March 28, 2007

How to Market in Virtual Worlds

SUMMARY: More than 600 marketers from 19 countries are in New York today and tomorrow dissecting the hottest fad around: virtual worlds.

Why are the likes of IBM, Toyota, Dell, Coldwell Banker, Starwood Hotels and MTV Networks diving headfirst into this new channel? Are there enough users to merit the attention it’s getting? Do consumers mind seeing marketing messages?

We got the low-down from two experts and a pair of virtual-world marketers for the most up-to-date analysis of where the medium is and where it’s headed. Plus, results from a recent campaign and a handful of useful links.

Any marketer exploring the nascent medium of virtual worlds and 3D social environments already knows the only certain thing is that they’re growing every day. Experiential marketplaces, such as Second Life and Whyville, each have members totaling into the millions. And they’re getting attention from marketers eager to reach all those eyeballs.

But this space is essentially at the same point that ecommerce or banner ads were circa 1994. And, despite the media ballyhoo that virtual worlds have received in the past year, the truth of the matter is that they’re still so new people don't know what to expect.

-> Focus #1. Toyota & Whyville

Fewer big brands have attacked the virtual world marketplace more vigorously than Toyota with their promotion of the Scion models. While they were one of the earliest adapters to Second Life, what they've done at the age 8-15 demographically targeted Whyville may be more intriguing.

1.2 million children (as well as several parents and grandparents) have joined Whyville for free, chosen avatars and earned play currency (called "clams") by playing educational games. If they save up enough money or purchase virtual money with real money, they can use the virtual currency to buy a cartoon replica of the Toyota Scion, which they can drive around the various destinations existing on Whyville.

The base Scion costs at least 20,000 clams, and 5,000 Scions have been purchased so far. Meanwhile, Toyota Financial Services sponsors a car loan component. 9% of Whyville's regular citizens have had at least one experience with the car loan activities, which include visiting the loan office, interacting with a loan simulator, playing with a WhyCO score (their take on the FICO score) simulator and getting a loan.

It's important to note that children can only engage in the virtual clam economy after their parents' consent.

In February 2007, while purely looking at regular visitors, which were defined as members who visited three or more times during the month, 28% engaged with the Scion campaign. Other data:

- 11% of regular visitors rode in a Scion (either their own or a friend’s car)
- 19% of regular visitors went inside the Scion Clubhouse
- 26% of regular visitors spent considerable time hanging at the Scion Clubhouse entrance screen

"The thing people have to remember about virtual worlds in general is that you have to look past the regular holy trinity of metrics – clicks, visits and sales,” says experimental media specialist Brian Clark, Founder and President of GMD Studios. “I think you really have to look at more experiential or ‘consideration’ metrics to understand how the viewer is interacting with your brand. You have to look at deeper psychographic aspects to [virtual worlds campaigns].”

Two potential things NOT to like about Whyville:

o It's always risky marketing to children from a PR standpoint because there's a fine line between smart advertising to this demographic and exploitation. You have to be 100% sure that your brand fits.

o And then there's another gamble on the investment: How brand loyal can young people be? The Scion play was meant to influence kids who were soon to get their driver's licenses while also make an impression on their parents. For Toyota, so far so good. No negative scuttlebutt has come up to offset the cool interactive statistics.

-> Focus #2. American Apparel & Second Life

Raz Schionning, Web Director American Apparel, was considering buying high-profile (and costly) placement in video games more than a year ago, but he ultimately gave up on the notion because of the medium's costliness and uncertain tracking abilities.

"I discovered the unfortunate possibility of spending a lot of budget in getting together an ad for a game that might flop. What would be the point of that? The game developers need the money upfront, and they cannot give [satisfactory] impressions results. That eventually led us to Second Life."

Schionning and his team built what became the first retail entity that was also a real-life brand on Linden Lab’s Second Life. With a "shoe-string budget," they worked with a 3D vendor (see hotlink below) to create a storefront that let virtual members purchase images of American Apparel clothing for their avatars at $1 apiece. (Viewers could also click on the avatar to go the online store to buy real clothes.)

Since June 2006, they've sold more than 10,000 clothing images. "We'll probably be close to breaking even for the total investment for the first year -- and we'll be very happy with that result -- because this was really about getting the brand into the space before everyone else is already there," Schionning says.

Seven months later, the overall Second Life space has become littered with big brands (Starwood Hotels, Reebok and Pontiac, among others) that were attracted to the island-roamers' median age of 32. The setup fee for a Second Life island is $1,675, and rent is $295 a month. However, software and creative costs can push the price tag into the tens of thousands of dollars.

"It's a really interesting-but-fluid time at Second Life. We are happy with the brand experience we've had so far, and we think it's an area that will continue to grow for us," Schionning says. "But at the same time, I don't think anyone has really gotten close to understanding how to [optimally] use Second Life."

Indeed, while the fledgling virtual world in which Second Life exists may be all about richness of experience, the medium is evolving like the infant space it is.

Furthermore, surveys have found that many Second Life members are extremely sensitive about marketing messages. In fact, dozens of Second Life "citizens" created the Second Life Liberation Army late last year to protest the increasing presence of brands.

And, according to a new survey of 200 Second Life participants by German agency Komjuniti, 72% expressed disappointment with the marketing going on in the virtual world, although more than a third weren’t even aware of the branded presence around them. Only 7% said it had a positive influence on brand image and their future buying behavior.

-> Five tips

Navigating through these virtual worlds can be tricky. Thankfully, we have five recommendations from marketing and virtual guru Wayne Porter for those interested in getting into this space:

#1. It’s extremely important to understand the fabric of the 3D virtual space (also called "metaverse") before jumping in. Marketers should spend significant time using an avatar, participating in real world events, exploration and talking with other members. They will discover that people, functioning as avatars, do not always respond to situations the same as they would in real life.

#2. Marketers should realize that the metaverse is based on a global population, which means there is no traditional market segmentation. One will find people of all ages from the US, Europe, and Asia.

Due to this reality, targeting a type of consumer can be difficult, and actions can easily be misinterpreted. Perhaps more importantly, the avatar form, language and communication will be different in the varying countries.

#3. Although one can participate in gaming in the Second Life, marketers should not mistake it for a game platform. There are no preset goals, monsters to slay or gold to find. It is not only a social platform that gives people a form of escapism but also an outlet that lets them socialize, travel and take part in many activities.

#4. It's still early for brands to begin large-scale marketing in Second Life. This does not mean they should not have a presence there. But before trying to buy and sell or advertise, they might consider building their brand by helping the citizens solve some of the unique problems that are common in Second Life. For example, providing how-to info and advice on digital rights management.

#5. Marketers should avoid destroying part of the local economy. For example, an entire industry might revolve around the development of in-world vehicles. An automobile manufacturer might be tempted to drop into the game a new line of cars at no cost for the sake of branding.

But this will spread ill-will among some of the metaverse's most important individuals -- those who have been making, customizing and selling the cars. It would be far better to support the industry and offer dealerships at a nominal cost.

Useful links related to this article

Creative samples from American Apparel's store in Second Life:

Past Sherpa article on Linden Lab and Second Life:

Brandweek story: Are Marketers Dying on Second Life?:

Virtual Worlds 2007 - the conference in New York:

Virtual Worlds' weekly newsletter:

Aimee Weber - 3D developer who built American Apparel's Second Life store:

The Ad Option - consultancy that advised American Apparel on Second Life:

Brian Clark's blog at Revenews:

Wayne Porter's blog at Revenews:

Linden Lab's Second Life:


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