Questions in Virtual world Marketing

Anonymous
timer Asked: May 4th, 2017

Question description

Please find attached the word document. Thank you

Marketing in Virtual Worlds: Read the articles attached below on virtual worlds. Also be sure to view the several links below that highlight some applications of virtual worlds. Most of the information here will be focused on Second Life (SL), but is true for other virtual worlds. Currently SL has over 36 million registered users and is one of the more popular virtual worlds. Unlike some other environments that you may think of, like World of Warcraft etc., SL is not a game. It is an open ended world which includes its own economy where users can both spend and earn money. Video Links: 1. Things to do in Second Life http://www.youtube.com/watch?v=2mVUXnAeibE 2. Text 100 in Second Life http://www.youtube.com/watch?v=synxFmQJ_0A 3. Second Life Education http://www.youtube.com/watch?v=qOFU9oUF2HA 4. Online Role Play and Examples in SL (Video By Jaime Smith from my Virtual world course) http://www.youtube.com/watch?v=b2gUWwaNwZQ Followed is a series of questions. Be sure to support your answer. Submit these questions by the due date. 1. What is a virtual world? 2. How do you see virtual worlds being used in the future? Do you think that the technology is just a trend, or something that is here to stay? Explain. 3. What are some difficulties in using a virtual world for business or professional purposes? 4. Do you seen any major benefits (or not) in using virtual worlds for marketing a business or its products in a virtual space compared to a web page? 5. How do you view education in a virtual world? Would you ever consider using it for an online course? 6. Thinking about other collaboration tools you have used online to work with or communicate with other user, do you think something like Second Life would be better (or worse) to use? Explain.
 The Virtual Brand Footprint: The Marketing Opportunity in Second Life  Inside: Overview The Second Life Economy Best Practices Brands in Second Life Page 2 Page 3 Page 6 Page 10 Challenges and Solutions Thinking Inside the Virtual Box Colophon Endnotes and Appendix Page 11 Page 17 Page 20 Page 21 You Are Here: Among the 8.3 million Second Life residents* who spend $1.7M on virtual goods and services daily. *as of 8/10/07 About half of respondents (49%) think the presence of Real Life commercial brands in Second Life is mostly positive. - Market Truths Limited Introduction Every media outlet - television, radio, print and internet - presents a unique set of best practices for brand marketers to follow. These tried and tested approaches are part of a larger communications strategy to find the best way to reach and engage with customers. About a decade ago, marketers were struggling to understand how users interacted with the internet. Since then, large amounts of data have been collected on the subject. Today, the internet has added even more outlets into the marketing mix with the emergence of multiple social networks and virtual worlds. Second Life, the most popular virtual world, is quickly becoming an important platform for marketers to consider. These worlds, also referred to as Massively Multiuser Online Media (MMOM), are currently in a state of tremendous growth. This growth provides companies the opportunity to enter Second Life and establish their brand footprint, or level of impact, in this new world. Virtual worlds like Second Life are rapidly changing the brand marketing mix. Although it is an exciting time to be engaged in brand marketing given the new opportunities, it is also one fraught with uncertainty. This paper seeks to help marketers more clearly define their objectives, goals and best practices in Second Life. This new world presents a wide array of options for companies, but how best to engage in this world is yet to be determined. It is necessary to locate and understand the best opportunities for a brand and then decide on a proper execution “in world.” This paper begins a conversation on best practices for companies in Second Life and defines the possibilities that exist for them. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 1  How to Use This Paper The goal of this white paper is to provide an up-to-the minute tool that will help marketers develop and implement an effective Second Life marketing plan. To aid in the process of acclimating to Second Life, the appendix includes the addresses and coordinates for some of the companies who have a presence there. In order to make use of these references, go to www.secondlife.com to download the program. Once the software is installed and running, log in with your avatar name and password. If you selected Linden Lab’s Orientation Island, you will need to compete it before proceeding. You have two ways to find a location. The first is the “Search” button at the bottom of the screen. Select the “Places” tab. Highlight your destination and click “Teleport”. To access the exact locations in this document, click the blue “Map” Key on the lower right-hand side of screen. Type the name of the island and hit search. Highlight your chosen island, input the coordinates and click teleport to start the adventure. Second Life: An Overview - Second Life’s residents buy and sell tens of millions of dollars of virtual products weekly, creating new markets out of thin air. This has prompted congressional hearings to look into the question of taxing this growing virtual economy vi. The best way to understand the opportunities Second Life has to offer is by downloading their free program at www.secondlife.com and immersing yourself as a resident. A quick video showcasing Second Life can be found there. Virtual world Second Life has 8.3 million+i participants, 2 million of which have been active in the last 60 days. Its growing success has placed it on the cover of Business Week and the front page of the New York Times technology section. Countless media outlets, from Wired to Financial Times have given Second Life coverage, and a Google search on Second Life reveals over 39 million hits. How pervasive and remarkable is Second Life? As examples: - Reuters has opened up a news service devoted to the virtual world. The in-game currency, the Linden Dollar, fluctuates hourly, like any real-world currency, and is monitored by Reuters Second Life Bureauii. - Calvin Klein is launching a fragrance on Second Life, ck IN2U, despite the fact that a virtual world is a scentless environment iii. - Second Life is more than a virtual meeting space. Jazz pianist Louis Landon gave a concert in Second Life, “with his keyboard connected to a streaming media server via his PC.” iv Other artists who have played in Second Life include Suzanne Vega and Chamillionaire. - The Centers for Disease Control conducts training on HIV and disaster preparedness in Second Life. Launched in 2003 by Linden Lab, Second Life is a 3-D virtual world. By using simple creation tools, users can shape the world around them, particularly their virtual property, located on sims (short for simulators). They build new environments, alter their appearance, even design virtual objects like a racetrack or conference room. Participants then explore the worlds that they and others have created. Millions of objects, from designer fashions and buildings to planes and yachts exist in Second Life, all of which are imagined, created and owned by Second Life’s in-world residents. With a good computer graphics card (consult their requirements vii) and a broadband internet connection, anyone can create a free account and a personal avatar. Indeed, many activities in this metaverse (virtual universe) are free, but some goods and activities are paid for in Linden dollars. Although it uses 3-D rendering tools common to games like The Sims or World of Warcraft, Second Life is not a game but a tool for socializing, sharing, learning, doing business as well as playing. Second Life has no objectives and few evil monsters to shoot, and those that exist are a small part of a much larger world. - In “iVillage’s Girls Night Out,” in-world residents can meet one another over virtual champagne parties and participate in a Second Life fashion show v, as well as mingle with celebrities like Arianna Huffington. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 2 According to Greg Verdino, digital marketing executive and blogger viii, Second Life tends to get classed with MMORPGs (Massively Multiplayer Online Role-Playing Games) like World of Warcraft, but is actually very different because it’s not a game. “Second Life isn’t an environment or an experience where there’s an objective, per se. Just like real life… you are just in it to be in it.” In fact, Second Life is so divorced from the standard MMORPG model that members of Second Life are not “players.” They are “residents.” Residents do not “play,” or even “participate” in Second Life: they “reside there.” According to Verdino, “As marketers, we tend to think in terms of marketer and media property per se, Second Life is simply a technology platform with a commerce backend, in which everything that happens inside is created by the residents for the residents.” willing to spend real money to do it. Because it takes time and effort to create objects in Second Life ix, there’s a demand for ready-made virtual products. In response to this, users have become adept at creating desirable property. Residents and businesses alike can design cars, clothes and homes and have the ability to buy, sell and trade them with other residents for Linden Dollars, which can then be exchanged for American dollars. Once we understand that Second Life is a world in which people spend real money for products and services, it becomes clear that branding and customer engagement can be powerful tools here. Just as with any other market, real brands have an impact in this virtual space that translate into real dollars. Linden Lab doesn’t make the products, building or environments found in-world, but acts essentially as a virtual real estate holding company, that rents out real estate in the form of server space. Unlike other MMOMs, Second Life residents retain the intellectual property rights to their creations, igniting a new economy. Second Life is based on user-driven innovation. For example, you can go to the virtual Toyota dealership, buy a virtual Toyota for 300 Linden Dollars (just over USD$1) and show it off to your avatar friends. You can also customize it to make it unlike any other car in the real or virtual worlds. Many stores allow users to modify their products. This allows residents to take a Toyota Prius, design it to their liking and provide out of the box aesthetic feedback to “real life” engineers and designers. To create a virtual brand presence in Second Life, there is no need to contact Linden Lab to get permission: just rent some “land” directly from their website and create an engaging environment for residents to interact with. The Benefits of Branding Within Second Life: The media has prominently featured stories of how Second Life economy has enabled entrepreneurs like Anshe Chungxi. However virtual worlds can also provide a casual environment for: With a dedicated fan base and a flexible, hands-off approach to the way their clients spend their time and energy, Linden Lab has created one of most interesting virtual worlds in the “meta-verse”, or universe of online virtual worlds. Statistics of the Second Life Economy > Engagement and customer feedback > Market research and focus groups > PR/media buzz > Furthering existing customer relationships and creating new ones > Contextualizing peer-to-peer and group interaction > User-driven innovation > Deepening relationships Second Life as a Business Tool Second Life has revolutionized the online world by allowing residents to own the intellectual property rights to their creations. Second Life residents set and pursue their own objectives and are Second Life isn’t an environment or an experience where there’s an objective, per se. Just like real life… you are just in it to be in it. - Greg Verdino THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 3 In Second Life there’s never a dull moment! See the picture at the right – avatars can do anything from levitate across the dance floor to visit a virtual vineyard. They can build a mansion complete with a yacht and even relax with friends at a virtual picnic.  It’s a big virtual world THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 4 Best Practices Sell The Sizzle, Not the Steak Sublime, a popular restaurant in Second Life, requires avatars to make a reservation at least 24 hours in advance for service with a waiter. They serve its virtual customers Oysters Rockefeller and grilled lamb chops. In a world where an avatar does not need to eat, customers keep coming to Sublime for the experience – to enjoy a conversation over a meal with their virtual date. In Second Life, aesthetics are key. In a world where residents can fly and teleport, avatars use supped-up cars, jet aircraft, luxury yachts and flying saucers to express themselves. Brands need to offer residents a remarkable experience to effectively take part in an economy that generates over $1.7M in virtual sales daily. Second Life’s economy is based on an economy of aesthetics: the products that sell are the remarkable, experiential, outlandish and niche. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 6 F I G U R E 1 : “ T H E L O N G TA I L ” Best Practices in Second Life Sales One advantage of Second Life is its potential as an efficient and cost-effective tool for customer engagement and feedback. • Starwood Aloft used their Second Life location as an inexpensive prototyping solution to get customer feedback on design for future hotel layouts. • Programs in Second Life are teaching business students about merchandising in the real world by dressing virtual stores. • Sears, in partnership with IBM, is working on allowing customers to create a virtual version of a kitchen, complete with exact dimensions and layout. Products A profound Long Tail xi exists in Second Life. Chris Anderson, the editor of Wired who coined the phrase explained the Long Tail concept in a Second Life book tour: “The Long Tail is the world beyond the blockbuster. Our economy and culture is shifting from mass markets to millions of niches. The rise of distribution methods with unlimited capacity or “infinite shelf space,” of which the internet is the foremost (but not only) example, have made it finally possible to offer consumers an incredible variety of products and other goods that were previously suppressed by the economic and physical limits of traditional retail and broadcast.” – Chris Anderson “The Long Tail” describes our culture and economy as presently focused on hits but shifting toward niche markets, the tail of the L (see graph, above). Aiming directly at the niche markets, narrowly targeted goods are as economically viable as marketing to the masses. In fact, the aggregate of the niche products sell more than all of the hits combined. Second Life is an economy of niches. Rather than “wear” a shoe that every other avatar is wearing, the average participant chooses to wear something more expressive and unique. Second Life can be leveraged by businesses to discover what makes a select niche very happy which is an emerging formula for success. Second Life is also an excellent platform for market research. • Adidas allows customers to design their own sneaker in Second Life, helping them to design more remarkable “first life” sneakers. • Mazda has also ventured into designing an experiential marketing vehicle; the car’s designers even appear in virtual form to launch the new model. • “Just as the web replaces and extends the capabilities of traditional print media, Second Life is extending the capabilities of broadcast media and chat. Second Life now surpasses the intensity of broadcast advertising at an even more favorable price point than print.” Source: MediaPost Second Life can act as a platform for effective Public Relations. • Being the first big brand to move into Second Life, American Apparel received media mentions, worth hundreds of thousands of dollars, from outlets including the cover of BusinessWeek xii,The New York Times xiii, and MSNBC xiv. Some businesses have decided to use the Second Life communities to form focus groups. Achim Muellers, head of brand relations and co-operations at BMW, stated in a conference in Second Life that, “Second Life is great to get very honest feedback, more honest than in any focus group, because in a focus group, you sort of know what’s expected from you. Second Life residents are more extroverted and honest about their feelings.” (For more transcripts of Second Life marketing conferences, see Appendix.) In a focus group organized by Market Truths Limited, participants were particularly impressed with AOL’s Second Life presence. A participant said that his opinion of the company improved THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 7 In Second Life, aesthetics are key. The products that sell are remarkable, experiential, outlandish and niche. overall. Previously he had thought of AOL as being a “stodgy, traditional company,” but after seeing AOL’s activities in Second Life, he felt AOL must be more “modern and progressive” than previously thought.  For more information and up-to-date news, as well as a comprehensive list of brands and organizations within Second Life, see the list of Second Life blogs and wikis in the Appendix. The Trailblazer Marketer s and advertiser s can use Second Life to allow participants ar ound the world to take part in confer ences thr ough live audio, video and PowerPo i n t f e e d s . • The World Economic Forum in Davos, Switzerland is usually attended by prime ministers, celebrities, CEOs and entrepreneurs. But thanks to the democratizing nature of Second Life, sixty average residents were able to virtually attend most workshops in Davos and talk directly with people like the Governor of Virginia, Mark Warner, and musician and activist Peter Gabriel. Actress Mia Farrow has also held presentations on behalf of the UN about the genocide in Sudan. (so far) S e c o n d L i f e i s a l s o a p o w e r f u l t o o l f o r e d u c a t i o n a n d c o n f e r ences: • Thomson’s NetG corporate training division, which provides custom training solutions for corporate clients on Microsoft and Cisco products reportedly makes $10,000 a month by providing training, mentoring and customized podcasts for their corporate clients in Second Life. • Universities like Harvard Law School xv have used Second Life to host virtual classes and conferences, complete with video, sound and PowerPoint presentations. • The University of California, Davis, has created a virtual hallucination simulator to give psychiatry residents a better understanding of what schizophrenic patients actually experience. As a fundamentally social application, Second Life contextualizes human interaction, so friends can say: “We met at Reuters” or “We boogied at Pontiac” or even “we dined on Chicken Kiev at Sublime”. Second Life’s Competition While Linden Lab is trailblazing in its establishment of one of the largest virtual world populations, other companies are entering the burgeoning virtual world economy. (See the Appendix for a listing of other virtual worlds.) Newer entrants into virtual world-building may come to surpass Second Life in the future, particularly if virtual world consumers eschew the “do-it-yourself attitude” typified by Second Life. The market will sort out whether user-generated models, companygenerated models or perhaps another model, will dominate the metaverse. Second Life’s user base consists of early adopters, many of them very creative and technologically savvy, who can design, create and market their virtual wares. According to Michael Dowdle, Vice President of Business Development with Kaneva, a competing virtual world, “Second Life is for the more tech-savvy early adopters. It is a complex open platform to be creative and for building 3-D spaces and items. However for the masses, it can be difficult to use with its steep learning curve for creating virtual items.” With the user in mind, MTV created a virtual Laguna Beach that doesn’t require technical skills - only social skills. All the users have to do is sit back on the virtual beach and socialize with their friends. This world appeals to those who are only looking to socialize in an already existing space. However, Second Life gives users the chance to be creative and realize their personal visions. