Introduction

Last week, there was a lot of buzz around BrandWeek’s article, “Are Marketers Dying on Second Life?“, which placed a reality check on the marketing hype around Second Life:

So far all this collective marketing savvy hasn’t much impressed the actual Second Lifers. More than 70% of the site’s users say they are disappointed with the marketing that goes on in SL, according to a new survey by Komjuniti, a Hamburg, Germany, research firm. This could be because companies are approaching the site like a traditional marketing channel. (Emphasis Mine).

Does that sound familiar? Remember back in 1996 when someone’s idea of a website was scanning in the company brochure and uploading it? Yep, that’s what marketers are doing on Second Life.

The Web is not a PDF repository for your company brochure. Why are the big brands on Second Life following that pattern? As Karl Long declared: “For gods sake have some imagination, experiment with something, create something that you can’t create in the real world, create a way to for people to interact with people that they can’t in the real world.”
Understanding the Second Life Market Landscape

A 15 minute walk around Second Life will reveal that its a very niche demographic of users – again, just like the Internet in the early days. Further exploration would reveal two major challenges on marketing opportunities in the Second Life metaverse:

1. Scale and Audience Size

Scale

Just like in real life, in Second Life only so many people can be at one store at a time. For regular websites, you can have hundreds of thousands of visitors entering your ecommerce store with not too many problems (given enough hardware).

Audience Size

Second Life is rushing in its attempt to scale up, but in the near future it will never have the size nor the scale of say American Online at its peak in the 1990s. As of today, Second Life has +5.3m members, but only +1.6 have logged on in the past 60 days.

AOL had about 10m members in the late 1990s, and I would assume that most were active (since it was a paid service). And on Facebook, there are 18m members as of February 2007.

2. Demographics and “Second Life Culture”

Second Life geniuely have its own distinct culture that is different from the general Internet users at large. Eric Kintz of HP puts it well, when he neatly separates the mass audience appeal of the Internet with the more narrow and niche intention of Second Lifers:

“Second Life is about realizing your fantasies and being something different than you are in real life. Many avatars have a different gender than the subscriber or take animal forms. However most brands mimic their real life experiences and value proposition in Second Life.”

In other words, you do not go to Second Life dressed in your transgendered furry costume to go to the newly opened H&R Block Island on Second Life. Note: If you don’t know what a “furry” is – then you really need to do your research before marketing on Second Life. ;-)
Eric Kintz goes on to list 10 reasons why he feels hesitant about Second Life, here are some of the most relevant:

#5. The content is primarily adult oriented
#6. Brands are underestimating the investments required.
#7. Brands are not staying true to the Second Life values.
#8. Second Life experiences are not integrated with the overall brand experience.

Conclusion: Second Life is Not Ready for Primetime
In short, Second Life as a marketing channel face several barriers before it can seen as having broader marketing opportunities:

• Scalability: Second Life has a relatively small, active and niche userbase. Also, being 3D you can not have say, 1 million people hit your location at one time. Just like in real life there’s a limit on how many people can be in one store.
• Demographics/Second Life Culture: Given its small size, Second Life has its own culture that must be respected and requires any brand to truly fit and become part of that community. Unfortunately, right now that Second Life community is too narrow to appeal to most companies – Why is H&R Block there?

Assuming Linden Labs can overcome its scalability issues (as they’re known for having some issues keeping up) and establish a more diverse Second Life audience and culture, marketers may find broader opportunities in the Second Life metaverse.

Additionally, while not discussed here, Second Life also seems to have a lack of full metrics tracking, due to technical bandwidth and priorities. While it is possible to track all actions on Second Life, this is something that is currently not a priority on Linden Labs.

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Quick Post: Consumer Research on Second Life

One of my questions regarding much of the movement towards establishing a presence (stores) and campaigns in Second Life is the lack of any clear user data (See Second Life Marketing Rush: Why?). Indeed, there has even been a debate on the actual population and active userbase of Second Life, much less other informations like demographics, psychographics, purchase behavior et cetera.

