Under the heading "Second Life Loses Luster," Adweeks is currently running a story comparing the gold rush of advertising into Second Life to the net effect and why it's not working. Their conclusion, however, is a bit off. They suggest that marketers are confused, thinking Second Life is a traditional ad channel.
Marketers continue to rush to the virtual world of Second Life despite increasing evidence they don't really know what to do when they get there. ... So far all this collective marketing savvy hasn't much impressed the actual Second Lifers. More than 70 percent of the site's users say they are disappointed with the marketing that goes on in Second Life, according to a survey by Komjuniti, a Hamburg, Germany, research firm. This could be because companies are approaching the site like a traditional marketing channel.
This theory may have some truth to it, but it's not the reason there's no ad revenue coming out of Second Life. In order to generate Ad revenue, one must put one's ad before actual people, and enough of them to matter.
To be clear, Second Life claims millions of subscribers, but in actuality, they only have a few hundred thousand. Advertising in Second Life, therefore, would be like putting up billboards in El Paso - and only El Paso. Sure you might get a lot of foot traffic from El Pasoans, but El Paso will not a nation feed. And I've been there. Trust me, it's not worth the effort.