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 8 FIGURE 2: THE METAVERSE (DEMOGRAPHICS AND STATISTICS FOR A SAMPLE OF VIRTUAL WORLDS THAT EXIST) COMPANY WORLD NAME WORLD FOCUS USER GEN CONTENT AD SUPPORTED CURRENCY TARGET AUDIENCE INITIAL COST VIRT ITEM SALES Activeworlds' alphaworld both yes unknown - - - - 3d http://www.activeworlds.com/ Areae, Inc. Areae, Inc. unknown yes unknown unknown unknown - unknown - http://www.areae.net/ Mindark Entropia Universe public yes yes PED public - yes 3d http://www.entropiauniverse.com Forterra Systems OLIVE Platform private n/a n/a none enterprise - n/a 3d http://www.forterrainc.com/ Google, Inc. Google Earth public yes n/a currently none public free no 3d http://earth.google.com/ HiPiHi HiPiHi public yes unknown unknown public in beta currently not yet 3d http://www.hipihi.com/ imvu imvu public - credits - 13 years or older free yes 3d http://www.imvu.com Kaneva Kaneva public yes yes Kaneva credits public free not yet 3d http://www.kaneva.com Microsoft Virtual Earth Microsoft Virtual Earth public yes none public free n/a - - http://maps.live.com/ Multiverse Multiverse both - defined by world defined by world defined by world - unknown - http://www.multiverse.net/ Yoick Project Outback unknown yes unknown unknown unknown unknown unknown - http://www.yoick.com/ ProtonMedia ProtoSphere private n/a n/a none enterprise - n/a 3d http://www.protonmedia.com/ Qwaq Qwaq Forums private n/a n/a none enterprise - n/a 3d http://www.qwaq.com Linden Lab Second Life both yes yes Lindens 18 years or older free yes 3d http://secondlife.com/ Sony PlayStation Home PlayStation Home public yes, limited unknown unknown unknown unknown unknown 3d http://www.us.playstation.com/news/ Makena Technologies, Inc. there.com both yes, limited yes Therebucks 13 years or older free yes 3d http://www.there.com Three Rings Whirled public yes, unknown unknown unknown unknown in alpha currently yes - http://www.whirled.com 3B International 3B public yes yes none unknown no 3d http://3b.net Linden Lab Teen Second Life public yes yes - 13-18 year olds - - 3d http://teen.secondlife.com/ Doppelganger, Inc. The Lounge public yes - - 13-18 year olds - - 3d http://www.themusiclounge.com/ Flowplay unknown public - - - 13-18 year olds - - unknown http://www.flowplay.com/ Dubit Ltd. Dubit public - - - - - - - http://www.dubitchat.com New Horizon Interactive Club Penguin public no no virtual coins 8-14 year olds $5.95 USD/month - 2d http://www.clubpenguin.com/ MTV / Viacom Virtual Laguna Beach public - - - - - - - http://www.vlb.mtv.com/ Stardoll AB Stardoll public - - - - - - - http://www.stardoll.com/en/ Cyworld, Inc. Cyworld public yes, limited yes Acorns 13 years or older - yes - http://us.cyworld.com/ Sulake Corporation Habbo public no, limited coming yes Habbo Coins 13-16 year olds free yes 2d http://www.habbo.com/ Gaia Interactive, Inc. Gaia Online public no yes Gaia Gold public free yes - http://www.gaiaonline.com Jagex Limited Runescape public - - - - - - - http://www.runescape.com/ PERSP. URL TEENS and TWEENS KID WORLDS Ty Inc Ty Girlz public - - - - - - - http://www.tygirlz.com/ LEGO Group unknown public - - - - - - - http://club.lego.com/eng/ Mattel Barbie Girls public - - - - - - - http://www.barbiegirls.com/ Viacom Nicktropolis public - - - - - - - http://www.nick.com/nicktropolis/ Corus Entertainment multiple worlds public - - - - - - - http://www.corusent.com/others/ Viacom neopets public - - - - - - - http://www.neopets.com/ Disney Virtual Magic Kingdom public - - - - - - - http://vmk.disney.go.com/vmk/en_US/ Ganz Webkinz public - - - - - - - http://www.webkinz.com/ Numedeon Whyville public - - - - - - - http://www.whyville.net IAC Zwinktopia public - - - - - - - http://www.Zwinky.com gopets gopets public - - - - - - - http://www.gopetslive.com Coke mycoke - - - - - - - - http://www.mycoke.com/ General Mills Millsberry.com - - - - - - - - http://www.millsberry.com/ CORPORATE BRANDED Source: Virtual Worlds Management THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 9 New to the Neighborhood, Brands in Second Life THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 10 1. Challenges and Solutions for Entering Second Life Challenge: Understanding the culture of virtual worlds  When brands truck brick and mortar tactics wholesale into Second Life without tailoring to the unique virtual culture, they may have a rude awakening when their Second Life homesteads receive few visitors. Brands such as American Apparel have been picketed, due to lack of Second Life cultural respect, when they created ordinary buildings with very few options for residential interaction. First impressions are critical - residents never did warm up to American Apparel since they couldn’t easily interact with the brand. This may have contributed to the recent closure of their virtual store. Solution: If you love it, let it go: Brands that let users create, win. One wouldn’t market goods and services in a foreign country without tailoring the message to respect the social, political and economic culture of that country. The same rule should be applied to Second Life. In this case, that means creating a unique and inviting environment that residents can interact with. Indigenous resident-owned stores that are manned in Second Life welcome a greater number of avatars, who then in turn spend more time and money. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 11 Second Life has traffic ranking, just as Google does, which is based on, among other things, the number of avatars who are visiting a sim and the length of their stay. The higher these metrics are, the more prominently the sims will rank in the in-world search feature. Indigenous Second Life businesses routinely pay avatars to camp out or dance in their sims, generally, one or more Linden Dollars per hour, less than a third of a penny, effectively boosting their traffic rankings. According to Market Truths Limited, a Second Life market research firm, “About half of respondents (49%) think the presence of real life (RL) commercial brands in Second Life is mostly positive, or at least more positive than negative. About a third (34%) have a neutral opinion about the current presence of RL brands, and 17% have an attitude that is more negative than positive or mostly negative.” Market Truths calculated an overall Second Life brand impact metric xi. According to their research, “all of the most frequently mentioned brands are receiving a positive impact from their [Second Life] presence, but the impact is greatest for Reuters — largely due to the fact that most of those who have encountered the brand in Second Life say doing so has improved their impression of the company. IBM had the next greatest impact, but its position is more a result of the fact that it received more mentions in the unaided awareness question than any other brand. Toyota, Nissan, and Dell had the next greatest brand impacts. The black bars at the bottom show the metrics for Toyota and Sony when their two separate brand names are combined.” Market Truths concluded that the two components of the metric — how many people are aware of the brand’s Second Life activities, and how the brand’s Second Life presence influences overall brand attitudes — are determined in large part by what tactics are undertaken on behalf of the brand within Second Life. Brands that score most highly on the metric tend to go beyond showing their products, provoking virtual versions and web links. They provide opportunities for deeper engagement by making a brand-relevant contribution to the community and creating opportunities for interaction such as co-creation and customization of products. F I G U R E 3 : S E C O N D L I F E A N D I M PA C T O N B R A N D S -5.0 0.0 5.0 Reuters 3.8 IBM 3 Toyota 1.8 Nissan 1.7 Dell 1.5 Adidas 1 Coca-Cola 1 American Apparel 1 Apple 0.8 Sears 0.8 NBC 0.8 AOL 0.7 Pontiac 0.7 Nike 0.7 Scion 0.7 Circuit City 0.5 BMW 0.5 Sony 0.3 Microsoft 0.3 Reebok 0.3 ABN Amro 0.2 Sony + Sony BMG 0.7 Toyota + Scion THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 12 2.5 C O M PA N I E S D E P L OY I N G I N N O V AT I V E S T R AT E G I E S  Nissan: Selling cars from an 8 story vending machine B R A N D S S I M P LY I M P O R T I N G “ R E A L L I F E ” TA C T I C S  American Apparel: Created a virtual version of their brick and mortar store, and offering free beer and tacos.  iVillage: Every two weeks a local resident will host a “girls’ night out” inside Second Life, with a group of avatars that will congregate at the iVillage loft  ABN AMRO: Opened a virtual version of their brick and mortar bank to offer financial advice.  Toyota: Sells virtual Scions which can be customized and they offer how-to classes for residents wishing to do this.  Apple: While Apple has not created an official simulation, users have created their own simulation and sell their own Apple branded products. 2. Challenge: Learning curve  Solution: Companies need to make experiences in Second Life friendly. There is a significant learning curve in Second Life for new residents. For many it is not clear how to move, chat, teleport, and find places to visit. Only 10% of new residents, affectionately called “newbies”, become frequent residents. In addition to technology performance and unsatisfying experiences, many beginners find the acclimation frustrating and leave before ever successfully adapting to the technology behind Second Life. Brands can facilitate a more user friendly experience by creating customized graphical user interfaces or head-up displays (HUDs), which can better explain how to move around and interact with the environment. Brands can create solutions by providing a more intuitive GUI (graphical user interface) and including tutorials on how to move around. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 13 Also, many experienced residents are eager to help newbies in Second Life and act as guides within the virtual world, especially in the social islands where many newbie avatars congregate after orientation. Second Life offers newbies several options when entering the world. Linden Lab has updated their “orientation island” with a HUD to make navigation easier. Newbies can also select from a myriad of branded islands to arrive on such as The L Word and Pontiac that feature custom orientation for a faster start with a ready-made community and frequent live help. Linden Lab compares the first time in Second Life to moving to a new city – it takes a while to meet people and get acclimated. Although Second Life has companion wiki sites and blogs, companies would do well by providing new visitors with authoritative recommendations and guides to the virtual world. When internet technology evolved from dial-up to broadband connections, marketers adjusted their strategy, tactics and content with the expanding capabilities. Likewise, marketers should be conscious of the medium’s capabilities and keep abreast of changes in platform capabilities. As Second Life’s technology and infrastructure evolves and matures, servers will be able to handle more incoming traffic and integrate more content seamlessly. BBC Radio held a successful event that brought in residents over an extended period of time to take part in a music festival. What happens when you’re looking for shoes or sneakers in Second Life and don’t know where you want to buy them? Right now searching for such terms won’t bring up the Reebok store, which is only optimized for its brand term. This is why marketers will need to engage in Second Life optimization, or on a broader scale, virtual world optimization. The discipline can mirror search engine optimization in many ways. Here’s an incomplete list of Second Life optimization tactics: Descriptions: Adding keywords to the description can help virtual stores come up for relevant searches, similar to how descriptions and meta tags work for websites. For example, if a virtual store is labeled, “Clothing for men and women, male and female fashion, socks, underwear, t-shirts, dresses, hoodie, track jacket,” a search in Second Life for “hoodie” brings up this specific store. Link Optimization: Link development strategies are trickier in Second Life than they are for websites. One of the first link-building strategies marketers learn for SEO is to have their affiliates and partners link to them. In Second Life, if marketers own multiple properties, they can include billboards encouraging visitors to teleport around to each one. Sony BMG and Reuters both allow easy ways for visitors to teleport within each of their islands. As marketers expand their presence and enlist partners to join, offering teleportation among partners will provide the virtual world equivalent of link sharing. Advertising: Search marketing firms recommend that marketers conduct their paid and natural search campaigns together, either with the same company, or by opening up the communication channels among the different parties. Similarly, marketers should consider how advertising can tie into virtual world optimization. An advertising network for Second Life, MetaAdverse, allows property owners to post billboards on which marketers can advertise and track the visitors. This strategy is the first step in automated marketing content delivery. Multiple Engines: In Second Life, there is one dominant search engine, accessible for every user from a search box that resides at the bottom of the screen. There are also outside efforts to improve the Second Life search experience. For instance, Second411 allows Second Life store owners to list all their items for sale, and then invites consumers to access its search application.“ Source: David Berkowitz Title Tags: The title of the virtual location should include a few important keywords, just like title tags for websites. Reebok, for instance, could choose the name “Reebok custom sneakers.” Nobody goes to a new store in real life unless they are intrigued. The same goes for Second Life. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 14 Challenge: Working with a growing medium  Only forty to sixty avatars are able to meet on one single simulator at a time, due to capacity and rendering issues with both Second Life servers and home-based personal computers. Solution: Plan marketing activities in coordination with technology 3. A brand’s goal is to build deep engagement with customers. Companies should look to establish experiential touch points, with fewer avatars at their sims at a time, rather than plan huge events which may cause lag and server crashing. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 15 4.  Challenge: Believe it or not, you have to promote it! Solution: Convert your own for richer brand experience When a new Second Life environment is created nobody knows about it or will visit unless they are made aware. It is necessary to inform residents of the new creation and give them a reason to come. Nobody goes to a new store in real life unless they are intrigued. The same goes for Second Life. Many brands invest in building simulations in Second Life, yet fail to market them. This situation harkens back to the Internet in 1995, when companies learned that simply building a website did not mean that customers would come knocking at their doors. Creating a compelling and unique experience in Second Life can foster a meaningful dialog and connection between a brand and its consumer. Creativity is key After making new friends and even getting a taste of virtual backlash, American Apparel, one of the first brands to open a store in Second Life, decided to close their doors on Lerappa Island. Although the cause wasn’t stated explicitly, the limitations of pursuing a “build it and they will come” strategy likely contributed to the closure. We look forward to American Apparel’s response to the pressure to innovate in Second Life. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 16 Thinking Inside the Virtual Box Best Thinking Inside the (Virtual) Box The failure of real-life companies to spark interest in their venues is based partly on flawed strategies and partly is due to the nature of the medium. To make the point visually: And here’s the in-world competition. Here is a pair of shoes that Adidas is marketing in Second Life. Here are the traffic numbers in avatar minutes/week:* • Adidas 1,122 • Dell Factory 577 • Sony 128 • American Apparel 2,588 • Warner Bros’ listening loft for Regina Spektor 62 AVERAGE: 650 per week ~ 900 The above companies may grace the pages of Newsweek and Time, but this does not matter to the participants of Second Life. People who “live” in Second Life don’t necessarily learn about brands through advertising and traditional PR, but through virtual world of mouth and popular Second Life blogs. The companies that succeed in Second Life may also benefit from the halo effect, extending goodwill throughout their product lines. • • • • • Ricx Jewellery 22,260 Xcite (virtual sex equipment) 59,011 Ice Dragon (casino) 75,695 ETD (hair) 17,294 Vindi Vindaloo (clothing) 5,579 AVERAGE: per week ~ 36,000 or 40 times the volume of the real-life businesses. *Traffic numbers were taken in January 2007 Source: Bret Treasure xxiv THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 17 Second Life enables companies to extend their brand footprint into another world and allows residents to engage with a brand on a deeper level. FIGURE 4: IMPRESSIONS AFTER APPEARING IN SECOND LIFE* 160.0 Impressions (in millions) 140.0 120.0 100.0 87.8 84.4 80.0 72.8 It has been proven that companies benefit from a Second Life debut - some more than others. Nevertheless, companies such as American Apparel, Adidas, Coke, Dell, IBM, Nissan, Pontiac, Sears, Starwood-Loft Hotels and The Louvre received millions of real world impressions after building an island in Second Life. 60.0 42.3 32.3 40.0 24.3 20.0 10.5 17.2 6.9 e t ou -L vr of s ar Se Po nt iac an ss M IB ll De ke Co id as 0.0 By entering into the virtual world these companies received a great deal of press coverage in leading publications for a very small investment. eL Th od St ar wo Ni Ad The chart to the left illustrates the number of impressions, in millions, each brand received after their Second Life entrance. This clearly Company Name illustrates that a successful launch in Second Life often turns into positive publicity for the brands. Whether it is a product mention or an in-depth story, the brands in this study were exposed to millions of eyes around the world. The press coverage also associates these brands with innovation since Second Life has not yet become a traditional marketing platform. * Total Impressions After Appearing in Second Life equals mentions of Second Life in relation to the Company Name multiplied by total impressions for that medium (includes online, print, and broadcast), January - May 2007. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 18 Second Life and other virtual worlds have spiced up the traditional marketing communications models. Never before have brand marketers had an opportunity such as this to consider when promoting their products or services. This is just the beginning of the 3D internet that will become mainstream in the coming years. The brands that have entered Second Life now will be better prepared for such a shift. “We are there for a learning experience,” said Doug Meacham, Circuit City’s manager of infrastructure services, during an interview with Direct magazine. “In the near future this is going to be a fairly seamless extension of the web that you deal with today.” anymore. For example, Nissan didn’t simply recreate one of their dealerships and put it in a virtual lot. Instead they have a vending machine in Second Life that dispenses cars of all kinds – even ones that fly. Second Life is best used as a tool for education, training and customer involvement. It is much more than a virtual advertisement. Second Life enables companies to extend their brand footprint into another world and allows residents to engage with a brand on a deeper level. Not all companies exist in this world to sell a product. Wells Fargo Bank, for example, provides financial literacy education materials. Informing and educating consumers about a brand can be more valuable than the few cents they can make by selling a product. Well, what are you waiting for? Second Life gives residents the ability to go to a virtual store and examine a 3D version of a product that they may want to purchase in the real world. “We want to learn how to use this 3D virtual environment as a way to extend our capabilities that improve customers’ experience,” Meacham said. Marketing a product in “first life” normally includes sending announcements to the target audience in order to inform them about the latest product. However, Second Life marketing requires a bit more creativity. Normal won’t cut it Thanks to Second Life, marketers now have a phenomenal tool to interact with a targeted audience. The nature of marketer’s relationships with audiences has shifted drastically away from a one-to-one model to a many-to-many model. Virtual worlds are at the forefront of this new communication model because they are rich, engaging and user-created, fostering active, collaborative brand experience. Colophon About DMD DMD is a New York-based communications consultancy specializing in advertising, branding, media relations, and print and interactive design. The philosophy of the company is one of partnership with its clients in creating exceptional quality communication. Diversified Media Design has proven success in developing awardwinning solutions and compelling communication across its client base and through use of a full range of media. For more information about DMD, please see http://www.dmdnewyork.com About combinedstory combinedstory is a media firm specializing in representing businesses, brands or artwork in the virtual world. We leverage over 20 years of experience in the interactive media industry to create compelling and community aware campaigns focused on enriching virtual experiences. For more information about combinedstory, please see http://www.combinedstory.com About Market Truths Limited Market Truths is a full service market research company that also provides services relating to Second Life. Market Truths creates custom projects to meet clients’ particular needs, and also offers a series of standard reports on various aspects of Second Life (information in this whitepaper comes from Market Truths’ Real Life Brands in Second Life report). These are available at http://sl.markettruths.com/reports and also from the Second Life office (Market Truths 50,185,35). For more information about Market Truths, please see http://www.markettruths.com THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 20 Endnotes Appendix i While Second Life boasts of their 8.3 million residents who have come into the world, around 20,000-35,000+ users are in-world at any given time Second Life Business Communicators Meeting Transcripts ii Reuters Second Life Bureau iii http://secondlife.reuters.com/stories/2007/03/21/launching-ascent-in-a-fragrance-free-world iv http://www.duke411.net/topher/2007/01/for-music-facultystudents-louis-landon.html v http://www.ivillagegno.com/ These are links to chat transcripts of in-world meetings of the Second Life Business Communicators Group. Not all meetings have transcripts available and on occasion only a partial transcript may be available. BMW with Achim Muellers, Head of Brand Relations and Cooperations Part 2, January 26, 2007 BMW with Achim Muellers, Head of Brand Relations and Cooperations Text 100: New Publics in Second Life vi http://secondlife.reuters.com/stories/2006/10/15/uscongress-launchs-probe-into-virtual-economies Roo Reynolds IBM Evangelist vii https://secure-web3.secondlife.com/corporate/sysreqs.php Adam Reuters viii http://gregverdino.typepad.com/ Library 2.0 ix This link, http://secondlife.com/showcase/ incorporates a video of designing a virtual guitar Second Life Presence Lists x http://www.businessweek.com/the_thread/techbeat/ archives/2006/11/second_lifes_fi.html ABN AMRO: ABN AMBR 238, 15, 22 (pg) xi http://en.wikipedia.org/wiki/The_Long_Tail AMD: AMD Dev Central 124,151,31(pg) xii http://www.businessweek.com/innovate/content/jun2006/ id20060627_217800.htm AOL Pointe: AOL Pointe 128, 128, 0 (pg) xiii http://travel.nytimes.com/2006/11/03/travel/escapes/03second.html xiv http://www.msnbc.msn.com/id/17280460/ Brands Adidas: Adidas 104, 183, 55 (pg) Autodesk: Autodesk 128, 125, 54 (mature) BMW: BMW New World 195, 66, 23 (pg) Circuit City: IBM 10 136, 38, 22 (pg) Cisco Systems: Cisco Systems 128, 127, 30 (mature) xv http://cyber.law.harvard.edu/cyberone/videos/CyberOne.mp4 The Connected Home: The Connected Home (mature) Dell Computer, Main Island: Dell Island 43, 162, 24 (mature) H&R Block: HR Block 113,48,37 (pg) IBM IBM Sandbox: IBM 121, 154, 33 (pg) IBM 1 Virtual Universities Community. Theater I: IBM 1 128, 128, 23 (mature) THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 21 Appendix (continued) IBM 2: IBM 2 128, 128, 22 (mature) IBM 3: IBM 3 243, 105, 23 (mature) IBM4 IBM05 / Recruitment Project: IBM 4 130, 183, 22 (mature) Media Companies AOL Pointe: AOL Pointe 128, 128, 0 (mature) Bantam Dell Publishing (Random House): Sheep Island 123,28,25 (mature) BBC Radio 1: BBC Radio 1 128, 127, 32 (pg) IBM 6: IBM 6 128, 126, 22 (mature) Choc Hebdo: La Plaine 59, 140, 37 (mature) IBM 7 Greater IBM Connection: (pg) CNET: Millions of Us 226, 30, 38 (pg) IBM 8 SOA Hub: IBM 8 104, 106, 23 (mature) MTV Laguna Beach Laguna Beach 63, 218, 25 (pg) IBM 9: IBM 9 128, 129 22 (mature) IBM 10 Theater M, Circuit City: IBM 10 139, 42, 22 (pg) NBC, NBC Universal Headquarters: NBC 2 131, 123, 43 (mature) iVillage: Sheep Island 42, 150, 25 (mature) Northsound Radio Scotland: Fusion Unity 204, 131, 22 (pg) Major League Baseball: Baseball 214, 129, 27 (mature) Popular Science, PopSci Future Lounge: Millions of Us 193, 133, 24 (pg) Mercedes-Benz: Mercedes Island 128, 128,0 (pg) Nissan: Nissan 19, 129, 26 (pg) PA Consulting: PA Consulting 116, 119, 27 (pg) Pontiac Main Island: Pontiac 179, 96, 24 (pg) Reebok: Reebok 111, 100, 97 (pg) Reuters: Reuters 127, 99, 25 (mature) Sundance Channel: Sundance Channel 55, 173, 38 (mature) The Infinite Mind: Infinite Mind 209, 76, 46 (mature) Wired: Millions of Us 203, 228, 23 (pg) Reuters: Reuters 127, 98, 25 (mature) Government/Public Entities Sears: IBM 10 95, 32, 23 (pg) U.S. Congress (Democratic Party) Capitol Hill 128, 128, 0 (pg) Sony|BMG: Media Island 108, 111, 21 (mature) Politicians Starwood Hotels: Aloft Island 68, 69, 27 (mature) Mrs Ségolène Royal, French socialist candidate to the 2007 presidency, Comité 748 : Désirs d’avenir: Bretton 175, 233, 102 (mature) Sun Microsystems: Sun Pavilion 182, 144,55 (mature) Sundance Channel: Launching January 2007 TELUS: Shinda 187, 72, 22 (pg) Thompson NetG: Thompson 182, 123, 35 (pg) Toyota: Scion City 44, 40, 23 (pg) Vodafone: Vodafone Island 128, 128,0 (mature) Mrs. Hillary Clinton, U.S. Democratic candidate 2008 presidency: Isles of Intrigue2 133, 137, 604 (mature) Mr. John Edwards, U.S. Democratic candidate 2008 presidency: Onnuri 169, 25, 87 (mature); Laguna Beach 219, 113, 23 (pg) Mr. Barack Obama, U.S. Democratic candidate 2008 presidency: Silicon Island 222, 217, 32 (unofficial) (pg) THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 22 Agencies crayon: crayon 150,140,34 (pg) Centers for Disease Control and Prevention: Juwangsan 218,223,0 Centric: Maui 230,26,24 (mature) Homeland Security Synthetic Environments for Emergency Response Simulation National Oceanic & Atmospheric Administration Meteroa 246, 244, 309 (mature) Community Chest: Launching soon Edelman: Edelman 198,114,26 (mature) GSD&M: Idea City 196,32,0 (pg) K Zero: Munck 180, 142, 26 (mature) Leo Burnett: Millions of Us 193,80,23 (pg) Non-Profit Organizations CompuMentor, TechSoup Info Island 66, 184, 33 (mature) MarCom:Interactive: SL Business Communicators Group Creative Commons Kula 4 39, 35, 21 (mature) Meybocks Group: Launching soon Genocide Intervention Network, Camp Darfur Better World 176, 245, 21 (mature) Text 100: Text 100 Island 183,73,91 (pg) Mensajeros de la Paz, Machinima Premiere Urgence, International Humanitarian Aid Porcupine 131, 150, 117 Save the Children Yak Shack Midnight City 34, 220, 26 (mature) Thinkhouse PR: Dublin 88,63,25 (mature) Topaz Partners: Launching Soon Market Research Companies Market Truths: Market Truths 52, 194, 35 Reperes Second Life: Loon 209,23,104 The Boomer Esiason Foundation, Cystic Fibrosis Education Boomer Island 80, 66, 30 (mature) Media World Vision, Alternative Gift Catalog Kiwa Northwest 53, 169, 24 (mature) Tourism Boards SL Business Magazine: Business and marketing in Second Life (monthly magazine) Metaverse Messenger: Second Life news (weekly newspaper) Intoscana, Tuscany, IT: Launching soon Galveston, Texas, U.S.: Launching soon Metaverse Messenger Teen: Second Life Teen Grid news (weekly newspaper) Second Life Herald: Second Life news (news blog) Marketing and Public Relations Agencies 65 Marketing: Shinda 140,132,0 (pg) AKQA: Millions of Us 39,80,24 (pg) Second Life Arts and Total Entertainmnet: The arts and cultural scene of Second Life (monthly magazine) Andrea Media: Giacometti 192,64,0(mature) Second Life News Network: Second Life news and real life news that affects Second Life (daily) Artmiks: Seopophang 226,138,100 (mature) In The Grid: Second Life culture (monthly magazine plus blog) Bartle Bogle Hegarty: BBH 128,128,0 (pg) Second Style: Fashion scene in Second Life (monthly magazine plus Fashionista blog) THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 23 Appendix (continued) Second Opinion: Official Linden Lab newsletter (monthly) Ohio University, Ohio University Without Boundaries SL Campus: Ohio University 20,36,24 (pg) The Konstrukt: General magazine (monthly) Pepperdine University: Malibu Island Second Life Art News: Second Life art news (blog) Pixel Pinup: Fashion and design in Second Life (web-based magazine) University of Illinois at Urbana Champaign: Cybrary City 220, 138, 24 (mature) Source: Business Communicators of Second Life ASpiRE Magazine: Fashion in Second Life Second Life Reuters: Business and economy of Second Life by Reuters AvaStar: Professional tabloid newspaper associated with BILD Grid Review: Machinima news PixelPulse Magazine: Second Life Adult magazine Podcasts SecondCast: A collection of discussion and event webcasts related to Second Life SLPodcast: The Podcast and Blog about Second Life Broadcast Virtual Life TV: Broadband channel for Second Life Universities This list is in progress and reflects universities that have some Second Life presence. This list does not necessarily indicate the university is offering classes, but may have some other presence in-world. Many are not open to the public. A comprehensive list of Institutions and Organizations in Second Life is kept at the Simteach wiki. Web site URLs for each organization is provided. Check here for a complete list: Simteach Wiki/Organizations Ball State University, Center for Media Design: Middletown 196, 179, 31 (mature) Harvard Extension School: Launching soon Harvard Law School: Launching soon New York University: Launching soon Other popular virtual worlds include: Best for Kids Disney’s Toontown Mokitown Virtual Magic Kingdom Whyville Best for Teens Coke Studios Dubit Habbo Hotel The Manor The Palace Playdo Kaneva Second Life for Teens The Sims Online Sora City There TowerChat whyrobbierocks.com Yohoho! Puzzle Pirates Best for 20s - 30s Active Worlds Cybertown Dreamville The Manor Moove Muse The Palace Second Life The Sims Online Sora City TowerChat There THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 24 Virtual Ibiza Voodoo Chat VP Chat VZones Worlds.com Yohoho! Puzzle Pirates Best for Ages 40+ The Manor Moove The Palace There Traveler VP Chat Voodoo Chat Worlds.com Yohoho! Puzzle Pirates Best for Techies Active Worlds Cybertown Muse Second Life Best for Newbies Coke Studios Dubit Habbo Hotel Playdo The Sims Online There TowerChat Virtual Magic Kingdom VP Chat VZones whyrobbierocks.com Whyville Yohoho! Puzzle Pirates Best for Artists Active Worlds Cybertown Muse Second Life There Worlds.com Best for Dial-Up Coke Studios Dubit Habbo Hotel The Manor Mokitown The Palace Playdo TowerChat Traveler Virtual Ibiza Voodoo Chat VP Chat VZones Whyville Worlds.com Free Access! Active Worlds Coke Studios Dreamville Dubit Habbo Hotel Mokitown Moove Muse The Palace Playdo Second Life Sora City There TowerChat Traveler Virtual Ibiza Virtual Magic Kingdom Voodoo Chat whyrobbierocks.com Whyville Worlds.com Yohoho! Puzzle Pirates Mac Access Coke Studios Dubit Habbo Hotel The Manor Mokitown The Palace Playdo Second Life TowerChat Virtual Ibiza VZones whyrobbierocks.com Whyville Yohoho! Puzzle Pirates Best for Broadband Active Worlds Cybertown Disney’s Toontown Dreamville Moove Muse Second Life The Sims Online There Yohoho! Puzzle Pirates There and World of Warcraft As well as: Active Worlds Coke Studios Cybertown Disney’s Toontown Dreamville Dubit Habbo Hotel Mokitown Moove Muse MTV Laguna Beach Playdo The ISecond Lifeands Online Sora City Disney’s Virtual Magic Kingdom VPchat whyrobbierocks Worlds.com THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 25 Appendix (continued) Second Life and Related Blogs Business Communicators of Second Life Exploring the potential of Second Life for business communications, information dissemination and innovation. 3pointD The Metaverse and 3D Web, as blogged by Mark Wallace and friends Beth’s Blog A place to capture and share ideas, experiment with and publish links about nptech, educational technology, information design, visual thinking, creativity, ICT in the developing world, and much more. Clickable Culture By Tony Walsh Official Blog of Linden Lab The Official Blog of Linden Lab, makers of Second Life. reBang Weblog Product design. virtual design. transreality technologies. mixed reality convergence. and that which binds them. Global Kids Digital Initiative A blog for Global Kids’ work in our Online Leadership Program. I-Anya Australian academic teaching and researching in Second Life. Editor of Slatenight Magazine. InfoIsland Second Life Library2.0. KnowProSE Where one line can make a difference. New World Notes Wagner James Au reports first-hand from Second Life. NMC Campus Observer News from our virtual campus in Second Life: New Media Consortium Virtual to Reality What’s Next? Roo Reynolds - diary of a Metaverse Evangelist. Second Life Wikis Second Life Education Research Using Second Life as a research and education tool. Beyond Broadcast Wiki: Berkman Center for Internet & Society at Harvard Law School Second Life et la seconde vie du Web The experiences and thoughts of Wangxiang Tuxing having a Second Life. (French language) Creative Commons Second Life Wiki Second Life Insider A Weblogs, Inc. Network blog eightbar By a group of techie/creative people working in and around IBM’s Hursley Park Lab in the UK. Virtual Suburbia Architecture of Second Life Game Slave Wiki LSL Wiki (Linden Scripting Language by Catherine Omega) Roots Camp Wiki Second Life for Marketers Glossary SecondLife Observer SLObserver is a blog of information in French on the virtual universe Second Life. Second Thoughts By Prokofy Neva who lives and works in Second Life. Second Life of Warcraft Second Life Through the Ages Simteach Second Life Education Wiki SLOz Australia’s Second Life News Source The Second Life Times Second Life News Journal Tao’s Thoughts on Second Life The experiences of Tao Takashi having a Second Life Terra Nova Terra Nova is a blog about virtual worlds and their implications. tu Segunda Vida en castellano Your Second Life in Castilian. THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 26 Estimated In World Business Owners: Unique Users with Positive Monthly Linden Dollar Flow (PMLF) USD Equivalent PMLF September 2006 October 2006 November 2006 December 2006 January 2007 February 2007 < $10 USD 5,180 6,285 7,098 9,000 11,396 13,490 $10 to $50 USD 2,770 3,402 3,592 4,535 5,671 6,625 $50 to $100 USD 760 866 1,010 1,239 1,489 1,690 $100 to $200 USD 566 692 797 921 1,119 1,289 $200 to $500 USD 524 563 671 823 1,018 1,165 $500 to $1,000 USD 228 263 289 350 386 496 $1,000 to $2,000 USD 125 160 179 229 263 283 $2,000 to $5,000 USD 77 92 94 140 188 211 > $5,000 USD 37 41 58 90 97 116 Total Unique Users with PMLF 10,267 12,364 13,788 17,327 21,627 25,365 Monthly Spending by Amount (2007 February) Transaction Size Resident Transactions by Amount (2007 February) Residents 1 - 500 L$ 113,396 Transaction Size Volume 1L$ 1,709,467 501 - 2,000 L$ 32,995 2 - 19 L$ 3,500,533 2001 - 5,000 L$ 23,567 20 - 49 L$ 1,089,090 5,001 - 10,000 L$ 16,842 50 - 199 L$ 1,426,485 10,001 - 50,000 L$ 29,834 200 - 499 L$ 622,635 50,001 - 100,000 L$ 6,249 500 - 999 L$ 266,731 100,001 - 500,000 L$ 5,475 1,000 - 4,999 L$ 297,264 500,001 - 1,000,000 L$ 649 5,000 - 19,999 L$ 69,425 Over 1,000,000 L$ 571 20,000 - 99,999 L$ 14,293 100,000 - 499,999 L$ 1,822 >= 500,000 L$ 149 Total Transaction Count 8,997,894 Total Customers Spending Money In-World 229,578 THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 27 Special Thanks to: Patrick Burke, Dimitri Darras, Katie Gerenski, Mary Ellen Gordon, Rowland Hobbs, Boris Kizelshteyn, Dan Koifman, Gina Miller, Carol Pinchefsky, Mark Sahm and Eric Teng THE VIRTUAL BRAND FOOTPRINT: THE MARKETING OPPORTUNITY IN SECOND LIFE • PAGE 28
