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Advertising in Second Life

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In their own words Second Life “is a 3-D virtual world entirely built and owned by its residents.”

Within Second Life you can interact with other users, explore the virtual world, create and trade items, and purchase land for your virtual home or business.

Second Life has over 7 million registered users, of which over 1.5 million have logged in at some point during the last 30 days. These figures have led people to begin to take Second Life more seriously as an advertising medium but the number of registered users is a contentious point.

In a story for InformationWeek published in May 2007, Executive Editor Mitch Wagner said:

“I calculate that, as of the end of March, there were fewer than 310,000 regular users of Second Life.”

This would suggest that Second Life is significantly smaller than the company itself, Linden Lab, would like people to believe. However, regardless of this on average there are between 25,000 and 40,000 people participating in Second Life at any one time. These users are highly immersed in the virtual world, offering great potential for brand interaction.

Do virtual worlds, particularly Second Life, present significant marketing opportunities for real-life companies?

There are two main options to advertise in second life – become part of Second Life through building a store and a brand experience, or through contextual ads placed on billboards within the game.

As Cristiano Midnight, creator of one of Second Life’s first and longest running third party sites, SLuniverse.com, says:

“I think any company that comes along and does not understand the environment and just treats it as another marketing venue is doomed to fail.”

American Apparel is a US clothing company that recently launched a Second Life store. Through offering virtual versions of their clothes that users could place on their avatars in the game the company can gain valuable feedback on what is popular as well as raising awareness and generating more traffic to their online store.

Raz Schionning is director of web services at American Apparel, and says:

“I have few expectations about generating significant revenue right now – it’s not the objective at this point. I see Second Life as a budding example of the evolution of the “web experience”. The potential is amazing and very compelling.”

Wagner James Au, a Second Life consultant, also supports this view through stating that “the potential for marketing in online worlds is truly staggering.”

The potential is certainly there, with companies such as American Apparel and Red Bull using the medium very effectively. However, for the time being Second Life is predominantly a stage for brand interaction. It remains limited as a sales generation tool.

What about users’ attitudes towards advertising in Second Life?

Hamburg-based research firm Komjuniti conducted a study into attitudes amongst Second Life users of companies marketing within the virtual community.

The results were worrying for the future of marketing using this medium. 72% of respondents said they were disappointed with real world company activities in Second Life, and just over 40% felt that these marketing promotions would not last.

Compared to research on online advertising as a whole these figures were relatively similar. However, while 41% of respondents to a study by research firm Yankelovich Parterns felt that online advertising has some relevance to them, the corresponding figure for the Komjuniti study was only 7%. With such a low percentage of users feeling that the marketing efforts of companies in Second Life are relevant the question has to be asked whether this using this medium as a marketing channel has as much potential as some people think.

However, it could be argued that these figures are more a reflection on the failure of companies to truly understand the nature of marketing within virtual worlds. As Cristiano Midnight says:

“Companies that really get SL and understand how to take a more lifestyle approach to their marketing will have far more success than those who just treat SL as another ad buy opportunity.”

Boliver Oddfellow, director of Infinite Vision Media, endorses this:

“The real world company that comes in here and [does] strictly a billboard campaign will learn very quickly why you don’t alienate the consumer base. It’s suicide.”

This suggests that Second Life ad buying agencies, such as ContextAds, are likely to struggle to recruit advertisers and produce an acceptable return on investment. Second Life residents are very wary of traditional forms of advertising. The lesson – truly immerse your company into the culture of the virtual world, otherwise it’s best to avoid using Second Life as a marketing channel.

What opportunities do virtual worlds offer that the real world doesn’t?

The main difference is that within virtual worlds companies must interact with their customers – the customer-company relationship becomes blurred. As Wagner James Au puts it:

“Marketers need to be playful, need to embrace the fantasy aspect, need to embrace the ability to suddenly morph into a squirrel with a jetpack or just like I did, jump on the table and start playing air guitar.”

The main opportunity surrounds brand equity – virtual worlds are an excellent way of interacting with consumers, building an enjoyable experience, and as a consequence building brand equity.

What does the future hold?

Second Life has already changed enormously since its early days, as Wagner James Au notes:

“Second Life has long passed the days where it was a hothouse utopia where any hint of the outside world, especially the corporate for-profit world, causes much of a ripple. Now the challenge is to create cool, lasting, exciting experiences, and the companies are competing on an equal level with the best creators in SL.”

However, whilst large companies are welcome, they are only welcome if they fully immerse themselves in the culture of the virtual world, something perhaps that Coca Cola could work on:

“Second Life residents especially have been very sensitive to the encroachment of the big bad RL business…not in the forms we see, but in the dreaded form of Coke billboards spread all across SL and plastered on buildings,” says Cristiano Midnight.

In the future it’s likely that any attempts to bring in traditional advertising on a widespread scale, such as what ContextAds is attempting with its billboard ads, is likely to struggle.

The real opportunities that will emerge will be in product development, potentially resulting in consumers actually designing their own products, making certain forms of marketing research obsolete. Virtual worlds could become excellent avenues to test store layouts and clothing concepts. However, as always, it will be important to assess whether your virtual world customers are close enough to those of your real life ones.

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