Thankfully this is changing. According to Business Communications of Second Life:

“The Social Research Foundation has officially launched the First Opinions Panel in Second Life. First Opinions is a consumer research panel formed in Second Life to provide Fortune 500 companies with resident insight and feedback on new products, services and policies. The panel is owned by SRF, but it is being exclusively licensed to and managed by MarketTools, a joint venture of P&G and General Mills.

MarketTools is a leading online consumer research service used by nearly all Fortune 500 companies and many leading universities such as Harvard, Columbia and John Hopkins. They manage over 60 online communities for Microsoft, and have over 2 million people on real life panels who have access to the ears of industry leaders.

…

First Opinions is not the only market research company in Second Life. For example, Market Truths and Reperes both established Second Life offices several months ago. Market Truths recently released a study focused on the retail fashion industry in SL.

Market research in Second Life is a bit of a complicated landscape to navigate. There are some rather vocal groups who are against commercial research in SL, and these include not only the SL public, but educators and researchers, as well. The success of these companies is dependant on how well they address three central issues related to their work in SL: cross-cultural (SL/RL) learning and internal training; privacy protection; and standards of best practices. More to come on how these can be accomplished. Stay tuned.

Link: “Second Life Market Research Panel Licensed to P&G”
While this is welcome news and I’m excited on any new research being done, the fact that (as some have reported) there are only about +200,000 active users on Second Life makes me wonder if the numbers are there to justify this much effort? Although, I’m pretty sure Second Life can achieve over 1 million active users given time.

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Richard at Read/Write wrote on the return of Virtual Malls (the stuff of the mid-late 90s), see “Virtual Shopping Malls Making a Comeback?“:

So I have to admit it is surprising that the virtual shopping mall, as a concept, is alive and well in 2006. Lately we’ve heard that Boo.com, an infamous 3D shopping website of the late 90’s, is making a comeback later this year. But one that has actually launched already is The Mall Plus, where users navigate a virtual shopping mall in a 3D environment. All of the shops are a part of the The Mall Plus, rather than being external sites. Geekzone quotes The Mall Plus CEO Nigel Kirkpatrick as saying it’s “the next generation of retail, through a virtual environment”.

Indeed, I find this as surprising as well. I’ve never appreciated Virtual Malls, they seemed to be clunky, long and tedious – very much like the worst aspects of brick-and-mortar shopping.

Virtual Malls in Second Life

(Via FreshTakes) Adding to Boo.com and The Mall Plus, B3 has built a virtual mall in Second Life (Correction: It is not part of Second Life. See Comments) (shown above), creating affiliate stores involving the likes of Amazon.com, eBay, Old Navy, Delia’s and Barnes & Nobles. Beyond shopping, 3B has created virtual worlds for top Shopping, Travel, Entertainment, Kids and Female-related websites. They also offer service to “Virtualize” webpages like MySpace profiles.

Linda Zimmer noted:

While the display of web information in 3B is essentially still 2D, it allows content to be positioned or juxtaposed in ways we cannot do within the single-page-at-a-time format of a web browser. For example, browsing through book titles is much more similar to walking down store aisles then browsing via clicks on Amazon.

…

Applications like 3B – and Second Life – are at the very least beginning to inform the discussions about better ways to interact with content, and more immersive ways to share it.

Again, not sure how well people will adopt and use this, but its good to see people are willing to give 3-D web a try.

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This Monday it was announced that Jason Calacanis of Netscape.com (previously of Weblogs Inc) will be the keynote speaker for Search Engine Strategies (SES) Chicago 2006.

This is not Jason’s first appearance on SES, but as the keynote speaker this has tremendous symbolism.The conference maybe called “Search Engine Strategies” but Jason Calacanis belongs in the world of online publishing and social media (Particularly, his Digg.com-like service at Netscape.com).