Marketing in Second Life and Other Virtual Worlds October 2007 © 2007 Media Contacts :: Havas Digital Lead Contributors TS Kelly SVP, Director of Research and Insight, Media Contacts Global ts.kelly@mediacontacts.com Anthony Rhind Chief Strategy Officer, Media Contacts Global anthony.rhind@mediacontacts.com If you want to receive the MC Insight periodically, please subscribe to mcspeaks.mediacontacts.com © 2007 Media Contacts :: Havas Digital 1 Contents 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Introduction What really is Second Life? Other Virtual Environments Early Marketing Efforts Virtual Marketing Challenges What’s Next for Virtual Worlds? Final Comments Suggested Resources and Reading Endnotes Glossary Contact us © 2007 Media Contacts :: Havas Digital 3 5 10 14 23 30 35 36 37 38 40 2 1. Introduction In October 2007, Linden Labs’ virtual online community Second Life welcomed its 10 millionth resident to its service. Its unprecedented growth over the past 18 months has vaulted this little-known San Francisco firm to the front pages of Business Week, Wired, MIT’s Technology Review and a host of other ‘physical’ publications worldwide. There has been some recent backlash, however, with some journalists writing that most of Second Life, especially areas developed by brands, is deserted. It is ironic that such an article would appear in an issue of Wired (August 2007), a usually tech-progressive publication. It is a serious point we will consider later when discussing how brands should take advantage of virtual environments. However, Media Contacts feels that dismissing Second Life and similar virtual services outright as nothing more than hype would be missing the point. To the uninitiated, Second Life may seem more like a geek haven than a thriving virtual community. In some ways this skepticism echoes comments made in the early days of the commercial Internet in the mid-1990’s. Three years ago it may have been fair to generalize that virtual environments were the preserve of a niche group comprising only gamers and hardcore techies; today Second Life has become, arguably, a leader in the rapidly growing area of virtual communities and the poster child for a new wave of metaverse-related products and services with a much broader demographic and behavioral appeal. Though Second Life (and similar platforms) may never reach ‘mass market’ status, the service has quickly become an intriguing opportunity for marketers to better understand how to interact with consumers within an immersive ‘virtual’ 3D environment, also known as a metaverse. Active users within Second Life are not only exposed to marketer brands and messages but can also choose to engage through exploration, dialogue, testing, customization, games and other forms of interaction. Second Life may also represent a critical early learning environment if, as we feel will be the case, ‘web 3.0’ in fact turns out to be ‘web 3-D’ … A topic we will consider within the scope of this MC Insight. Several marketers have already taken the plunge into Second Life (including a number of high profile initiatives by Media Contacts clients - Sears, Citroen and Lacoste). Retail companies have been most active, creating virtual consumer spaces as they would ‘real world’ consumer environments. Automotive firms such as Nissan, Peugeot, Pontiac and others have created virtual showrooms providing Second Life residents test drives and virtual ownership of their latest models. Adidas and Reebok offer virtual pairs of running shoes. Dell welcomes users into a virtual factory to customize their own PC for delivery (and purchase) in the real world. Sears allows customers to explore a virtual department © 2007 Media Contacts :: Havas Digital 3 Introduction store, letting users in one area to design their own ‘dream’ kitchen. Even Starwood for a time had a virtual hotel, aloft, in which residents could explore, experience and add input on the future design of the new chain well before its physical launch in 2008. Recent academic research querying existing Second Life users suggests that virtual environments may help promote communication, collaboration and cooperation.1 Though still too soon for marketers to take full advantage of these positive user perceptions, early virtual advertising efforts may offer some positive impact on brand recall, affinity and purchase intent. Media Contacts, working with our network of offices and clients worldwide, has already utilized Second Life within a broader communication plan and also as a standalone tactic. To ensure we understand the impact of these actions we have and continue to undertake research into the consumer perception and usage patterns of this emerging platform. Our goal has been and continues to be - working towards an understanding of the marketing potential & acceptable process for commercial communication. Though virtual environments such as Second Life are still in their infancy, our efforts thus far suggest that marketers should consider a very limited exposure to virtual environments in the near term. Consequently, expectations on performance should also be limited as these services will likely not yield mass-media performance for at least a number of years (if at all). In the meantime, however, Second Life and similar virtual communities offer a robust environment for trial and testing. To share some of our initial experience with Second Life and other virtual environments, Media Contacts has produced the following MC Insight to help marketers decide if virtual environments should be incorporated into their future digital media plans. We would be delighted to discuss individual business issues opportunities, whether you are already a Media Contacts client or simply just interested in a more case-specific perspective. Please contact your Media Contacts Account Director, or either author to find out how Second Life and other virtual environments may play a role in your overall marketing plans. © 2007 Media Contacts :: Havas Digital 4 2. What really is Second Life? 2a. The Basics Simply stated, Second Life is an online virtual world (or metaverse) in which usergenerated 3-D personas, called avatars, interact, participate in group activities, create and trade items (virtual property) and services from one another. 2 Virtual worlds such as Second Life offer a unique combination of characteristics – gaming, community, and user-generated content. Together they offer users nearly infinite opportunities for expression, exploration, association, collaboration and social interaction. The gaming component in Second Life is not unlike other existing MMOG’s (massively multiplayer online games) such as Blizzard’s World of Warcraft or CCP’s Eve Online in which users create an avatar and interact with other players in tandem or in competition. For example, users in World of Warcraft and similar games combine their unique talents to perform specific scripted tasks such as slaying dragons or defending a village from attack, a key distinction being the range of behavioral options is structured to reflect game objectives. Second Life offers similar, but widely un-structured and un-scripted, opportunities to interact with other users in a whole range of virtual game-like activities from war games, fencing, skydiving, role playing, or kart racing to more cerebral pursuits such as trivia, debating or even 3-D board games. The community aspect of virtual environments is a natural extension of other popular social networking services such as Facebook or MySpace. In Second Life users can interact with people with similar goals or interests by joining virtual clubs or academic groups and sharing experiences or chatting (text or voice) in virtual meeting places. One major distinction between ‘real life’ social networks such as Face Book or MySpace and similar connections in Second Life, many users in virtual environments choose to keep their virtual and real lives completely separate (actually living two distinct lives). An indication of this clear separation between the real and the virtual is reflected in the current demographics of the service. While the majority of users of Second Life are male, the majority of the avatars in the system are female. User-generated content is probably the most personalized aspect of Second Life and similar virtual worlds. Users can customize the appearance of their avatar by designing unique body shapes, clothing and personal accessories. More advanced users can create pets, vehicles, homes and elaborate landscapes. As a bonus, residents possess virtual copyright privileges for unique items they create within the service. © 2007 Media Contacts :: Havas Digital 5 What really is Second Life? What is an Avatar? Its origin comes from Hindu philosiphy most commonly referring to the incarnation (bodily manifestation) of a higher being (deva) or ‘Supreme Being’ onto planet Earth. The word has also been used by extension to refer to the incarnations of God or highly influential teachers in other religions, especially by adherents to dharmic traditions when explaining figures such as Jesus or Mohammed. Source - Wikipedia More recently, the term ‘avatar’ was famously penned by William Gibson is his 1984 novel Neuromancer, in which people created virtual 3-D representations of themselves or ‘avatars’ for use in the metaverse. 2b. Early ‘Virtual’ Days Second Life, formerly known as Linden World, sprang to life in late 2002. Created by former Real Networks’ CTO Philip Rosedale and his company Linden Labs, Second Life has grown in just a few short years from a handful of servers to literally thousands worldwide supporting over 10 million residents (as of October 2007). There is an ongoing debate, however, to the ‘true’ resident population. The Second Life website currently defines a ‘resident’ as “a uniquely named avatar with the right to log into Second Life, trade Linden Dollars (currency in SL) and visit the Community pages” – currently pegged at over 10 million total residents (TR). There are some issues with this service definition. Regardless if a user has one or multiple accounts, each unique avatar is counted as a unique resident. Many unique users also try the service only once and never return; this may also inflate overall TR population figures. Other metrics are likely far more accurate such as RCO, residents concurrently online. This RCO figure currently averages roughly 30K, but can fluctuate anywhere between 20K and 40K residents concurrently online. Another SL population metric widely quoted is the figure for residents who have logged in the past 60 days. Though this metric also includes single-use residents, the 60-day figure may be a better gauge of churn and service popularity than either TR or RCO. © 2007 Media Contacts :: Havas Digital 6 What really is Second Life? Concurrent Residents Online and Total Residents data collected 08/2006 - 03/2007 GMT, excluding grid downtime 40’000 4’500’000 35’000 4’000’000 30’000 3’500’000 25’000 3’000’000 20’000 2’500’000 15’000 2’000’000 10’000 1’500’000 5’000 500’000 0 08/2006 0 09/2006 10/2006 Average Concurrent Residents Online 11/2006 Total Residents 12/2006 01/2007 02/2007 Trend Average Concurrent Residents Online Additional research studies conducted by professors and students at Rollins College and elsewhere have projected that Second Life will produce an RCO of 150K by March 2008, based on current growth and usage trends. In addition, Second Life’s TR during that same month will increase to 25 million. 3 2c. The ‘Cost of Living’ in Second Life Unlike your ‘real’ cost of living, there is no financial expense to basic existence in Second Life. However, if a user decides to plant roots and settle down in Second Life, by owning virtual property or setting up a virtual business, there are monthly fees for land ownership, maintenance, and other associated server and support costs. As a result, an economy of sorts has developed within the Second Life metaverse helping facilitate the exchange of virtual goods and services between residents. In order to buy land or other items within Second Life, one must use a form of virtual currency called Linden dollars. A floating exchange, called the Lindex, keeps track of the conversion between Linden Dollars and ‘real’ U.S. dollars. As of August 30th, the conversion rate posted on the exchange was L266 Lindens to the dollar. According to founder Philip Rosedale content creation is also a viable virtual world business. Residents of Second Life transact more than $1 million a day, and about 40,000 residents are cash flow positive, he said. In one Second Life shop, 830 residents are making greater than $1,000 per month from selling virtual clothing. “Just like the Web, a network effect business is driven by creativity and economic success.”4 © 2007 Media Contacts :: Havas Digital 7 What really is Second Life? The First Virtual Millionaire Ailin Graef by day is a Chinese-born language teacher in Frankfurt, Germany. By night she is one of a growing number of virtual entrepreneurs doing business in Second Life. Buying and selling virtual real estate, creating a whole line of designer structures, clothing and various personal items, Ailin Fraef’s virtual persona Anshe Chung (pictured at left) has become a bit of a celebrity beyond the realm of Second Life. Her amassed wealth within Second Life has blossomed into a growing business in the ‘real world’ worth millions of dollars. She now supports a growing worldwide team of designers and business associates all helping to run her virtual operations. 2d. Academic Pursuits As was the case in the early days of the Internet, academic institutions and researchers have been some of the earliest adopters of virtual environments such as Second Life. Conducting lectures, town hall meetings and other academic functions, Second Life has allowed schools and universities to extend the reach and flexibility of their ‘distance learning’ and collaboration efforts. Thanks to the metaverse, physical presence is no longer necessary to be an active part of intellectual discourse. According to Professor Rory Ewins of Edinburgh University, beyond email, IM and chat rooms, Second Life “replaces that sense of immediacy that you have in real life.”5 A sample of the growing list of schools and universities now in Second Life: Arcada University, Finland Aarhus Business College, Denmark Berkeley Columbia University Cornell Duke University Edinburgh University Harvard University INSEAD Ithaca College MIT Murray State University New York University Oxford University Sogang University, S. Korea University of Aveiro, Portugal University of Sydney, Australia University of Toulon, France Areas of academic study using Second Life as a platform include: chemistry, biology, meteorology, geology, architecture, urban planning, industrial design and any number of artistic disciplines. According to Anne Beamish, Professor of Urban Planning at University of Texas at Austin, Second Life provides an alternate palette in which to engage her students. “I use Second Life for students to explore ideas about public space and what makes a good public space,” she said. “Being in Second Life all of a sudden puts them in this different environment, which is similar but different, and it forces them to explore how they think about these things” 6 © 2007 Media Contacts :: Havas Digital 8 What really is Second Life? No Peeking! As was the case with the rise of the Internet, DVD’s, satellite TV and other media platforms, adult content has found its way into the realm of the metaverse. Arguably, the appearance of adult content and gambling within Second Life and other virtual communities could be a harbinger of a growing interest in virtual worlds as both a social and commercial platform. In early May 2007, Second Life instituted several technical safeguards to block exposure to adult content and gambling services from specific avatars based on user age and location. In July 2007, Linden Labs went one step further, outlawing all games of chance in SL that are ‘connected to real life events.’ © 2007 Media Contacts :: Havas Digital 9 3. Other Virtual Environments 3a - A crowded virtual world Second Life is certainly not alone, nor was it the first virtual environment or community to spring up in cyberspace. In fact, there are literally dozens of virtual environments currently active or in their planning stages. Some are as unscripted like Second Life, while others offer a more structured environment. A sample of existing virtual worlds: Cyworld – cyworld.nate.com Data stat: Reaches over 90% of all teens in S.Korea. Originally in South Korea, Cyworld has become extremely popular throughout the Pacific Rim and recently launched in North America. Members cultivate on- and off-line relationships by forming ‘Ilchon’ or buddy relationships with each other through a service called “minihompy”, which encompasses photo galleries, message boards, guest books and ‘mini rooms’ where users create their own personalized virtual living space. Source Wikipedia Habbo Hotel – www.habbo.com Data stat: Over 50 million users worldwide Launched in 2000 by two Finnish entrepreneurs, the service has spread to over 29 countries worldwide. Users customize their own ‘Habbo Guest Room,’ with pictures and various ‘fumi’ or furniture. Users obtain fumi and other items through the Bank of Habbo, where credits are created and exchanged. Habbo has limited flexibility and tends to attract a younger user base than most other virtual community services. © 2007 Media Contacts :: Havas Digital 10 Other Virtual Environments Sony’s ‘Home Project’ for PS3 Data stat: 4.5m PS3 units sold worldwide (Sep’07) Home is the ‘soon-to-be launched’ virtual community built exclusively for the PlayStation 3 console. Users will design their own avatar and living space including a personal trophy room to review game achievements. Public or ‘common’ areas will include multiple lobbies and meeting places for conversation (both text and voice) and game challenges. There will also be theatres and museums to watch previews, videos, in-game clips as well as play mini-games. Club Penguin – www.clubpenguin.com Data stat: Over 12 million active users worldwide Club Penguin is a massively multi-player online game (MMOG) specifically developed for children ages 8 to 14. Using cartoon penguin avatars, players chat, play mini-games and participate in other joint activities. Users can design their own igloo homes and adopt pets called ‘puffles’ which are also customizable. The service was recently purchased by Disney in a deal worth nearly $700 million. Entropia Universe – entropiauniverse.com Data stat: Over 600k registered users worldwide Similar in scale and scope to Second Life, Entropia Universe is a science-fiction game set on the planet of Calypso. Game players must help create a civilization on this untamed-virtual world. Similar to Second Life, users begin the game with virtually nothing and must build up skills and possessions to survive and then thrive. A currency system has also been established by which users can easily transfer funds between real and virtual worlds. © 2007 Media Contacts :: Havas Digital 11 Other Virtual Environments There – www.there.com Data stat: 1 million users, mostly in North America There.com is another competitor to Second Life and the rest of the emerging group of players in this space. There.com’s claim to fame is an ongoing relationship with cable channel MTV. The Hills and Virtual Laguna Beach are online extensions of both hit cable shows on the network (vmtv.com). There.com service currently boasts roughly 750,000 active users on its main services. Virtual Lego Community Staging a series of events in Second Life in 2006, Lego is no newcomer to the virtual world. Lego recently announced a partnership with MMO developer NetDevil to create a virtual Lego community set to launch in 2008. According to Valther Pallesen, EVP at LEGO, “The LEGO brand represents construction, creativity and problem solving – values that compliment the MMOG market. 7 3b. Let the Games Begin! The arrival of Second Life and similar virtual worlds should not be a surprise to anyone. In a sense, the early developments of video games on both the PC and various gaming platforms (Sony, Nintendo, and Microsoft) provided increasingly complex and visually immersive user experiences. Classic single and multi-player games such as Castle Wolfenstein, Doom, Quake, Half-Life, Halo, Metroid Prime, and Call of Duty (usually labeled as first-person shooters or FPSs) evolved over time providing players with increasingly rich, yet scripted, virtual 3-D environments. Today Second Life has been compared to what are called massively multi-user online games (MMOGs) such as World of Warcraft (WoW) or Eve Online; however, it may not be a completely fair comparison. Though possessing similar social attributes such as their persistent nature (always active) and various community building characteristics, games such as WoW and Eve Online are much more structured and scripted, limiting users to specific goals, storylines, language, and codes of conduct. © 2007 Media Contacts :: Havas Digital 12 Other Virtual Environments Conversely, immersive services such as Second Life and Active Worlds are widelyunscripted and unstructured virtual environments. Apart from a few basic rules, users are allowed to create their own reality – appearance, environment, interactions, etc. Some critics cite that most new users do not know what to do when they first enter these worlds, that they are too open-ended. 8 Ironically, it may actually be this flexibility (or open-endedness) that could drive development in the virtual space. Could Second Life offer clues to a future Web 3.0? Though not all current or planned virtual worlds may be active 5 or 10 years hence, no doubt many will exist in some form or another. Perhaps one of the existing virtual environments will be the basis for a future Web 3-D platform, a ‘virtual’ standard in which future online services and interactions will be based? (discussed in Section 6) Though some sports and action video game titles have attracted some interest from marketers, the violent, fantasy, and adult themes in many scripted MMOGs games, such as WoW or Halo, may find it difficult to attract most brands. Alternatively, open-ended environments such as Second Life allow for multiple themes and multiple environments, suggesting brands may play an important role in their ongoing development. We will discuss this in more detail later in this MC Insight. Before Second Life… Early First Person Shooters (FPS) such as Doom and Duke Nukem 3D introduced consumers worldwide to the visual concept of 3D computing and gaming environments. Doom (id Software, 1993) Duke Nuken 3D (3D Realms, 1996) © 2007 Media Contacts :: Havas Digital 13 4. Early Virtual Marketing Efforts According to writer W. James Au there are now over 100 ‘for-profit’ corporate-owned islands in Second Life (actually 136 if one includes the non-profits) all considered ‘real life’ firms conducting business in Second Life since its inception in 2002. 