Social gaming has become a mainstay of the online experience for millions of Internet users and certainly became a multi-million dollar industry overnight. In fact, if we keep citing figures, we’ll see that it’s expected to surpass the 1 billion dollar watermark. That’s a lot of dollars.

The casual and social gaming industry have seen explosive growth in 2010 and drawn in an audience of millions. This should be interesting to marketers and advertisers alike, as well as anyone who would like to get in on what is still the ground floor of an entirely new economy of virtual things.

As I’ve said, that’s a lot of dollars, and eMarketer has an idea about where all those dollars are coming from and we can certainly see where they’re going.

Most of those dollars will come from virtual items purchased by the 61.9 million internet users who will play social games this year, according to eMarketer estimates. That represents 27% of the US internet audience and will rise to 29% by 2012.

“That is a spectacular number considering that this form of gaming took off in earnest less than two years ago,” said Paul Verna, eMarketer senior analyst and author of the new report, “Social Gaming: Marketers Make Their Move.”

“Next year’s growth will be modest compared with the meteoric rise of this form of gaming in its first two years, but the projected increase will be healthy enough to sustain multiple opportunities for game developers, publishers, investors and marketers.”

The rise of social gaming means two things for advertisers right now: one, that virtual items are surprisingly hot and people are willing to pay small amounts of money for things that only take a little bit of storage space, a tiny trickle of bandwidth, and a few pixels; and that more-and-more eyeballs are constantly drawn into these sorts of games as people pull in their friends to water their plants and pet their cute-fuzzy-critters.

The first revelation is a no-brainer and comes with its own revenue stream—people have always loved buying stuff to make their experience more interesting and show off to their friends and they’ll never stop. It’s basically a captive audience. The second part, however, which encompassing marketing and advertising, while it also has a captive audience, may not prove quite as easy to exploit as the economy of virtual things.

Social game publishers may have to provide advertisers with a bit more incentive to enter into their world. They certainly have the eyeballs—which, according to the article is still increasing—but they have a hugely diverse audience of players from all strips of the Internet experience and there’s very little demographic data to be had from casual game playing itself. Advertising thrives on a multitude of elements, but two of the more important are the audience (which they have) and knowing the audience makeup to properly target advertisements.

Something that I think would certainly take off, and it’s suggested by the article itself, is hybridizing the two factors: virtual items and advertising. I’ve seen this done extremely well by virtual goods economies like Gaia Online, who fund themselves by getting advertising sponsors to run ads on their site for say, the next upcoming kids movie, and they entice advertisers by giving them a special branded item that Gaia Online users receive after they’ve participated in an advertisement. Since most casual and social game players also come from a demographic who are extremely OCD they’ll generally watch their way through the advertisement just to get the virtual item. And, not only have they experienced the advertisement—immediate gratification for the advertisement campaign—but they come away with a branded virtual item that will remind them of the advertising campaign in the future.

The report cited by eMarketer costs money, and it’s probably only really interesting to marketing researchers, but for the rest of us the mere existence of a report speaking to the profitability of social gaming says that it’s here to stay and we can probably expect future innovations and possibly more addictive games to enter the market.

It does tell us that the next big FarmVille may also come along with Hillshire Farm limited-edition pigs and cows.