At a recent conference on virtual worlds in San Jose, Calif., executives from some of the industry's biggest sites touted growing audiences of kids, who spend hours a month playing games and socializing. Some of those communities boasted of successful experiments with marketing. For example, preteens are driving virtual Toyota Scions on sites such as and Gaia Online, and they're wearing the latest digital fashions from DKNY at Nickelodeon also talked about coming plans to run "immersive" ads in its 3D environment for kids ages 7 to 14.

Executives at these companies, and their investors, agree that virtual worlds are engaging enough to children to provide an unprecedented opportunity for marketing. But in a nascent industry with relatively no standards for advertising, media watchdogs, educators and even some gamemakers are worried.

"This kind of marketing is designed to operate at a subconscious level. And kids don't know how to think critically about how someone's trying to get them to be loyal to a brand or buy their products," said Kathryn Montgomery, a professor in the School of Communication at American University and author of Generation Digital: Politics, Commerce and Childhood in the Age of the Internet.

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