9 The rudimentary advertising methods in use since the early days are more akin to outdoor signage than virtual marketing. Businesses post graphics and static displays on the sides of various structures and surfaces within SL’s virtual environment. By clicking on specific graphics, users are prompted with text messages from various companies within SL, offering special deals on virtual clothing, artifacts, body designs, real estate or even consulting on how to live a better ‘second life’ within the service. Many of these SL advertisements now include Second Life urls or ‘SLurls’ linking directly to specific web pages outside the SL environment. Signage examples in SL: SLurl example: Clicking on the Sears logo takes the user directly to Sears.com. © 2007 Media Contacts :: Havas Digital 14 Early Virtual Marketing Efforts More recent examples of marketing within Second Life include store fronts, showrooms, audio clips, vehicles, digital sampling of merchandise, guest speakers in virtual reading and lecture halls, and even rock concerts - all taking advantage of SL virtual capabilities. Virtual consulting firm K Zero (UK) recently published brand timelines (retail below) of various industry sector activities within Second Life. As these timelines suggest, as the total Second Life population has pushed towards the 8 million mark (and now beyond), an increasing number of companies in a wide array of industry sectors - automotive, financial, retail, media, etc, have all staked a claim within Second Life. Retail brands in Second Life Bruna 8M 1-800 Flowers 7M Registered accounts Lacoste Kraft osMoz 6M Aveda Aveda 5M L’Oreal Calvin Klein 4M 3M American Apparel 2M Circuit City Reebok Adidas Sears 1M 0M Jun 06 J A S O N D Jan 07 F M A M Jun 07 Jul Aug Source: K Zero © 2007 Media Contacts :: Havas Digital 15 Early Virtual Marketing Efforts Virtual Marketing Spotlight – Sears Launched in January 2007 through a partnership with IBM, the Sears storefront in Second Life, called the Sears Virtual Home, offers distinct showroom floors for automotive products and services, home and kitchen furnishings, as well as consumer electronics. Each floor highlights different Sears products providing consumers much more functionality than what is possible through a typical store web site. Of particular note is the kitchen design center allowing Second Life users to model and create their own dream kitchens using a wide array of colors, textures and hi-tech Sear products and appliances. Users can move around within their custom creations as they would in a real kitchen in order to get a look and feel for how the products would work in their own kitchen at home. The Garage and Automotive floor offers similar product possibilities for consumers. Click on a set of Craftsman cabinets and the tools perform a neat trick of flying through the air finally arranging themselves back on cabinet shelves. Like the custom kitchen, Second Life users can walk around the garage to see how they can design their own workshop. The Entertainment and Electronics showroom provides similar interactive functionality allowing visitors to test various home electronics such as televisions (watch movie trailers and other video clips) as well as test virtual sounds systems to find the perfect speaker arrangements for a specific room in their own home. © 2007 Media Contacts :: Havas Digital 16 Early Virtual Marketing Efforts Virtual Marketing Spotlight – Lacoste In April 2007, worldwide clothier Lacoste held a virtual modeling contest in search of the 100 most remarkable avatars in Second Life. Unlike American Apparel or Reebok, Lacoste chose not to have an ‘ongoing’ presence in Second Life, deciding instead to run a multi-week promotion allowing residents and artists in the virtual world to express themselves outwardly, displaying their virtual presence for the ‘real’ world to see. The top 6 contestants, as voted by the ‘real and virtual’ public, shared the grand prize of 1 million Linden Dollars. © 2007 Media Contacts :: Havas Digital 17 Early Virtual Marketing Efforts 4a. Additional Marketing examples in Second Life: Adidas Adidas launched a virtual store in Second Life in September 2006 to promote a new brand of shoe available in the real world, the a3 Microride. When worn in Second Life, the shoes provide SL users a little extra bounce in their step. Reebok also launched a store in SL. In their virtual storefront users are offered design options for shoes that can be purchased in the real world. aloft by Starwood In preparation of its ‘real world’ debut in 2008, Starwood launched a virtual model of it’s aloft hotel concept in Second Life. In May 2007, the hotel chain redesigned the interior of the virtual hotel space and announced they would donate their Second Life island to a worthy cause once their marketing efforts were concluded. American Apparel Launched in June 2006, American Apparel was the first ‘real world’ store to open up a counterpart in Second Life. The clothing company also was the first to connect virtual world sales with its real world counterpart. Clothing items selected by SL residents in the virtual store were good for discounts towards similar items in the real American Apparel stores. The AA virtual store experiment ended in July 2007. © 2007 Media Contacts :: Havas Digital 18 Early Virtual Marketing Efforts L‘Oreal Paris In early Spring 2007, L‘Oreal Paris and virtual modeling agency Aspire! hosted the Face of L’Oréal Paris Glamour fashion show within Second Life. The winner, Isabella Sampaio (pictured left) received a year’s supply of L’Oreal Paris products, a modeling gig with the Aspire! Modeling Agency and have their avatar displayed on a special VIP L’Oreal Paris website. Dell Computers Dell launched their Second Life factory in November 2006, allowing users to not only obtain virtual PCs, but design and order models for their real world counterparts as well. The Dell Island includes a walk-through of a late model Dell desktop as well as a mockup of Michael Dell’s college dorm, the founder and CEO of Dell. Scion (Toyota) Scion was one of the first automotive companies in Second Life. In addition to offering SL users a test drive of their new models, Scion allowed SL residents to create their own virtual versions of the vehicle, mimicking the personalized and exclusive touch of the brand in the real world. Other auto brands have quickly followed Scion’s lead including: Toyota (Scion’s parent), Nissan, Mazda, Pontiac, BMW, and several others. © 2007 Media Contacts :: Havas Digital 19 Early Virtual Marketing Efforts Coca-Cola – Virtual Thirst Contest In May 2007 Coke launched the Virtual Thirst contest in SL inviting all Second Lifers and designers to create their versions of virtual Coke machines. In addition to SL, Coke used a unique MySpace page and promotional site virtualthirst.com to provide entrants and other interested parties updates on the status of the contest. The winning design was announced in July 2007. Citroën - Brasil In April, 2007, Linden Labs launched the official Portuguese version of Second Life called Ilha Brasil. At the time of launch, Citroën opened its first virtual dealership, offering residents test drives in their new 2008 model, the C4 VTR, which they were allow to keep for use anywhere within SL. The complete virtual strategy also included a virtual Citroën plant showing the company’s automated assembly line. Penguin Books – William Gibson In August 2007, Penguin Books and Rivers Run Red hosted a book reading event in Second Life to promote the launch of William Gibson’s new book, Spook Country. Live book readings and Q&A sessions have become a staple within the SL universe. Bantam Books offered up Dean Koontz to SL residents back in March 2007, reciting from his recently published work, The Good Boy. © 2007 Media Contacts :: Havas Digital 20 Early Virtual Marketing Efforts Sky News UK In May 2007, Sky News launched a 24-hour news center in SL offering viewers the chance to sit at the anchor desk for a close-up view of what it looks like to work in a news studio. Sky News is certainly not alone. Other media firms such as the BBC, Reuters, Channel 4 and others have also made their presence known in Second Life. Kraft – Phil’s Supermarket In May 2007, Kraft launched Phil’s Supermarket, named after ‘supermarket guru’ Phil Lempert, food editor for NBC’s Today show in the U.S. Inside Phil’s Supermarket is a culinary school, holding scheduled classes on food and cooking, as well as a new product showcase, displaying various new product ideas from Kraft. NOAA – Weather Maps, Planetariums, and Hurricane Simulators In addition to the myriad of academic institutions inhabiting Second Life, non-profit organizations and government agencies are also using the platform to hold public forums, explore new learning techniques, or just experiment. The NOAA, the U.S. National Oceanic and Atmospheric Administration has been a long-time resident within Second Life creating large scale ‘walk-through’ weather maps as well as other science-related environments. © 2007 Media Contacts :: Havas Digital 21 Early Virtual Marketing Efforts The preceding pages contain just a handful of the many companies and organizations joining the ranks of the virtual populace. No question, these are very early days for virtual environments. Brave marketers taking these first courageous steps into Second Life and other virtual worlds are learning and experimenting as much as they are reaching out to their target consumers. As a result, performance varies widely depending on brand, sector, and an evolving process of trial and error. Regardless of the outcome, Second Life has afforded marketers the unique opportunity to create new modes of interaction between consumers and brands. Lessons learned here will provide invaluable insight as other virtual media environments emerge, grow and evolve in the coming years. Sample ‘Must Reads’ from the Metaverse: Helped coin the term ‘metaverse’ Early use of term ‘avatar’ Terrific resource for anyone interested Boasts the first use of the word This densely written techno-thrill in learning how to maximise their time ‘metaverse.’ Snow Crash has ride boasts the first use of the in this extremely popular virtual world. become the inspiration for any word ‘avatar’ in modern literature. (2007) number of writers, developers (1984) and film directors making forays into virtual worlds. (1992) © 2007 Media Contacts :: Havas Digital 22 5. Virtual Marketing Challenges Second Life and its ilk have come under some scrutiny in mid-2007. Despite all the positive media coverage, increasing marketer involvement and a burgeoning resident population, many Second Life advertising efforts of late have been met with mounting indifference. Citing inaccurate population figures, empty virtual buildings and storefronts, technical glitches, scalability issues and inconsistent measures to gauge success, pundits, consultants and even marketers themselves have all begun to question the overall effectiveness of Second Life and similar virtual worlds as a viable advertising platform.11 A recent article in the September 2007 issue of Wired magazine has only helped to reinforce this growing skepticism, taking a bearish stance on the near-term marketing prospects of Second Life and similar virtual environments. 12 Considering the examples mentioned in the Wired article (Adidas, H&R Block, etc), a good number of marketers may have entered the ‘virtual’ space with unrealistic expectations. In this section we will explore some of the current challenges of marketing within Second Life and other virtual environments: Don’t expect ‘mass media’ results Managing expectations is absolutely crucial Treat virtual environments like event planning Do brands need a temporary or permanent presence in virtual worlds? By understanding the existing issues, we may find proper reason to either pursue/refine a virtual marketing strategy or hold off until more suitable opportunities materialize. 5a. Don’t expect ‘mass media’ results As detailed in Section 2, critics argue that multiple avatars could be owned by a single individual. The total resident (TR) population listed on the service tracks avatars and NOT people; as such, this TR figure could be grossly inflated. A better way to gauge audience size within SL may be to observe ongoing activity or residents concurrently online (RCO). Independent metrics released by Rollins College in June 2007 suggest that Second Life supports an RCO figure of roughly 25K.13 The same report projects that by March 2008, Second Life will be home to more than 25 million residents (avatars) and attract a concurrent online audience of roughly 150K. No question, an RCO of over 150K would be quite impressive. Realize, however, that this figure represents a worldwide audience. Audience figures (left) released by comScore in May 2007 reveal that the largest share of active users of Second Life is actually located in Europe, Germany in particular. © 2007 Media Contacts :: Havas Digital 23 Geographical Location of Second Life Residents Who Logged-in During January and March 2007 Unique People, Age +15 Total Worldwide Audience - Home and Work Locations* Source: comScore World Metrix Worldwide Europe Germany France UK North America USA Asia Pacific Latin America Middle East & Africa Mar.07 (000) Percent of Total Active Residents Increase In Active Residents Mar.07 vs Jan.07 1,283** 777 209 104 72 243 207 167 77 20 100%** 61% 16% 8% 6% 19% 16% 13% 6% 2% 46% 32% 70% 53% 24% 103% 92% N/A*** 26% N/A*** * Excludes traffic from public computers such as Internet cafes or access from mobile phones or PDAs. ** Sum of components may equal more than total due to rounding. *** N/A - Residents in January below minimum reporting standard source: Media Guardian As the destination traffic figures listed below suggest, many well-known marketer-focused SL destinations deliver limited audiences. Any marketing foray into Second Life at its current stage of development must expect similar results. IBM, one of the most prominent marketers within Second Life, currently attracts about 8,400 visitors per week. As with the overall TR figure (counting avatars vs. people), the actual IBM audience may be slightly lower. Marketers take note; even with a highly-marketed and heavily attended Second Life launch party, traffic in the proceeding weeks and months will likely decline without new or compelling content to promote repeat visitation. Site(*Native reality site) The Pond IBM Pontiac The L Word Greenies Home The Weather Channel Nissan Microsoft Virtual Holland ABC Island Est avg hourly visits Est avg hourly visits (peak) Estimated total weeks visits 53 50 33 26 26 17 16 16 14 11 19 47 44 33 32 25 11 25 17 11 9,025 (up 35%) 8,412 (up 2%) 5,676 (down 2%) 4,464 (down 14%) 4,392 (down 10%) 2,880 (down 3%) 2,808 (down 4%) 2,796 (up 2%) 2,376 (up 9%) 1,980 (up 3%) Source: New World Notes: Tateru’s Mixed Reality Headcount © 2007 Media Contacts :: Havas Digital 24 Virtual Marketing Challenges 5b. Managing expectations is absolutely crucial American Apparel opened in Second Life with great fanfare back in June 2006. Despite attracting thousands of visitors from around the world, in July 2007 American Apparel shut its virtual doors. No doubt, the lack of consistent or ‘repeat’ traffic was a contributing factor for ending the SL experiment. Quoting from an American Apparel press statement: “…we’re closing our doors … for now. This doesn’t mean we’re finished with the virtual world. Stay tuned to see what we do next.” 14 As the Wired article suggests, it is not just a matter of ‘build it and they will come’ but creating compelling reasons for Second Lifers to frequent a location more than once. In the case of American Apparel, their virtual store would frequently lay dormant, devoid of shoppers or even store personnel. In the end, a Second Life virtual store likely did not generate sufficient ‘real world’ sales or exposure to justify existence in its current form. Considering a virtual storefront? The main question to ask, “Based on business objectives, will a virtual storefront generate enough ‘ongoing’ traffic or revenue to justify the ‘ongoing’ expense?” Consider the physical world responses if marketers faced a similar dilemma of minimal store traffic or revenue; no question the lack of patronage would set off alarm bells. Possible physical world response would be to increase marketing expenditures, alter the product offerings within the store, or perhaps even close or move the specific location. As we will see later in Section 5c, none of these efforts may bring immediate results in the virtual world. 