This maybe indicative of the fact that in recent times SES has become less and less about search marketing than emerging forms of online marketing. The area of SEO and PPC was one of the emerging areas, but now many of the SEM/SEO firms have moved to include link baiting, online PR, Reputation Monitoring, Blog Marketing etc. And so with it, SES has evolved along similar lines a swell.

Moving Beyond the “Search Engine” in “Search Engine Optimization”
As I’ve mentioned before, while SEO and PPC will continue to have a close relationship, SEO is quickly expanding to include any kind of “organic optimization” making the leap beyond search engines (SEO) to social media (SMO).

While I’m not saying this is what Jason’s speech will be about, his presence as the keynote speaker is indicative of the greater overall shift in the SEM landscape towards social media.

Expanding to “Second Life Optimization”
So how long before we start talking about Second Life Organic Optimization? Too late, MediaPost has the article (by David Berkowitz) here: “Second Life Optimization“. Here’s an excerpt:

Title Tags: The title of the virtual location should include a few important keywords, just like title tags for Web sites. Reebok, for instance, could choose the name “Reebok custom sneakers.”
Descriptions: Adding keywords to the description can help virtual stores come up for relevant searches, similar to how descriptions and meta tags work for Web sites….
Link Optimization: … In Second Life, if marketers own multiple properties, they can include billboards for visitors to teleport around to each one….
Advertising: …An advertising network for Second Life, MetaAdverse, allows property owners to post billboards, and marketers can advertise on them and track the visitors. As with link optimization, this won’t help the Second Life search visibility right now, but this will help the marketer’s general visibility there.

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….

Indeed, to say that online marketing has been rapidly evolving in the past few years seems like an understatement at this point.

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Introduction: Social Media Gentrification? Or Maturing Market?
Commercialization of any new frontier is usually something between ambivelence to protest by the first movers into any space. The Internet is not different.

But as the dot-com mantra that “Content wants to be Free” has shifted from Google’s “Adwords and AdSense All Content”. And so the same is happening with Social Media.

Instead of greeting it with disgust, this is the time to shape what’s a viable busniess plan, while also asking what’s the acceptable and ethical standards and what is not.

Let’s take a look at what’s been going on this past year:

Pay for Digg (or any other social media-based publishing site):

Via Search Engine Journal: “A site dubbed User/Submitter is taking the manipulation of Digg to higher levels with a service that pays users $.50 for 5 Diggs, and charges its ‘advertisers’ a base fee of $20, then $1 per Digg.”A site dubbed User/Submitter is taking the manipulation of Digg to higher levels with a service that pays users $.50 for 5 Diggs, and charges its ‘advertisers’ a base fee of $20, then $1 per Digg.

A site dubbed User/Submitter is taking the manipulation of Digg to higher levels with a service that pays users $.50 for 5 Diggs, and charges its ‘advertisers’ a base fee of $20, then $1 per Digg.

For-Pay-Bloggers:
At SES San Jose, there were attendees who spoke of making a living via “pay per blog posting”, which included undisclosed endoresements and writeups of products. Basically harking back to the days of early onlin Guerilla Marketing.

This has finally grown into a “network” of for pay blogger at PayPerPost.com:

Via TechCrunch: “You guessed it, it’s a marketplace for companies to connect with bloggers who are willing to blog about a product – for a price. The companies can set guidelines for their requests such as whether a picture must be included and whether they will only pay for positive blog coverage. There does not appear to be any requirement that the payment for coverage be disclosed. There is a requirement that PayPerPost.com must approve your post before you are paid. ”

Second Life:
I’ve covered Second Life various times and the growing roster of big name brands on Secodn Life: Starwood Hotels, Toyata, CNet, Wells Fargo, American Apparel and others. But now, Leo Burnett Worldwide, founded by the man famous for the Golly Green Giant, has become the first agency to establish presence on Second Life. Once a few daring established businesses and their agencies start appearing on Second Life – you know it has a chance of hitting mainstream.

