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Virtual Worlds: The Next Realm in Advertising?

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What do Major League Baseball, Coca Cola, Well Forgo Bank, the W Hotel, and the American Cancer Society have in common? They all use a virtual realm to reach out to potential customers and supporters in novel ways.

Today, traditional media captures less attention from the younger generation, including the young at heart. New venues that address this demographic are evolving. One such approach to connect to this allusive audience is videogame advertising. Consider Massive Corporation, which is now part of Microsoft. The premise of Massive is to reach "Lost Boys" (ages 18 to 34) who pay less attention to mainstream media.

The advertising spend for this market segment is estimated at $12 billion for television and another $10 million on static product placements in videogames. The challenge for advertisers is a declining use of television due to other distractions (Internet, music, messaging) or simply "skipping" ads via TiVo or other recording devices. Another age-old problem for advertisers is the inability to directly measure results or return on investment (ROI).

Massive Corporation's value proposition was to "insert" a series of ads into select Internet-based videogames, visible during play. Massive worked with videogame publishers to install code into their programs allowing for dynamic advertisements to flow into place cards within the gaming environment. Concurrently, impression data flowed back to Massive to be packaged as data for the advertiser. This data allowed the advertiser to adjust content on an ongoing basis for greater effectiveness.

For the first time, advertisers had real-time data about their ads which where directly targeted to the audience they sought. Since most Internet gaming environments require payment and personal information, demographic detail increased.


Another untapped arena for advertisers is virtual worlds. Places like Second Life and Entropia Universe provide opportunities to interact and communicate with users in ways not achievable through traditional mediums. In these settings, individuals create a 3D "avatar" (human or fantasy characters) and through walking, flying, or teleporting can explore imaginary worlds.

These virtual spaces take shape in numerous forms and may resemble a city street in Amsterdam, a walk through the Louvre Museum in Paris, or standing on the bow of the Titanic—strike a pose as Rose or Jack! As part of your "Second Life," you may acquire land, build a house, and shop at yard sales to buy clothes or home furnishings. Real dollars are exchanged in these worlds, and the lines between fantasy and reality become blurred.

In addition, you may form relationships with neighbors and groups that share similar interests or causes. Innovative organizations may create venues that interest this younger generation and weave their brand into the activity or environment.

Consider how Coca Cola approaches this demographic. Coke Studios is a place where teens can mix music in a virtual studio and win "decibel" points by playing their mixes to other members. With these points, they can buy things such as furnishings for their studio. Points are also earned by participating in games and other activities. Whether you're on a roller coaster or answering game quizzes, the ever-present red and white wave (Coke's logo) adorns the objects, wallpaper, or surroundings and serves as an active brand builder. This subtle approach creates more awareness, like advertisements do, but also allows the individual to interact with the brand.

What about educational branding? If you are a financial institution, you can achieve this objective through a venue that informs and creates brand awareness to a new generation. Well's Fargo built Stagecoach Island in Second Life and touts it as the first virtual reality (online) financial literacy game. In a press release, Well's Fargo cites "over half of U.S. High School students graduate without knowing the basics of banking...and 70% of college students play videogames." This blending of entertainment and learning achieves more than traditional mediums would ever hope to.

This free Internet-based game allows students to create a character on Stagecoach Island and the ability to interact with other island members. Although most activities are free, such as skydiving and paintball, other experiences require money and can be earned by attending a Virtual Learning Lounge and answering basic banking questions. The topics covered in these sessions include budgeting, saving, and managing money and were derived from a Well's Fargo signature program called "Hands on Banking." By creating a hip and fun setting, Well's Fargo engages this younger generation by having them interact with its services (Well's Fargo ATM machine) while associating its brand with banking services.

What if you are launching a new brand to this target market? That's exactly what Aloft (A W Hotel brand) did in September 2006. According to Alison Brod of Aloft public relations, Aloft will be the first hotel brand to open its doors for operation in a virtual setting. Visitors will be able to visit guest rooms, lounges, and surrounding environments well before the first real-world hotel opens its doors in 2008.

The Aloft brand suggests an "escape" from the ordinary and provides a highly unique experience. Visitors will be able to provide feedback on amenities such as food service and decor. The purpose behind developing this site was to educate consumers on this brand by allowing visitors to experience the loft-style rooms and trendy environment. In essence, Aloft is building a potential customer base via familiarization and use of their services. Imagine if you are nonprofit organization with limited resources. The American Cancer Society recently held a "walk" through a virtual route to raise needed funds. In a recent OnPhilanthropy.com article, the American Cancer Society raised $38,000 during its "Relay For Life." This walk involved thousands of participants who walked in a virtual setting. "We are thrilled with the success of this year's Second Life Relay for Life program," said Michael Mitchell, vice-president and executive director of the American Cancer Society's Futuring & Innovation Center. "Now, more than ever, we know that a virtual community can be engaged just as effectively as a real community to help fight cancer." The beauty of using this environment is undoubtedly the wide reach, with minimal financial burden. Since these activities exist in virtual worlds, the costs to sponsor an event or cover incidentals (like T-shirts and cleaning fees) are manageable. By virtue of the American Cancer Society's success, this should be an attractive venue for other causes and charities.

What about Fortune 500 organizations? Could another advertising channel exist in these virtual worlds? Consider the possibilities.

Say your company produces a new mobile device that enables the user to do far more than other devices currently available. Traditional media channels targeted to the younger market are highly congested and commoditized. Due to the technical nature of your offering, you will need consumers to spend time learning these features in a fun and interesting manner. As a result, you build a technology center in a virtual world to showcase capabilities in a game format.

For example, to educate users on a GPS feature, you build an Amazon jungle and have them navigate their way while avoiding quicksand and predators. By completing the game, they will have "learned" how to apply the product's features and become more encouraged to try other offerings.

What is the real value of advertising in this new virtual world? First, consumers have the ability to experience things not currently possible in the real world. Product trials in virtual settings provide a low-risk environment for testing features and benefits. You can hire avatars to be product ambassadors and answer common questions. Also, you can demonstrate your 3D product or service in use. Live video and jpegs can add to the experience to help educate the user. In some cases, live feeds such as the Atlantis Shuttle launch can be viewed in some virtual settings.

Could virtual environments be a just another channel for advertising or a viable community for consumerism? When blogging came on the scene, people dismissed it as a fad and characterized it as a soapbox for loonies! Today, organizations of all sizes closely monitor these sites and take what's being said there very seriously. Could virtual worlds be the next medium for advertising?


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Bill Nissim consults with organizations on strategic branding imperatives. He has helped firms make the transition to Second Life and has fostered brand creation in virtual worlds. Bill has held senior management positions at Fortune 100 firms. Reach him via www.ideawerksstudios.com.

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