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Summary:

What’s the ROI on marketing in Second Life? After attacking the topic from a couple directions (most SL users seem receptive, but so far, are largely unimpressed with existing attempts), we finally have some concrete numbers to work with, at least on the more relevant metric […]

Pontiac in SLWhat’s the ROI on marketing in Second Life? After attacking the topic from a couple directions (most SL users seem receptive, but so far, are largely unimpressed with existing attempts), we finally have some concrete numbers to work with, at least on the more relevant metric of unique visitors.

So how does anywhere from 6,454 to, well, zero, grab you?

That’s the spread of weekly visitors to real world corporate sites in Second Life, according to SL demographics expert Tateru Nino. Every Monday on my Second Life blog, she reports on the number of Residents to visit these locations; the world’s dynamic map enables her to headcount actual visitors, and with some common sense extrapolation (sampling numerous peak and offpeak use periods), winds up with a fairly accurate estimate of total uniques. In the three weeks since she began, the highest weekly total belongs to Pontiac, which hosts a kind of virtual autobody island where Residents can customize their cars (pictured), followed by a site for Showtime’s The L Word (4,687), where regular events are held on a recreation of the show’s main locations; IBM has an expansive site which includes an open source coding tutorial lab (4826).

The low end, however, is littered with some of the world’s most prestigious corporations and brands. Despite entering Second Life to much mainstream media fanfare, companies like Sears, Sun Microsystems, Dell, Coca Cola, Reebok, Coldwell Banker, and Calvin Klein have so far failed to attract even 500 weekly visitors each (during Tateru’s headcount, at least)— some of them far less.
For comparison’s sake, there are currently about 400,000 Residents who log into SL on a weekly basis; about a million have logged in over the last month. By far the most popular sites remain grassroots “native” locales; over the last three weeks, for example, the most heavily trafficked place was not a casino or a sex hangout, but “Phat Cat’s Jazzy Blue Lounge”, a PG-rated ballroom for elegantly dressed avatars. With a highest weekly performance of 31,248 unique visitors, it vastly eclipses even the most popular corporate site.

So roughly a year after SL’s mini-dot com boom began, most companies are still struggling to even be noticed. I recently put these paltry figures to Steve Prentice of Gartner, as a caveat to his firm’s bullish predictions that 80% of Fortune 500 companies would have a virtual world presence by 2011. He seemed surprised, then fingered the relative lack of company avatar activity at most of these locations.

“[Y]ou’ve got to be able to go in there and interact [with people],” he said, “that’s the nature of 3D interactivity.” Though many companies will quit in frustration, Prentice believes they’ll learn from their early botched attempts— whether they want to or not. “Like the [early] Web,” he added, “most will be brought back to the table due to user pressure.”

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  1. Dean Collins Thursday, May 24, 2007

    I think like all disruptive technologies the initial expectation of what it means is often over estimated with the long term effects vastly vastly under estimated.

    I’ve said this again and again – companies aren’t getting into Second Life because of what it is today but what it will become in the very near future….and because of the head start/lessons learned they are betting they will be in a position to benefit from getting involved now.

    Go back and look at what the web looked like in 95/96 and compare it with what it looks like today and compare it with how advanced SL really is along the evolution scale.

    My company http://www.Mexuar.com is working with a number of partners to deliver voice for not only ‘land holders’ but for first life/second life border application integrations.

    It’s developments like this that will deliver on the promise of SL being a true ‘platform’

    Cheers,
    Dean Collins
    dean@mexuar.com

  2. The hype over virtual worlds is wrong-headed in my opinion. The current state of SecondLife, and virtual world technology in general, is miserable from an outbound marketing perspective, but powerful from a training and collaboration perspactive.

    In the context of SecondLife as an outward-facing channel to reach customers it is, as Dean points out, an experiment in preparation for the future. The numbers are simply not there to make it viable in a revenue ROI calculation.

    If you shift the context to an inward-facing communications tool it is very easy to create a powerful cost reduction ROI. The two shining stars in this area are virtual meetings and training.

