Virtual World Marketing Gets Reality Check in 2007

It was a year of ups and downs for virtual worlds, as well as the companies that jumped on the bandwagon of creating virtual advertising and branded worlds. As 2007 began, the virtual world environment Second Life was riding high on a wave of interest from users and advertisers, but as time went on, many marketers and agencies began to question the return on investment of their virtual projects.

“2007, especially early 2007, was the year of Second Life,” said Greg Verdino, chief strategy officer for Crayon, a marketing consultancy. “Late ’06 through ’07 was this interesting virtual world rollercoaster ride, where coming into ’07 everybody thought they had to be in Second Life, and they didn’t know why.”

By March, Second Life had over 1.3 million users, and companies ranging from Microsoft to Starwood Hotels to Reuters had launched a presence in the world. But the success of their branding efforts fell into question, as advertisers had difficulty providing the metrics needed to measure success, or simply didn’t approach the environment in the right way to promote a brand, Verdino said.

“A lot of the problems with marketing in virtual worlds stem from brands and their agencies thinking you can just parade into a virtual world and take it over as if you belonged there all along. The ‘a-ha’ moment happened in 2007 when some of the big early brands that entered the virtual space pulled out,” he said. “People did a lot of stupid stuff in virtual worlds that they shouldn’t have been doing.”

Second Life continues to grow and attract the attention of major media firms and advertisers, including CBS and its CSI franchise. Greater competition is also cropping up from Web worlds oriented around specific demographics, especially children and teenagers. Coca-Cola funded PG-13 virtual realm and CosmoGirl. Meanwhile Disney acquired kid-aimed virtual world Club Penguin and switched its own ToonTown offering to a subscription model. Nickelodeon jumped into the mix with Nicktropolis.

“The kid’s space is exploding,” said Sibley Verbeck, CEO of the Electric Sheep Company, a virtual worlds media and technology agency which recently reorganized to shift its strategy for 2008. “The non-kids space, for teens and adults, is growing quite a bit as well, and we’re seeing [longer-term] projects and fewer quick hit marketing projects.”

As the virtual worlds industry moves into 2008, Verbeck and others predict lessons learned from 2007 will mean fewer small and rushed campaigns will be created, and instead advertisers will look for opportunities to create larger projects tied to quality content.

“People jumped in without a strategy or a plan; there was no quality content to tie to a brand, so user [went] in and moved on,” said Christopher Sherman, executive director of Virtual Worlds Management, a media company. “Now you’re going to see content tied to the brand, and high quality content coming out of Disney and Warner Bros and the CSI stuff. Just like any advertising medium you have to tie your brand to quality content. The risk will be much lower for the advertisers and the brands because people that are experienced with creating content are getting into the space.”

And as in 2007, dollars and cents will shape the virtual world campaigns of 2008, said Verbeck.

“You’re going to see a lot more and wider variety of businesses making money off virtual worlds,” he said. “Too much was done over the last year and a half that didn’t involve money, and that’s why you’ve seen a down side.”

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