramifications. In one recent branding campaign, for example, a financial institution set up a virtual banking experience online, complete with a virtual vault and virtual "drives to the bank."

After that, Soininen said, young Web site visitors started banding together in Hobbo groups online to dream up possible businesses of their own.

Other VR Web sites, including Gizmo, are now contracting with celebrities to promote their images to kids online, according to John Eaton, CEO of YouCast, a start-up ad agency specializing in VR sites.

Gizmo, one of YouCast's clients, also served as an online concert site for the recent Live Earth international music bash, Eaton said.

Some people might be shocked by the use of kids' Web sites for "immersive advertising." But others might argue that kids have long been the targets of ads and celebrity promotional campaigns anyhow, through vehicles ranging from Beatles cards in bubble gum packs during the 1960s to cereal ads on TV cartoon shows, since at least the 1950s.

At least one panelist believed that the re-emerging trend toward VR and more "experience"-based online services geared for youth could lead to the expiration of the very service upon which the Internet was founded...at least for that particular crowd.

"(Kids) don't use e-mail often," observed Gaia's Hyrkin, who further predicted that this preference for IM and chat over e-mail is likely to follow the younger set into the future.

And although the entire Web might not become VR-enabled any time soon, elements of VR are already starting to crop up elsewhere. "There will be business cases (for VR)," predicted Gaia Online's Hyrkin.

Ron Diorio, VP of community platforms for the UK magazine The Economist, pointed to the use already of some VR-like elements in Web-based job fairs his publisher sponsors. In one instance, job candidates submit their resumes and talk with potential employers online.

Most of the attendees at this particular session of the OnMedia NYC conference, sponsored by AlwaysOn, revealed they do not work for ad agencies, in a show of hands conducted by Diorio, the session moderator. A good number of the session attendees, however, said they've taken part in VR Web sites for adults.

Some attendees, including Kai Lemmetty, co-founder of Floobs, told BetaNews just afterward that they're interested in finding out how technologies they're currently developing might fit into VR environments.

Lemmetty said that Floobs is working on technology aimed at letting MySpace users quickly send videos from mobile phones to Web pages.