Leo Burnett Office:

FaceBook’s Sponsored Stories:
Via MarketingVox:

The new ad unit, called Sponsored Stories, will occupy the third position within a News Feed, either as a small banner-like placement or as a video clip, writes MediaWeek (via MediaBuyerPlanner). When users click on the ad, the user’s entire network of friends is alerted, and they can then interact with the ad. According to Facebook, the ad will allow advertisers to harness the site’s social-networking dynamic and leverage social-networking behavior.

MySpace and YouTube
MySpace and YouTube are the two names that describe the mainstream social media and web 2.0 companies. There’s really no need for me to give an overview of the commercialization efforts here but here are some links:

• 5 Brands Make Their Mark on MySpace – Nanette Marcus
• NBC, YouTube Create Alliance – MediaWeek
• YouTube has also become a repository for commericals, music videos and the like, which should be treated as alternative channels of distribution (rather than copyright violations)
• Warner Takes The Lead In Dealing With YouTube – TechDirt on YouTube and Warner’s revenue creative sharing deal

If I miss anything major, let me know and I’ll add it.

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I just got around to this but WSJ’s Andrew LaVallee did a write-up on the fashion industry on Second Life: “Now, Virtual Fashion” (09/22/06 Registration Required).

Key Data/Points on Second Life and its Fashion Industry

Some choice numbers excerpted from the Second Life article:

• Demographics of Second Life Players:
  “median age 32 and 57% male, with 40% living outside the U.S.”
• On Fashion Industry Sales:
  “In August, the 20 best-selling Second Life fashion designers generated a combined $140,466 in sales, Linden says.”
• On the American Apparel store in Second Life:
  “the store has sold some 4,000 items, catering to players who want their avatars to dress as they do.”
• Example of a Second Life Clothing:
  “One target customer is Lizbeth Moore, a 45-year-old office manager in Santa Barbara, Calif., who got hooked on Second Life while recovering from knee surgery (”It was the painkillers,” she jokes). She now has more than 15,000 items in her virtual closet and doesn’t mind shelling out as much as 1,000 Linden dollars (about $3.50) for an elegant gown. Ms. Moore says she spends about $15 to $20 a month on Second Life clothes, though she spent about $75 a month when she first became a resident.”
• The Second Life’s “Fashion Industry Ecosystem” mirrors the real world:
  Antics and spats between designers and customers (accusations of stealing designs, customers dumping clothes in the front of stores in protest) to blogs dedicated to Second Life fashions.
• Associated Cost of Fashion Business:
  “Uploading a dress design from a computer to the Second Life world costs about four cents, though once it’s there it can be duplicated and sold over and over again. Many designers also “rent” online storefronts or stalls in shopping malls, which cost about $5 a month.”

Conclusion
I’ve asked before outloud on how viable it is to be present on Second Life. Truth be told, I’m still asking that question – but this article goes a long way to not only answering it but also shows in some areas (at least in clothing) it makes sense. I’m still looking to do an interview with some Second Life marketers and business owners, will keep you posted…

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The Second Life Liberation Army holding an American Apparel store hostage

All of this sounds very empowering, democratic and, well, also idealistic. Let’s look at some real world examples of the unqiue problems that araise from social media: 1) Facebook is now labeled by over 100,000s of users as “Creepy” and “Stalkerbook”; and 2) Second Life is being targeted by political activism of the “Second Life Liberation Front”.

The New Facebook is “Creepy”: Introduction
Let’s look at Facebook. While companies may understand the need to take criticism publicly by their own customers or userbase, how many can anticpate and listen before a crisis hits?

Facebook recently changed its inteface, basically allowing a person (via a feed) to track every new update of her/his friends – exact change in relationship status, what messages were left on what wall and by whom. Basically, this service is has been nicknamed “NetStalker 2.0″. Caffieine Marketing reports:

Even more startling, there is a Facebook group called “Students Against Facebook News Feeds” with over 380,000 members and over 5,000 new members being added every 30 minutes.