5c. Treat virtual environments like event planning According to Wagner James Au, prominent writer and blogger on all things Second Life, “...entering virtual worlds, what you’re seeing is ‘who’s here now’ rather than the ‘who’s been here’ “ 15 As Wagner James Au suggests, perceiving a virtual location as always empty would be misplaced as a current user only witnesses its current state without any knowledge of activity over a specific period of time – a day, week, month or longer. That said, however, an empty store may have as much brand impact, if not more, than a store crowded with people. The lack of activity may suggest to consumers that perhaps this place has minimal value, unpopular, provides bad service, etc. No amount of advertising, virtual or otherwise, may reverse these perceptions. © 2007 Media Contacts :: Havas Digital 25 Virtual Marketing Challenges Media Contacts believes that it is inadvisable to conduct marketing campaigns within virtual worlds in the same manner as those running across traditional media channels. Virtual worlds like Second life require a different approach and subsequently a different set of metrics / measures to gauge success. Despite their virtual nature, Second Life and similar virtual worlds possess some of the same characteristics of the ‘real world’ environments they emulate. First, they generally exist in persistent state, continuing to function and run in ‘real time’ whether or not a specific user is active. Second, their 3-D environments are purposely designed to be explored, just as if one was walking down an unknown street or entering a new store for the first time. Driving footfall is therefore critical, in both the real and the virtual worlds. Ironically, while other digital media channels (web, audio and video) are all evolving into on-demand consumer platforms, virtual environments such as Second Life may require marketers and media companies to employ old-fashioned ‘real world’ advertising techniques, such as event planning or outdoor advertising, to successfully promote virtual exposure and repeated use. For example, some of the more effective marketing efforts in Second Life resemble similar ‘real world’ events such as book readings, music concerts, celebrity interviews, scholarly lectures and other ‘scheduled’ public gatherings. Thus far, ‘scheduled’ events such as these have attracted the sixeable audiences within Second Life. In fact, ‘live’ book readings by prominent authors have become some of the most popular marketing events in Second Life. In a way, one could argue virtual events such as these are far easier to organize (and perhaps even environmentally friendly) as no ‘real life’ travel is required of either the author/celebrity or the people attending the event. In 2007, Penguin and Bantam Books used Second Life to promote releases by authors such as William Gibson and Dean Koontz. Despite a few technical glitches, both authors attracted huge virtual crowds, especially William Gibson. Best known in cyber circles for his 80’s masterpiece Neuromancer, William Gibson is considered, by some, to be one of the earliest pioneers of virtual reality. The popularity of his book reading event within Second Life was of no surprise to anyone. © 2007 Media Contacts :: Havas Digital 26 Virtual Marketing Challenges 5d. Temporary vs. Permanent? Treating virtual worlds like event planning may provide marketers additional benefits - lower brand risk and reduced cost of entry. If marketers wish to test Second Life or other virtual environments without the enormous investment in either time or internal resource (to build and maintain virtual locations), teaming up with existing SL tenants may be both advisable and financially prudent. In the case of Penguin Books and William Gibson, they partnered with virtual developer Rivers Run Red for the individual event. In this case, brand exposure was limited to just the single event. Consider the current challenge of Kraft and many other brands supporting a permanent presence within Second Life. Though Kraft has a well-promoted schedule of virtual activities and events, the schedule is not full time; it is not even daily. Come at a time when no event is scheduled and one will likely find what amounts to a ‘ghost town’ containing few, if any, support personnel and more importantly few, if any, customers. Temporary vs. Permanent Virtual Spaces? Kraft, Sky News (UK), Reuters, Major League Baseball (shown below) and many other well-known brands have built sophisticated ‘persistent’ spaces within Second Life. Unfortunately, apart from a limited schedule of events, most days these amazing virtual spaces go unseen and unappreciated. Questions to ponder while exploring these beautiful, though frequently empty, virtual spaces: “Should global brands build long-term virtual spaces or consider more temporary opportunities?” “Do marketers need a persistent presence in Second Life to promote customer interaction and create buzz in virtual worlds?” © 2007 Media Contacts :: Havas Digital 27 Virtual Marketing Challenges Kraft, Sky News, Reuters, the MLB and many other ‘persistent’ brands in Second Life face an interesting challenge – is it OK to support a mostly inactive virtual environment? In the case of American Apparel, the clothier recently decided (July 2007) to close its Second Life shop and consider its next virtual move – perhaps an event-driven effort such as a virtual fashion show similar to L’Oreal Paris? Considering American Apparel’s recent SL store closure, the argument could be made that temporary or ‘leased’ spaces provides better flexibility and control over virtual experiences. As detailed in the prior section, Second Life residents who come across empty virtual spaces may prove difficult to coax back, regardless of the updated value proposition. We feel that the Lacoste example detailed earlier illustrates a very effective ‘tactical’ approach for testing brand impact, engagement and relevance. It is fleeter than the American Apparel strategy which proved unsustainable from a resource requirement perspective. Perhaps it would be best that marketers for now treat advertising forays into virtual worlds like short-term outdoor events or promotions – here today and gone tomorrow? A good example of a temporary SL marketing effort would be the new Die Hard film. 20th Century Fox with the help of Picture Production Company (PPC) recently hosted an interview session with Bruce Willis within SL to promote the launch of Die Hard 4. Fox Studios held a similar event in 2006 supporting the launch of X-Men 3. The Die Hard 4 event was staged in a rather simple Second Life environment offering visitors the ability to view clips, photos, and interact with various animated elements from the new film. When the picture finally completes its worldwide run in theaters, the Second Life location built by PPC will likely be taken down. In this instance, Fox’s exposure would be limited to the event itself. If successful, subsequent virtual movie marketing efforts will likely follow a similar path – build and promote a movie-specific themed virtual location, run the event and then take it down when the entire campaign is completed. © 2007 Media Contacts :: Havas Digital 28 Virtual Marketing Challenges The Metaverse in the Media Over the past several decades, television programs and movies have used the concept of a ‘metaverse’ as fertile ground for innovative storytelling. Popular programs and films such as Star Trek: The Next Generation, Minority Report and Tron have all made virtual environments a key part of their storylines. Tron Minority Report Star Trek: The Next Generation The Lawnmower Man Johnny Mnemonic Wild Palms machinima Most recently, Second Life itself has been the backdrop for some of the compelling use of virtual worlds in media. Using the Second Life application, SL residents can record activities as they take place in the virtual world. These clips can then be strung together and edited to make movies or other forms of video expression. These videos are called machinima. 16 © 2007 Media Contacts :: Havas Digital 29 6. What’s next for Virtual Worlds? In 1995 the web was regarded within most marketing circles as irrelevant. Those who dismiss Second Life in the same manner today may be missing the point. Just as the web (and HTML) eventually became the standard for browsing the Internet, the VR coding related to Second Life or similar virtual worlds may eventually evolve into a standard for 3D interactive environments as well. This will require Second Life and a host of other services to eventually find common technical language allowing users to seamlessly teleport from one virtual environment to the next just as easily as users now ‘surf’ from one web site to the next. Bottom line – regardless if existing virtual services become part of a larger interactive network similar to the existing 2-D web, virtual environments are here to stay and will only evolve and grow over time. Marketers need to keep close watch on innovations in the virtual space as consumers continue to discover new and innovative ways to communicate and share experiences with each other. Virtual trends to watch for in the months and years to come: 6a. Will a future Web 3.0 turn into Web 3-D? According to Wikipedia, beyond the sales hype, the term Web 2.0 refers to any next generation application that helps users communicate, collaborate and share. Considering the similar goals of immersive environments such as Second Life, worlds.com, there.com and others, could Web 3.0 actually turn out to be Web 3-D? Though it is still too soon to tell if immersive environments will be at the center of the next wave of personalized media, applications and technology (Web 3.0), early signs suggest we are moving in this very direction. Consider the latest technology out of Redmond called Microsoft ‘Surface’ (right), offering a multitouch interface for communication, information and data retrieval, commerce, as well as media consumption. Microsoft is not alone in this innovative development; a U.S. firm called Perceptive Pixel is also working on similar multitouch user interface technology. Microsoft has a second effort out of their Live Labs group codenamed ‘Photosynth’ that is also worth noting. This innovative virtual application creates 3-D images and environments from multiple 2-D images. For example, a large collection of still images taken of the Piazza San Marco in Venice are assembled to provide the user a 3-D like walk- © 2007 Media Contacts :: Havas Digital 30 What’s next for Virtual Worlds? through of the entire piazza (http://labs.live. com/photosynth). Consider growing collections of images from Flickr, Photobucket, etc and the ‘virtual’ potential of this new application becomes quite clear. 6b. Watch the academics Fertile ground for communication, research and experimentation, academics and scholars were some of the earliest adopters of the Internet. Second Life and other virtual environments are now experiencing similar high levels of attention from academics and intellects worldwide. These are the folks to watch. Web browsers, online libraries, email clients and other Internet staples all had their beginnings from creative minds on campuses all over the planet. Imagine what students and professors are dreaming up for immersive environments like Second Life? No question, the academic world will be among the first groups to drive use of virtual worlds for learning, intellectual discourse, collaboration and visual representation. Commercial applications are bound to follow soon after. Examples of the many innovative academic and independent projects in Second Life: 17 UC Davis (U.S.) - In addition to the typical California beach accoutrements, the medical school created a simulation that mimics the audiovisual hallucinations associated with schizophrenia. Interesting experience; just don’t take any of the creepy advice whispered in your ear during the simulation. International Spaceflight Museum – This virtual science exhibit contains a planetarium, space demonstrations, and historic replicas of various satellites, spacecraft and rockets from various space-faring nations including Russia, China, the United States and elsewhere. Rocket simulators offer users virtual trips into space. Ann Myers Medical Center – Support site helping students become more proficient in initial exam history, physicals as well as analysis of MRIs, CTs and X-Rays. Virtual Amsterdam – a finely detailed recreation of this historic Dutch city replete with bars, shopping malls, parks, and all the popular tourist destinations. Not into Holland? You can also visit virtual Dublin, London, Barcelona, Singapore and many others. Virtual Skydiving - Not so much a destination as a thing to do. Go into the search function and type ‘sky diving adventure ride’ to find one of the more popular destinations. If you prefer more ‘physical’ virtual sports head over to the Ajax Arena either watch a scheduled virtual match or perhaps jump on the field and join a team. © 2007 Media Contacts :: Havas Digital 31 What’s next for Virtual Worlds? Great Northern Way Campus (Canada) – Virtual campus (pictured below) is part of a master’s degree program in digital media affiliated with the University of British Columbia and several other prominent Canadian academic institutions. Site in Second Life opened on the same day the new ‘real world’ facility opened in Vancouver. Excellent example of how to integrate ‘real world’ educational programs within an interactive digital media framework. One primary goal of the Second Life component will be to expose the curriculum and academic work to a global audience of prospective students. 6c. Emergence of Virtual CRM / Customer Service Geek Squad, Best Buy’s in-house technical support and repair team recently moved their operation into the virtual world of Second Life. In addition to a bumper car ride and a few exhibits on computers and electronics (seeing once is enough), Best Buy has also decided to ‘man’ the Second Life location with limited ‘live’ office hours (not 24/7). As Best Buy and Geek Squad are typically considered North American brands, their virtual office hours in Second Life tend to align with the late waking hours in the region (6pm – 3am ET). Outside these hours, the place can be pretty quiet. Considering the persistent nature of Second Life, perhaps Best Buy should man their island 24/7? Are we seeing the future of consumer support? Will the majority of users eventually interact with virtual operators and consultants for any number of consumer needs? Two areas that may see immediate impact if such efforts such as the ‘Virtual’ Geek Squad gain traction among consumers: (1) increased use of virtual product and purchase support specialists, and (2) 1-on-1 and group sessions for tutoring, counseling and perhaps even religious services. © 2007 Media Contacts :: Havas Digital 32 What’s next for Virtual Worlds? 6d. Look first to video game advertising According to eMarketer, video game advertising worldwide (figure below) is projected to jump from $692 million in 2006 to nearly $2 billion in 2011. Up to now, most of the investment is this sector has gone to scripted video games like Madden NFL, FIFA, Grand Turismo car racing series, and many more. Worldwide Video Game Advertising Spending, 2006-2011 (millions) 2006 2007 2008 $692 $1,003 $1,330 2009 $1,658 2010 $1,855 2011 $1,938 Note: includes static, dynamic and rich media in-game ads; product placemente/integration and advergaming; excludes mobile games. Source: eMarketer, April 2007 If, as projected, there is a significant increase in attention and advertising investment directed towards this segment, the marketing prospects for virtual worlds will most certainly benefit. In addition to watching the overall growth of the space, keep close tabs on developments from Sony, Microsoft, and Nintendo: 1. Sony Home – First off is the upcoming launch (Spring 2008) of Sony’s Home service, which will work exclusively with their new PS3 game system. Home’s ‘Second Lifelike’ interface will act as a virtual meeting ground and personal space for all PS3 users. Players will have the opportunity to create and design their own virtual homes and invite other PS3 users over to chat, listen to music, view game clips and trophies as well as challenge each other to matches. If the Home service is just marginally successful, it may prove be an interesting platform for marketer experimentation, creating opportunities in both a virtual environment as well as specific PS3 video games themselves. One other item of note - unlike Second Life, Sony’s virtual Home service will utilize the larger TV screen instead of the PC monitor. It may be worth watching to see if the larger screen in a ‘lean-back’ environment impacts how people utilize a metaverse environment. It may prompt further ‘lean-back’ behavior as people increasingly ‘watch’ the virtual activities of others with less of an imperative to interact. 2. Microsoft’s Xbox Live Service – Already offering instant messaging (IM), video as well as game downloads (in some markets), Microsoft is now rumored to preparing the launch of an IPTV initiative on the platform. © 2007 Media Contacts :: Havas Digital 33 What’s next for Virtual Worlds? 3. Mii’s on the Wii – The Nintendo Wii has been a surprise hit in the gaming world attracting a whole new legion of casual gamers. One of the more popular features on the Wii system is the ability to create personal avatars or Mii’s as Nintendo calls them. The Mii’s represent players or competitors in a number of the games on the system. As the Wii platform evolves, Nintendo may allow Mii’s to do more than stay confined to their user’s home system, perhaps traveling online to interact with other Mii’s for IM, gaming and more. 6e. Will Second Life scale? In Snow Crash, the popular novel by Neal Stephenson, the main character Hiro travels throughout a metaverse supporting more than 150 million simultaneous users. Second Life has already eclipsed 10 million residents and frequently tops 35K-40K concurrent users daily. If projections are correct, SL will likely push towards 25 million residents by mid-2008. 18 Can it ever support the concurrent traffic of so many potential users as depicted in Stephenson’s novel? The answer is unclear. Comments from various blogs and news reports suggest that Second Life may run into very serious infrastructure problems if the population continues to grow at its current pace.19 No question, this scalability challenge will have to be addressed if Second Life is to survive the dramatic growth spurt expected by 2008. SL’s current challenge to scale online is not without precedent. Back in the mid-90’s when online service AOL switched from an hourly to a monthly fee structure, its system could barely keep up with skyrocketing demand. Too many users tried to sign onto AOL simultaneously, pushing the online service to the breaking point. Thanks to some clever marketing from CEO Steve Case as well as some extensive server upgrades, AOL survived and eventually thrived as an online service for the remainder of the decade. Expect Second Life to have competition. Social networking service MySpace has been challenged in recent months by the likes of Bebo, Orkut, Cyworld, Facebook and others, depending on the market; so will Second Life. Virtual world creators such as Multiverse, Entropia Universe, There.com, Worlds.com and even the new Chinese virtual world called hipihi.com, all vie for ‘virtual’ market share from early mover Second Life. © 2007 Media Contacts :: Havas Digital 34 7. Final Comments From the beginning, Media Contacts has taken an extremely pragmatic approach to the current marketing potential of Second Life and all other virtual environments. It is an experimental environment that will continue to evolve as technology and behavior move each other forward, perhaps into still unknown areas. First mover advantage is unlikely to be reflected in short-term or even medium-term sales advantage. The gain will certainly be learning, even by making mistakes at a time when the risks of failure are extremely low. On the upside we also feel there is an opportunity here for brands to demonstrate a willingness to embrace new and exciting technology to the group of consumers pushing the virtual world forward. These consumers are also certainly those least interested in engaging with traditional ‘push’ advertising models. However, with marketers understandably focused on optimizing return-on-investment, whether in a context of brand impact or customer acquisition/direct sales, Second Life and the other metaverse platforms should be considered for parallel marketing projects rather than a replacement for more traditional (including traditional digital!) investments. The traditional offline and now increasingly established digital marketing tactics enable experimentation with Second Life. As always, experimentation today fuels future success. Despite recent dismissive comments in Wired and elsewhere, 20 Media Contacts strongly feels that virtual environments such as Second Life should not be ignored. We will see any number of 3D worlds emerge and prosper in the coming decade. As they mature, marketers will eventually find opportunity and even utility in many of these services. © 2007 Media Contacts :: Havas Digital 35 8. Resources and Suggested Reading Resources: Media Contacts — www.mediacontacts.com Search ‘media contacts’ in Second Life Second Life Research - secondliferesearch.blogspot.com Second Life Videos (machinima) – www.secondlifevideos.com Education in Multi-User Virtual Environments (M.U.V.E.) – www.simteach.com SLEDucation - www.sleducating.com Second Life Homepage Forum - forums.slhomepage.com Annotated Bibliography of SL Online Resources http://web.ics.purdue.edu/~mpepper/slbib#Blogs New World Notes - http://nwn.blogs.com/nwn http://www.sltopsites.com/ Wikipedia - www.wikipedia.com Forrester Research — www.forrester.com Gartner Research — www.gartner.com Suggested Reading: Fetscherin and Latteman, User Acceptance of Virtual Worlds, June 2007, Rollins College and Potsdam University Robbie Cooper, Alter Ego: Avatars and Their Creators, Chris Boot, 2007 T.L. Taylor, Play Between Worlds: Exploring Online Game Culture, MIT Press, 2006 Michael Rymaszewski, et al, Second Life: The Official Guide, Sybex, 2006 Edward Castronova, Synthetic Worlds: The Business and Culture of Online Games, University of Chicago, 2005 William Gibson, Neuromancer (20th Anniversary Edition), Ace Hardcover, 2004 Neal Stephenson, Snow Crash, Spectra Reprint, 2000 David Gelernter, Mirror Worlds: or the Day Software put the Universe in a Shoebox, Oxford University Press, 1992 © 2007 Media Contacts :: Havas Digital 36 9. Endnotes 1. Fetscherin and Latteman, User Acceptance of Virtual Worlds, June 2007, Rollins College and Potsdam University 2. Wikipedia, Second