    The increasing cost of travel makes virtual meetings very cost effective. Today, the state of the art is a ‘halo’ suite which costs $329,000 to build and $18,000 a month to maintain. It’s not rocket science to stack those costs up against a $1,650 island and $295 a month maintenance. Add in the costs for building and scripting and you’d be hard pressed to break a $30,000 set up charge for a meeting room that anyone on the internet could come to for a meeting.

    The virtual training room scenario has similar costs. The technology of SecondLife brings additional intangible benefits to this context such as more powerful representational tools and unique community interactions that support anecdotal learning, proven to be the most durable form of learning.

    So, yes, SecondLife is a poor marketing tool today, but don’t overlook the immediate benefits while you’re waiting for the consumers to arrive.

    Regards,

    Jay Swartz
    President, MirrorMessage
    303-949-4015
    http://MirrorMessage.biz

  3. Yeah, it’s amusing all the hype virtual worlds get. Sorta feels like the internet bubble of 2000.

  4. Mads Kristensen Thursday, May 24, 2007

    Why does so many companies invest so much in a virtual world with no inhabitants? I guess for two reasons: (1) To get the PR and (2) for the marketing guys to be able to tell that at least they weren’t caught napping, while something major happened in the evolution of the web.

    I really hope the paltry results will turn into a PR fiesta. It’s about time people started thinking with their brains.

  5. As a media advertising professional who is additionally addicted to Second Life — my thoughts are that marketers are mostly using the virtual word incorrectly.

    Marketers need to find a way to contribute to the community (and some like AOL and Pontiac seem to understand that). Second Life is not about elaborate builds, it’s about the people in the community. Providing them entertainment opportunities, or free goods and services are the way to appeal to the community.

    Honestly, marketers don’t need to buy islands to do these things. Stores with free or discounted items can be placed in existing areas. For signage or naming rights, marketers could help sponsor art or music performances.

    Hopefully, marketers will see those opportunities rather than abandoning virtual worlds.

  6. Thanks for sharing some real numbers regarding traffic on Second Life to corporate sites – i recently jumped in to the world a few weeks back and were a bit bored with the corporate sites i came across. If only more were like Pontiac (which i just checked out) or just fun like Phat Cat’s than things may be different.

  7. Ming Jack Po Sunday, May 27, 2007

    I still don’t see the benefit of Second Life . It seems like it’s nothing more than The Sims advanced to me.

    Now only is ROI absurdly low, but what exactly is the point of Toyota or SUN advertising inside the game?

    I would defenestrate a System Admin who tolde me he learned about his new blade server from Second Life. I would also love to see if Toyota generated ANY sales from their Scion SL campaign.

    I think the whole Virtual World thing is overblown. It’s very effective in building up soft connections / casual friends, but nothing will beat meeting a person in RL.

  8. Sean Mulholland Tuesday, May 29, 2007

    I just completed a lot of research into Second Life and virtual worlds in general, and I think virtual worlds hold promise, but Second Life is not the future.

    I predict we’re going to see more CyWorld or WebKinz type of worlds as opposed to Second Life. SL is way too complex and over-featured. More is not always better. To oversimplifying a bit, it’s essentially using CPU and graphics heavy MMORPG gaming technology to facilitate a chatroom. But with avatars.

    I agree with a previous poster in that the majority of the rush is coming from the fear of missing the boat. After social networks, blogs, etc. caught the world off guard, now nobody wants to even risk being behind the times.

  9. The simple point here is that these metrics are flawed and are not how brands or visitors in virtual worlds should be measuring their ROI.

    If you want to measure success, set the KPIs upfront and include engagement and time that visitors spend on your site. That is what they have come for after all – to spend time with an engaging experience.

    Every Monday The Project Factory publishes these engagement stats for brands in Second Life at http://www.theprojectfactory.com. These include a comprehensive list of major brands worldwide also, not a subjective grouping of US ones.

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