Virtual World Marketing: Lots of Companies, Few Visitors (So Far)

16 Comments

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.”

16 Comments

SpectraMind

The future carries a lot, but kottler marketing strategies cannot be implemented in Virtual world, so be patient and you will see

Una Ewing

I think that marketing on platfoms such as Second Life require greater creativity in how to reach prospective clients, existing clients or any clients at all. There is a misconception that there is no demographic at all in Second Life. How does that explain virtual designers who make up to 250,000 real world dollars based on sales alone? Many companies went into Second Life without really knowing or understanding the “nature of the beast” and partnered with companies experienced in building a presence (for a quick buck), but no knowledge, or perhaps even interest in advising on how to maintain traffic levels.

Incidentally those mentioned that are doing well are doing what drives and sustains traffic levels in Second Life. It is not rocket science.
Second Life is a “no need” world – no one needs to log onto Second Life, no one needs to buy a fridge in Seond Life, or eat, or have a house. However, people buy and rent houses in which to live, because those renting the houses appeal to the “want to” instincts. The secrets to attracting people in virtual worlds is to make them want to come to you. Events are one way of doing this. Interactivity is another.

I recall the emergence of a high fashion Italian brand who built the “castle” as a representation of the real-world presence, but sold nothing. It is dead – no traffic and the interest has now gone. I believe the perception, or one could say, the delusion about their real-world success being sufficient to sustain in-world interest is delusional and naive. What would visitors do? Watch paint dry?

The secretis for companies to engage with SL developers who know and can advise about how best to engage the public on an ongoing basis. The icing on the top would be that they would posses the facilities to do this also. I speak as an SL residentwho runs a successul fashion promotions company able to attract enough avatars in per event to crash sims – so now we set limits. I think the possibilities for business in Second Life are there and are plenty – success requires less complacency and more understanding.

Troy Hipolito

Strange to see second life providong less then less then 500 visitors a week for fortune companies investing. Business model does not seem right.

We built a virtual world just for fun/portfolio and we receive around 5000 + unique Daily. If any one wants to check it out is http://www.chamberofchat.com. More details on my company web site http://www.isointeractive.com

We are doing a similar but large project now (targeted towards profit) and seeking funding but found out most people that offered funding want to own the entire project. They are crazy. So we are just doing the project in house with out crazy investors. Although investment would be nice.

Also I do agree the business model lacks certain things in second life.

But if you look at Dofus, Habbo Hotel, and Club Penguin man O man. Habbo Hotel is the oldest and made 77 million a year ago.

So there is money to be made.

Beachnobo

Looking at some of the most publicized corporate projects in SL, I feel like most companies haven’t grasped the nature of the medium. The platform has the potential to involve the consumer with a brand, like no other medium before. I would love to see more projects, where visitors are incorporated in design processes or idea generation. I see large potential in SL to give customer feedback to companies.

David Vanderpoel

This is an interesting metric – but not necessarily one that should be read as an equivalent measure of success for a brand in SL. As a part of the Coca-Cola team, I can attest to the fact that the intention was never for a hub-reliant model.

The Coke Pavilion floating above Crayonville Island is not designed to drive lots of traffic through an experience with the brand, but rather to serve the more tactical purposes of explaining the Virtual Thirst contest in-world and of showcasing prototype submissions.

An outcome of the Virtual Thirst contest will be that Coca-Cola isn’t attempting to draw most users into its hub, building, or island. Rather, we’d like residents to help us form our SL brand and then bring it into their own spaces because we offer something valuable to them – just like in RL.

I’d take care to not simply assume that a brand’s goal in SL is the equivalent of site “hits” – a metric that’s becoming less meaningful in the flatland Web as well. In many cases, the goal may be one of deeply engaging a smaller segment of the overall audience in a more passionate or meaningful way. The surest way to gauge whether a brand is accomplishing its goals in SL is to see if they stick it out – are they investing in it in 2008? Many state openly that an appealing part of the hub model is that they can always just turn it off.

Gwyneth Llewelyn

From the billion users that log in to the Internet every day, how many go to IBM’s website?

According to Alexa, about 0.2%.

So IBM is getting half of that percentage in Second Life. Is that such a bad number? Other, smaller companies, are getting much better results in SL than on the Web. Dell, for instance, should have 2.5 times the number of visitors than IBM, but they have 10 times less; Pontiac, on the other hand, has 0.0094% on the Web, but 0.1% on SL. Wow! Great work :)

You can also patiently explain each case. Watching cars on the Web is not so exciting as driving them around in SL, which is what Pontiac is able to do; selling computers inside SL is not (yet) so easy than selling them through the web site, so Dell, which relies mostly on e-commerce to drive traffic to their website, has not been able to do the same in SL — yet.

IBM is a good example: their site has all sorts of information and interesting areas, for both the casual browser and for someone who needs specific information on IBM’s products and services. They managed rather well to replicate the same mix of “interest” in SL, and are not so bad off in their case.

Remember, on the Web, corporations are not trying to de-throne Yahoo or YouTube from their rankings in visitors. Why should they attempt to do the same in Second Life? IBM’s web site is one of the 500 most viewed sites in the world; however, they have 200 times less traffic than Yahoo. So should IBM give up on the Web as a marketing channel?

I surely hope not; they’d be missed :)

Guy

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.

Sean Mulholland

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.

Ming Jack Po

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.

Ryan Peal

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.

Clark King

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.

Mads Kristensen

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.

Blake Snow

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

Jay Swartz

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

Dean Collins

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

Comments are closed.