Life, http://en.wikipedia.org/wiki/Second_Life 3. Fetscherin, Lattemann and Lang, “Second Life Resident Statistics,” Second Life Research, http://secondliferesearch.blogspot.com/2007_03_01_archive.html (March 8, 2007) 4. Dan Farber, “The Future of Virtual Worlds,” http://blogs.zdnet.com/BTL/?p=5825, (August 1, 2007) 5. Jessica Shepherd, “It’s a world of possibilities,” Guardian [UK}, May 8, 2007 (http://education.guardian.co.uk/higher/news/story/0,,2074240,00.html) 6. Daniel Terdiman, “Campus Life Comes to Second Life,” Wired.com, September 24, 2004, (http://www.wired.com/gaming/gamingreviews/news/2004/09/65052) 7. Lego.com, The Lego Group selects NetDevil to create branded MMOG, http://www.lego.com/eng/info/default.asp?page=pressdetail&contentid=30574 (March 5, 2007) 8. Caroline McCarthy, “ ‘Second Life,’ after the backlash,” August 23, 2007, http://news.zdnet.com/2100-9595_22-6204024.html 9. Wagner James Au, New Word Notes, Tateru’s Mixed Reality Directory, http://nwn.blogs.com/nwn/2007/07/taterus-monday-.html (July 2, 2007) 10. Fiona Harkin, “Virtual style? In another life,” FT.com, May 19, 2007 (http://www.ft.com/cms/s/733d2398-05a6-11dc-b151-000b5df10621.html) 11. http://news.zdnet.com/2100-9595_22-6204024.html 12. Frank Rose, “How Madison Avenue is wasting millions on a deserted Second Life,” Wired, August 2007, (http://www.wired.com/techbiz/media/magazine/15-08/ff_sheep) 13. http://secondliferesearch.blogspot.com/2007_03_01_archive.html 14. American Apparel.net, Sorry, We’re Closed, http://americanapparel.net/presscenter/secondlife/ (July 2007) 15. Chris Anderson, “Why I gave up on Second Life,” The Long Tail Blog, http://www.longtail.com/the_long_tail/2007/07/why-i-gave-up-o.html (July 20, 2007) 16. Wikipedia, Machinima, http://en.wikipedia.org/wiki/Machinima 17. “Wired Travel Guide: Second Life,” Wired, October 2006 (http://www.wired.com/wired/archive/14.10/sloverview.html) 18. http://secondliferesearch.blogspot.com/2007_03_01_archive.html 19. Ian Lamont, “Second Life’s population problems,” Computerworld Blog, http://www.computerworld.com/blogs/node/5122 (March 6, 2007) 20. http://www.wired.com/techbiz/media/magazine/15-08/ff_sheep I gave up on Second Life,” The Long Tail Blog, http://www.longtail.com/the_long_tail/2007/07/why-i-gave-up-o.html (July 20, 2007) © 2007 Media Contacts :: Havas Digital 37 10. Glossary Metaverse - The term metaverse comes from Neal Stephenson’s 1992 novel Snow Crash, and is now widely used to describe the vision behind current work on fully immersive 3D virtual spaces. These are environments where humans interact (as avatars) with each other (socially and economically) and with software agents in a cyber space, that uses the metaphor of the real world, but without its physical limitations. Avatar - Its origin comes from Hindu philosiphy most commonly referring to the incarnation (bodily manifestation) of a higher being (deva) or ‘Supreme Being’ onto planet Earth. The word has also been used by extension to refer to the incarnations of God or highly influential teachers in other religions, especially by adherents to dharmic traditions when explaining figures such as Jesus or Mohammed. More recently, the term ‘avatar’ was famously penned by William Gibson is his 1984 novel Neuromancer, in which people created virtual 3-D representations of themselves or ‘avatars’ for use in the metaverse. Linden Dollars - Second Life has its own economy and a currency referred to as Linden Dollars (L$). In the SL economy, residents buy from and sell to one another directly, using the Linden, which is exchangeable for US dollars or other currencies on marketbased currency exchanges. Machinima - is both a collection of associated production techniques and a film genre defined by those techniques. As a production technique, the term concerns the rendering of computer-generated imagery (CGI) using real-time, interactive (game) 3D engines, as opposed to high-end and complex 3D animation software used by professionals. Engines from first-person shooter and role-playing simulation video games are typically used. As a film genre, the term refers to movies created by the techniques described above. Usually, machinima productions are produced using the tools (demo recording, camera © 2007 Media Contacts :: Havas Digital 38 Glossary angle, level editor, script editor, etc.) and resources (backgrounds, levels, characters, skins, etc.) available in the game itself. Advergaming - is the practice of using video games to advertise a product, organization or viewpoint. The term “advergames” was coined in January 2000 by Anthony Giallourakis who purchased the URLs Advergames.com along with Adverplay.com. The term Advergames was later mentioned by Wired’s “Jargon Watch” column in 2001, and has been applied to various free online games commissioned by major companies and marketers. MMOG - Massively multiplayer online game is a computer game which is capable of supporting hundreds or thousands of players simultaneously. By necessity, they are played on the Internet, and feature at least one persistent world. MMOGs can enable players to cooperate and compete with each other on a grand scale, and sometimes to interact meaningfully with people around the world. They include a variety of gameplay types, representing many video game genres. Many MMOGs require players to invest large amounts of their time into the game. Most MMOGs require a monthly subscription fee, but some can be played for free. Source: Wikipedia © 2007 Media Contacts :: Havas Digital 39 11. 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FRONTIERS Companies spend large sums trying to segment, reach, and influence potential customers. They should think about targeting those customers’ online alter egos, as well. Avatar-Based Marketing by Paul Hemp T ake a minute – go ahead, don’t be timid – to step into the strange but compelling virtual world of Second Life. The landscape of brown hills is dotted with often-fantastic buildings – some homes, some businesses – and a tantalizing array of information kiosks, drivable vehicles, and fanciful interactive objects just waiting to be investigated. Birdsong and a gentle breeze enliven the scene at dawn, and as you walk by a house later in the day you may hear music emanating from an open window. When people approach you to chat – their hands typing on an invisible keyboard to indicate that a line of dialogue will soon appear on your screen – their movements are slightly awkward. But these folks aren’t android-like in appearance or in action: Their outfits are elaborate, and most of their gestures – a nod, a shrug, a beckoning arm – are quite realistic. 48 Some things in this virtual world may seem bizarre at first. Many residents wear sexually provocative clothing, and some inhabit an animal or other nonhuman body. The truly odd thing about this place, though? You’re not you. In Second Life, you live in a new body and take on the identity of your “avatar” – that is, a being you’ve created as a representation of yourself in this online environment. Avatars aren’t the only personal creations in Second Life. Nearly everything in this world – which encompasses 50 virtual square miles and would take days to walk across, although you can save time by flying or by instantly teleporting yourself from one place to another – has been made by Second Life residents. Along with the thousands of eye-catching structures, physical landmarks, and interactive objects, these creations include less tangible things: vir- tual businesses, interest-based social groups, and scheduled events that range from dance parties to celebrity book signings to boxing matches to yard sales. Clearly, many of Second Life’s 100,000 or so residents are highly involved with this place. And that makes it potentially a dream marketing venue. Instead of targeting passive eyeballs, marketers here have the opportunity to interact with engaged minds. Commerce is already an integral part of Second Life. Residents spend – in Linden dollars, the local currency, available at in-world ATMs – the equivalent of $5 million a month on resident-to-resident transactions for in-world products and services. Certainly, introducing real-world brands, in some form or another, is a logical next step. But wait. Whom do your marketing efforts target? The flesh-and-blood Second Life members who gave their credit harvard business review june 2006 doubling every year. Millions more enter free sites, some of them sponsored by companies as brand-building initiatives. Many users spend upward of 40 hours a week in these worlds. And as the technology improves over the next decade, virtual worlds may well eclipse film, TV, and non–role-playing computer games as a form of entertainment. That’s because, instead of watching someone else’s story unfold in front of them on a screen, users in these worlds create and live out their own stories. When marketing online, “you want sustained engagement with the brand rather than just a click-through” to a purchase or product information, says Bonita Stewart, responsible for interactive marketing for DaimlerChrysler’s Jeep, Chrysler, and Dodge brands. “Avatars create an opportunity for just this type of engagement.” Given the potential, marketers need to acquaint themselves with the phenomenon of avatars and to consider whether it requires a rethinking of marketing messages and channels. They can draw on the experiences of the handful of pathfinding companies that have begun to explore this realm. What Is an Avatar? People have long taken on alternative identities, from authors’ sly noms de plume to CB radio operators’ evocative handles to chat-room visitors’ sexually suggestive user names. But in the last few years, technology has expanded the possibilities. Today, a teenager will communicate in the voice of two personae–one transmitted over cell phone and the other via instant messaging – to the same friend at the same time. An unattractive, shy man will transform himself into the sexiest and most 49 YEL MAG CYAN BLACK ERIK SANDBERG card numbers to register for the game – or their Second Life avatars residing in the virtual world? Sure, the real-world human controls the real-world wallet. The avatar, though, arguably represents a distinctly different “shadow” consumer, one able to influence its creator’s purchase of real-world products and conceivably make its own realworld purchases in the virtual world. At the least, it may offer insights into its creator’s hidden tastes. Such questions aren’t academic. Second Life is just one of a growing number of three-dimensional virtual worlds, accessible via the Internet, in which users, through an avatar, are able to play games or simply interact socially with thousands of people simultaneously. By some estimates, more than 10 million people spend $10 to $15 a month to subscribe to online role-playing environments, with the number of subscribers F R O N T I E R S • Avata r - B a s e d M a r ke t i n g aggressive guy – or, not uncommonly, girl – on the virtual block. A Web surfer may change her persona every time she enters one of the hundreds of threedimensional chat rooms. Like the ancient rite of the bal masqué, modern technology helps people realize a deepseated desire to experience what it would feel like to be someone else. In the words of a famous New Yorker cartoon showing man’s best friend sitting at a computer screen: “On the Internet, nobody knows you’re a dog.” The avatar is the most conspicuous online manifestation of people’s desire to try out alternative identities or project some private aspect of themselves. (The word, which originally described the worldly incarnation of the Hindu god Vishnu, was popularized in its cybersense by Neal Stephenson in his 1992 cult novel Snow Crash.) Broadly defined, “avatar” encompasses not only complex beings created for use in a shared virtual reality but any visual representation of a user in an online community. For example, more than 7 million people have created Yahoo avatars, simple but personalized cartoon-like characters used as pictorial signatures in activities ranging from instant messaging to fantasy sports. The experience of living through an alternative self is the most powerful, though, in virtual worlds, sometimes called – take a breath – massively multiplayer online role-playing games. In these environments, someone’s avatar, or “av,” can evolve from a being created using standard character and appearance options initially offered to new users into a unique and richly developed individual. Avatars are endowed with mannerisms, skills, and wardrobes that their users create (employing a variety of software tools), purchase (from in-world shops), receive as gifts (from other avatars), or earn (through Paul Hemp (phemp@hbsp.harvard.edu) is a senior editor at HBR and the author of “Presenteeism: At Work – But Out of It” (HBR October 2004) and “My Week as a Room-Service Waiter at the Ritz” (HBR June 2002). 50 in-game achievements). Indeed, while avatars’ anonymity is part of their appeal, many people take considerable pride in their creations as public expressions of hidden aspects of their identities. Those who don’t have the time or desire to enhance their avatars on their own spend a combined total of more than $100 million a year on Internet auction sites for skills and accessories – digital weapons earned or crafted by others, for example – that can improve their avatars’ presence and performance in a particular world. Movies are even made in these worlds, using computer game technology, a form of filmmaking dubbed “machinima.”Avatars take on scripted roles, thus creating in these plays within plays characters that are two steps removed from their real-life creators. You might call them avatars’ avatars. The online worlds populated by avatars come in many forms but can basically be divided into two types. The most popular by far are combat-focused games, such as EverQuest, Lineage, and World of Warcraft: The latter alone claims more than 6 million paying subscribers. Other virtual worlds, even if they include game-like elements, primarily offer the opportunity for social interaction. In these worlds – places like Second Life and Entropia Universe, aimed at adults, and the more teen-oriented There, the Sims Online, and Habbo Hotel – users customize not only themselves but also their environments and experiences, decorating personal living spaces or running their own events. The settings are more realistic than those in the typical sci-fi or fantasy combat game. Though you often need to pay a monthly subscription to get the full experience – to buy your own land in Second Life, for instance, or to sell virtual items you’ve made in There – the operators of many of these social virtual worlds recently have allowed people to join and explore the worlds for free. This approach has boosted the sites’ membership numbers. Second Life currently has around 65,000 paying subscribers and another 100,000 nonpaying members with fewer in-world privileges, ac- cording to Linden Lab, the company that developed and runs that world. In such worlds, people often have more than one avatar. And these can differ substantially from one another and from the creator’s public self. Gender switching is common, as is the exaggeration of sexual characteristics. Some of these worlds have communities of nonhuman avatars – for example, “furries,” animal-like beings that often reflect their real-life creators’ strong psychological associations with certain animal types. One Second Life avatar, a well-muscled and spiky-haired male named wilde Cunningham, represents a group of people who are severely physically disabled in real life. And avatars can take on lives of their own: Because of real-world news reports about their virtual-world activities as community gadflies or wealthy entrepreneurs, avatars sometimes become better known than their creators. Living in the skin of an avatar – looking out through its eyes and engaging with other beings, themselves avatars of flesh-and-blood individuals – can be an intense experience. Though in most worlds avatars don’t eat, sleep, or use the bathroom, serious relationships are formed – avatars adopt avatar children, numerous virtual-world relationships lead to real-world marriages – and land ownership sparks sometimes nasty disputes over property rights. Put it all together and you have an avatar that is “not a puppet but a projection” of some aspect of the creator’s self, says Philip Rosedale, founder and CEO of Linden Lab. Marketing in Virtual Worlds The real-world marketing potential of online worlds is suggested by the active virtual commerce that already takes place within them. In Second Life, for instance, you find services you might expect – virtual clothing and furniture design, event planning, real estate brokering. But the avatar-run businesses also include detective agencies, which keep an eye on virtual infidelity; a notary public, who guarantees the legitimacy of avatar contracts (and offers harvard business review Avata r - B a s e d M a r ke t i n g • F R O N T I E R S Selling to Avatars – and to Their Creators Online virtual worlds offer untapped marketing potential for real-world products and services, particularly because of their ability to generate sustained consumer engagement with a brand. This occurs through interactions with “avatars,” the beings users create as representations of themselves and through which they live and relate to others in these worlds. >> The stage for real-world marketing has been set in virtual worlds like Second Life. There, residents run businesses that sell virtual products and services priced in Second Life’s Linden dollars, which are convertible into real-world currency on various Internet exchanges. In this example, Dominus Motors promotes a limited Eleanor edition (named after a famous 1960s muscle car) of its Shadow model that seats five avatars and can be driven through the world at speeds of up to 210 miles an hour. << Wells Fargo bank operates a virtual world called Stagecoach Island, designed to educate teens about money matters through games and social activities. At in-world ATMs, players take a financial quiz in order to withdraw virtual cash for activities such as skydiving and games of paintball. Coke Studios is a teen-oriented virtual world run by Coca-Cola. In this world, users’ avatars interact – that’s conversation in the text boxes – and accumulate points through primarily musicrelated activities. For example, you get five decibels for each thumbs-up from a fellow avatar for your selection of dance music in your role as virtual DJ in one of the public studios. You can use these points to buy furniture and accessories for your own studio, like the one shown here, where you can hold events for avatar friends. june 2006 YEL MAG CYAN BLACK IMAGES COURTESY OF FRANCIS CHANG, WELLS FARGO, COCA-COLA >> 51 F R O N T I E R S • Avata r - B a s e d M a r ke t i n g mediation services if problems arise); and an advertising agency, which designs and places ads for other avataroperated businesses. There are in addition the inevitable sex shops, which sell not only racy garb and paraphernalia but also computer code that allows two avatars to enter into a passionate embrace and beyond. Second Life residents pay for these products and services in local Linden dollars. Merchants can then exchange them, at fluctuating rates, for real-world cash on various Internet exchanges. Some avatar entrepreneurs, most notably fashion designers and land speculators, have been so successful that mon. You can buy a Corona beer at a Second Life bar while listening to the hum of a neon Budweiser sign from the wall. Evian was advertised at the concession stand of a recent U2 tribute concert. An iPod store sells virtual players loaded with tunes audible when your avatar wears one of the devices, and a store called Pear sells a laptop that sends e-mails to the real world and bears a fruit-shaped logo reminiscent of Apple Computer’s. The combination of robust virtualworld commerce and the growing overlap of virtual worlds and the real world suggests opportunities