Countless other groups like “Facebook is getting fucking CREEPY” and “RESTORE FACEBOOK TO BEFORE IT GOT STALKER-ISH” have sprung up.

Facebook: Test, Anticipate, Engage

Facebook, an established Social Media company, has forgotten that the “conversation” is not only between Facebook members, but involves Facebook themselves as well. I assume they did user-testing before hand, but one has to wonder what feedback they received and how they adjusted to that. Did Facebook anticipate that people would be “creeped out” by personal feeds, allowing any friends to track every move you made?

Second Life Liberation Army (SLLA) – Virtual Activists in a Virual World?
The Second Life Liberation Army (SLLA), members of Second Life, are demanding that “resident players should be entitled to purchase one share in Linden Labs (which own SL)”. In essence, virtual citizens in a virtual world demanding for a voice through becoming company shareholders and protesting virtually for these demands.
With no progress towards they goal, they began “military operations” to embargo the American Apparel store in Second Life:

The SLLA selected as its first target the American Apparel Store in SL. Volunteers from the SLLA have been posted to the store and are preventing SL residents from buying any goods from this vendor.

SLLA: What should Lindin Labs do?
Luckily for Lindin Labs, the SLLA’s protest was a minorly symbolic act that was small and ineffective. At this stage, its easy and wise to ignore them. But, what if they attained critical mass?

Do you try to find compromise? Or risk either a) Alienating your userbase and making them leave; b) Hand over commerical voting shares and risk lose control of your company? In terms of SLLA’s demands – talk about a “paradaigm shift”!
Conclusion

Central to the viability of Facebook and Second Life is the vibrancy of the community of its members. But given the freedom and vibrancy of an online community, do not be suprised if its acts like a normal real world community, which includes improptu protest, mob  behavior, political activism and maybe even virtual acts of terrorism (Will we see Second Life members staging “attacks” for a Second Life political cause?).

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Introduction: Telus on Second Life

The list of Second Life advertisers keeps on growing: Scion, NOAA, Starwood Hotels, American Apparel, Wells Fargo Bank and so on.

Just recently, Springwise reports that:

Telus, Canada’s second largest telco…opened a store in the sim of Shinda last week. Telus is both the first major Canadian corporation, and the first major telecommunications company to enter [Second Life] SL.
…
Telus’s SL phones currently only let users shoot off busy messages to other citizens. The phones are on sale for a few hundred Linden Dollars, which is the equivalent of a few US dollars.

Why Advertise?

Harvard Business Reviewon Second Life
Paul Hemp of Havard Business Review wrote “Avatar-Based Marketing“, which made the case for “Avatar-Based Marketing”. One of the things mentioned was that companies can exploit the unique environment of places like Second Life to 1) Really help an audience “experience the brand” in a more intimate level; and 2) Have the ability to literally track the behavior of the audience as they interact with the brand and the enviorment.

But is it worth it for companies to be on SL?
Second Life has taken on as a very active virtual community. While not a MySpace in size, it (at the time of this writting) has some interesting statistics:

• 600,024 Residents
• 264,00 Active Residents (logged on in the past 60 days)
• $304,152 Spent by the Residents in the past 24 Hours

The fact that real money is being sent by real people makes Second Life an interesting marketing platform. This brings me to a series of questions on Second Life Advertising:

• What is the associated cost for advertising on Second Life?
• How many Second Life members buy? How often? How much?
• How much member behavior can you track Second Life?
• What is the demographic profile of Second Life members?
• Are these members influencers? Of any sort? On online, offline etc.

Closing Commentary
I, unfortunately, havent seen any hard numbers or data on the above questions. Time available, I’m inclined to ask around on Second Life and find some answers. Until then, its hard for me to see Second Life “Avatar-based Marketing” as nothing more than an interesting marketing experiement, but definately near a sigificant consideration.

If anyone has the answer to the questions above, please shoot me an email or comment below. Maybe its time for me to interview some SL marketers.

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