for creative realworld marketers. So far, there have been Advertising has always targeted a powerful consumer alter ego: that hip, attractive, incredibly popular person just waiting to emerge (with the help of the advertised product) from an all-toonormal self. their creators have quit real-life jobs to focus on their virtual-world businesses. Linden Lab says that more than 3,000 people earn real-world money from their Second Life businesses, averaging $20,000 a year – a number skewed upward by the handful of residents who generate six-figure incomes in realworld dollars. The line between virtual and real worlds is blurring in other ways. In Second Life, perhaps the most technologically advanced of these environments, the BBC recently broadcast a segment of its Newsnight program from within the world. Internet intellectual property expert Lawrence Lessig gave a speech to a full house and electronically signed virtual copies of his latest book. A proliferation of “Impeach Bush” signs – that were installed by an avatar on tiny plots of land he had purchased, blocking many people’s views – created an uproar. Furthermore, many residents import real-world company logos as props or decorations. Coke machines are com52 few instances of real-world products being sold in virtual worlds to realworld users for delivery to their realworld addresses. But there have been some interesting brand-building experiments. In the Sims Online, McDonald’s installed virtual fast-food kiosks, complete with automated employees working at the counter and able to serve up (free) virtual burgers and fries to residents who made their selections from a clickable menu. Intel incorporated its logo into the screens of virtual computers that, when purchased by Sims Online residents (using “simoleans,” the inworld currency), helped them improve their game skills. In the virtual world There, Levi Strauss promoted a new style of jeans by offering virtual versions for sale to avatars, pricing them (in “ThereBucks”) at a premium to the generic virtual jeans that avatars otherwise could purchase. Nike sold virtual shoes that allowed wearers to run faster than other avatars. Organizations have also sponsored branded events in virtual worlds. For example, Kellogg’s sponsored a competition, in the teen-oriented world of Habbo Hotel, in which residents were asked to decorate their personal rooms in various Pop-Tart–related themes. (The winner received a room filled with rare in-game Habbo items, such as a DJ deck and a beehive-shaped lamp, that couldn’t be purchased by users in the Habbo furnishings catalog.) In a noncommercial sponsorship, the American Cancer Society staged its “Relay for Life” event in Second Life. Resident avatars walked a virtual course, lighted virtual luminaries, and raised virtual cash, which was converted into more than $5,000 in real cash and donated to the organization. There obviously is a real danger that product placement in virtual worlds will feel to residents like three-dimensional spam. To be effective, marketing in these worlds needs to be consistent with the virtual environment and enhance participants’ experience. “You don’t want to simply shove a billboard in people’s face,” says Betsy Book, editor of the Virtual Worlds Review Web site and director of product management for There. “You want a brand to be integrated into the daily routines of potential customers so that they can, if they choose, interact with it in a meaningful way.” In that sense, campaigns like those for Levi’s and Nike represented successful virtualworld placements, she says. Moreover, the Nike initiative, by helping in-world wearers to run faster, had the added benefit of heightening the user’s virtualworld experience. Companies have also created entirely branded virtual worlds – “adverworlds,” Book calls them. Wells Fargo bank recently launched Stagecoach Island, which is designed to educate teens about money matters through games and social activities. The branding is low-key: The Wells Fargo name is almost absent, appearing most conspicuously at the ATMs where players take a financial quiz in order to withdraw virtual cash for activities such as skydiving and paintball games. However, subtle brand building through education rather than the peddling of financial services is the harvard business review F R O N T I E R S • Avata r - B a s e d M a r ke t i n g intention, says Tim Collins, the bank’s senior vice president for experience marketing. “An educated consumer is our best customer,”he says. For that reason, the company may tinker with the ratio between fun and financial education – “currently about 99 to 1,” jokes Collins–in the next version of the game. In a similar vein, DaimlerChrysler has a site for preteens called Mokitown, a cartoonlike world designed to educate players–called “mokis,” short for “mobile kids” – about road and traffic safety through a shared social experience. Coca-Cola’s Coke Studios is another teen-oriented world in which nearly everything from the furniture to the vending machines that dispense miniature Cokes are branded or bear the company’s red and white colors. Avatars – known as “v-egos,” which stands for virtual egos – accumulate points (“decibels”) in public studios through various music-related activities. For example, you get five decibels when a fellow avatar likes the mix of music you have selected as a virtual DJ. (You get ten points when you drink a virtual Coke.) V-egos use these points to buy furniture for their studios, where they can hold events for avatar friends. “Teens desire not only to experience things but also to express themselves,” says Doug Rollins, the Coke brand manager who oversees Coke Studios, which claims 8 million registered users. These players spend an average of 40 minutes at the free site when they visit, he says – the kind of engagement that is invaluable in building a brand. So far, real-world marketing initiatives in virtual worlds are rare. The customer base is still small – visitors to the Coke Studios site at a given time typically number only in the hundreds – and marketers are still unfamiliar with the new medium and skeptical about what it can offer. Patrice Varni, head of Internet marketing for Levi’s, says the 2003 campaign in which residents of There outfitted themselves in the company’s virtual jeans was an interesting experiment but one she had hoped would yield more data–how many people were willing to pay extra for Levi’s 54 versus generic jeans, for example, or what avatars did when they were wearing Levi’s. Technology is improving, though, and she can envision placements in which users could, by making an in-world purchase of an appealing style of jeans, effect a real-world online purchase. In the meantime, there may be little to lose from experimenting. A company called Massive Incorporated, which sells real-world advertising in a network of computer games, recently signed a deal to place ads in the online virtual world Entropia Universe. In Second Life, where the world is a creation of the users, marketers can simply become residents and have their avatars try out marketing initiatives for free – something a number of companies are already quietly doing, according to David Fleck, vice president for marketing at Linden Lab. “People think they need to create a partnership with us, but all they have to do is join, go and buy a chunk of land, and then do what they want to do,” says Fleck, pointing out that the company’s business model is based on subscriptions and the sale of land and Linden dollars. “Making us an intermediary only creates friction in the process.” Marketing to Avatars Advertising has always targeted a powerful consumer alter ego: that hip, attractive, incredibly popular person just waiting to emerge (with the help of the advertised product) from an all-toonormal self. Now that, in virtual worlds, consumers are taking the initiative and adopting alter egos that are anything but under wraps, marketers can segment, reach, and influence them directly. Indeed, it’s important for companies to think about more than the potentially rich market of the virtual world and consider the potential customer – the avatar. For starters, avatars are certainly useful subjects for market research. “Marketing depends on soliciting people’s dreams,” says Henry Jenkins, head of MIT’s Comparative Media Studies program. “And here those dreams are on overt display.” For instance, a company could track how inhabitants of a virtual world use or otherwise interact with a particular type of product, noting choices they make about product features, wardrobe mix, or even virtual vacation destinations. It could then use those choices to create profiles of potential customer segments. For instance, in creating a Yahoo avatar, people choose from an array of elements, including physical features, accessories such as pets, and the setting in which the avatar appears. Some of these elements include branded items: Adidas shoes, say, or a Jeep Commander parked in the background. While encouraging avatars to wear real-world products is mainly aimed at enhancing the brand, even at this rudimentary level one could learn that avatars who choose golden retrievers as pets prefer Jeep Grand Cherokees over Jeep Commanders. As the options presumably multiply in the future, and the avatars become more complex, one could assemble detailed profiles of those who might be likely buyers of either kind of model. Avatars might also be enlisted to play a marketing role. They could use their virtual-world sensibility to design products with real-world potential. Several Second Life clothing designers have been approached by real-world fashion houses, and at least one business makes real-world versions of furniture based on virtual “furni” designed by Second Life residents. Avatar brokers could link up real-world companies with virtual landowners willing to rent space for the companies’ marketing initiatives. Avatars ultimately could run virtualworld stores selling real-world products or become what Internet culture blogger Tony Walsh calls “advertars,” paid to publicize, overtly or not, those same products. But will avatars actually buy realworld products that are marketed in virtual worlds, in effect purchasing real-world goods for their creators, just as those creators buy virtual-world paraphernalia for them? Could an avatar who currently spends Linden dollars to buy a virtual skirt from another harvard business review F R O N T I E R S • Avata r - B a s e d M a r ke t i n g avatar’s designer clothing store in Second Life be enticed, while visiting an inworld Gap retail outlet, to click on a cash register and use his or her creator’s credit card to buy a real-world Gap sweater that would be shipped to the creator’s doorstep? At the least, avatars are likely to window shop. Michael K. Wilson, CEO of Makena Technologies, which runs There, says that e-commerce sites, while they have reduced retailers’ brick-andmortar costs, don’t address the inherently social nature of shopping, especially for women. But in the mall of a virtual world, an avatar could try on – and try out in front of virtual friends – real-world clothing brands or styles her creator typically couldn’t afford or wouldn’t dare to wear. If she got rave reviews from her pals and became (along with her creator) comfortable with the idea of wearing a particular outfit, a purchase in the real world might follow. “It doesn’t cost anything for someone to create an individualized outfit, even mixing several brands,” says Dave Kopp, head of community applications at Yahoo and manager of the company’s avatar program. “And it doesn’t cost anything for companies to supply the products that become part of this act of self-expression and personal brand endorsement.” The amount of marketing and purchasing data that could be mined is staggering. An avatar’s digital nature means that every one of its moves – for example, perusing products in a store and discussing them with a friend – can be tracked and logged in a database. This behavioral information, organized by individual avatar, aside from being priceless to marketers in the long term, could be processed immediately. An avatar clerk might appear from behind the counter and offer to answer an avatar customer’s questions–questions the clerk would already know because they would have been gathered and recorded in the database. Furthermore, the avatar clerk might automatically adjust his or her behavior to become more appealing to the avatar customer. Research conducted 56 at Stanford University’s Virtual Human Interaction Lab has found that users are more strongly influenced by avatars who mimic their own avatars’ body movements and mirror their own appearance. This virtual manifestation of an old sales trick makes avatars potentially, if insidiously, powerful salespeople. Using a simple computer script, the selling avatar clerk is able to subtly and automatically tailor its behavior – its gait, the way it turns its head, its facial features – to the avatar buyer’s, thus making the clerk seem more friendly, interesting, honest, and persuasive. Even more astonishing, digital technology allows avatar sellers to modify their behavior and appearance so that ter top, scanty shorts–and branded Adidas high-tops, which she purchased in Second Life. “Maybe subliminal advertising might work,” muses Minxy. “It would be a large advertising budget wasted, in my opinion,” says Ben. LadyLizzie starts to warm to the idea of a Gap outlet in Second Life, before Ben interjects: “Without sounding harsh, clothes from the Gap are so boring,” compared with Second Life attire. Such anticommercial sentiments among avatars may be on the wane. Wagner James Au, one of a number of “embedded” journalists whose avatars post on the Internet regular dispatches from Second Life, says that, as Second Life has grown, purists fighting outside Each virtual world has a different culture and people come to these worlds for a variety of reasons, so a single marketing approach won’t work. they simultaneously mimic the different gestures and look of hundreds of avatars in the same room – at least in the virtual eyes of each of those potential buyers. “If I want a group of virtual people to buy a product, I can morph my avatar to subtly act like every one of them,” says Jeremy Bailenson, an assistant professor of communications at Stanford and the lab director. So what is an avatar’s perspective on buying real-world goods with real-world currency in virtual worlds? One afternoon in Second Life, Minxy Moe and her boyfriend Ben Stravinsky sit next to a rushing waterfall in the yard of their friend LadyLizzie Charming and talk with a visiting journalist (or rather, his avatar) about commercial incursions into their world. Minxy and Ben are skeptical about real-world marketing in Second Life, saying that people generally like to keep the two worlds separate. LadyLizzie echoes these sentiments. “I would not be caught dead in real life wearing the clothes I wear here,” she says, glancing down at her revealing hal- commercial influences have lost some of their clout. Two years ago, he wrote about an island in Second Life that was purchased by a British marketing company. The next day, sign-waving protesters picketed the island. Today, “a Starbucks – or whatever – isn’t likely to generate that kind of acrimony,” he says. The potential of marketing directly to avatars doesn’t disappear after they accompany their creators – tucked in their creators’ psyches – back to the real world. A company might, for instance, create a real-world advertising campaign aimed at a particular avatar “segment” – wizards, say, or furries. Or you might offer in real-world stores a distinctive clothing line available only to people whose avatars had, through achievements in an online world, earned their creators the right to wear the gear, thus giving people credibility in the real world based on their avatars’ virtual-world status. Marketers could thus “tie products to the game without busting the fantasy of the game itself,” which harvard business review Real Challenges, Real Risks This new marketing landscape and audience come with all kinds of pitfalls. There are technology constraints. Stagecoach Island moved from the technology platform on which Second Life is built to the platform underlying Active Worlds, another virtual world. The Second Life platform required too much computer hardware capability of users, according to Collins, the Wells Fargo marketer. Strong resistance to real-world commercial encroachment still exists in many virtual worlds, where users primarily seek an escape from real life. In-world billboards, like those calling for Bush’s impeachment, are occasionally defaced. And there was a mild though short-lived protest when MTV recently recruited avatars as models june 2006 and sponsored a fashion show in Second Life, which was then aired on the network’s broadband Internet channel, Overdrive. It’s also crucially important to realize that each virtual world has a different culture and people come to these worlds for a variety of reasons, so a single marketing approach won’t work. Marketers should get to know a world they are thinking about entering. In the vast expanse of Second Life, there are nooks and crannies that may be viewed as a bit dicey by mainstream marketers – for instance, an island populated by Goreans, adherents of a series of fantasy novels by John Norman in which slavery and male domination of women are themes. Consumers’ privacy concerns about the detailed tracking of avatar data pose obvious challenges. So does the attempt to balance viral brand enhancement–many avatars on teenage sites incorporate real-world brands into their user names – against the loss of brand control. Operators of virtual worlds make sporadic attempts to limit the unauthorized use of real-world brands, but even a company’s intentional introduction of a brand into a virtual world can be risky: The McDonald’s kiosks in the Sims Online, while popular, generated sniggering among residents about how fat the patrons would become, says Book, of Virtual Worlds Review. Clearly, this is virtually unexplored marketing territory. But conceiving of avatars and other online personae as a new set of potential customers, one that can be analyzed and segmented, provides a useful way to think about new marketing opportunities. Indeed, the day may not be far off when someone in a store – either virtual-world or realworld – says to a clerk, “Wait a minute. Let me have one of those as well. After all,” the customer will add, in a nearecho of pregnant women’s perennial refrain,“I’m buying for two.” For live links to some of the virtual worlds, Web sites, blogs, and companies mentioned in this article, read the online version at www.hbr.org. Reprint R0606B To order, see page 147. YEL MAG CYAN BLACK is always a risk when marketing in virtual worlds, says Edward Castronova, a professor of telecommunications at Indiana University and the author of the 2005 book Synthetic Worlds: The Business and Culture of Online Games. (By contrast, Walt Disney’s Virtual Magic Kingdom site, instead of bestowing real-world credibility for what an avatar does online, grants virtual-world credibility for real-world activities. The site is designed to encourage visits to the company’s real-world theme-park attractions. Avatars created at computer terminals in Disney’s real-world amusement parks get to sport an exclusive “Born in Park” icon in the Virtual Magic Kingdom, giving them “Main Street cred,” according to the Disney site.) As the barriers between virtual worlds and real life blur, so do the barriers between virtual worlds and the rest of cyberspace. New technology allows a group of avatars, a “Web mob,” to roam the Internet. Appearing as superimposed images on a Web page, they can check it out, make purchases if they feel like it, then zoom off as a group to other Web sites. Instead of having to seek out avatars in virtual worlds, savvy marketers may instead find ways to attract avatars to their e-commerce sites.

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