Brooklyn's Progress
June/July 2007

BY DONALD SCHWARTZ

The Virtual Worlds 2007 conference, held at the Jewish Museum in downtown Manhattan in March, brought together major media players, tech evangelists, advertising big-wigs, and aspiring virtual world marketing consultants. Everyone was trying to understand what place they had, if any, and by what means they might exploit these 3D environments populated by avatars, which are virtual representations of us.

The two-day March conference was a natural stimulant for entrepreneurs and small business. While geared toward the big corporations, there was any number of marketing concepts that could be scaled down to satisfy the interests of small business. Conference attendee and programmer Andy Fundinger was attracted by the fact that business in this virtual environment depended on one-on-one relationships. Fundinger, whose name in Second Life is Ciemaar Flintoff, is a resident businessperson who struts his programming skills in imaginative ways. Like many small business people, he labors in his first life as a programmer for the Burgiss Group. Andy has developed a tool to expedite contact between Second Life and real world Web sites and e-mail in-boxes.

The tool is called a “comment ball,” and this must-have virtual world communications device sells for the bargain price of $300L (Linden dollars) and is sure to win over those time-pressed customers who just have to have whatever you’re selling right away. The elegantly mounted orb is a perfect compliment to your Second Life residence or commercial space.

You trigger the action by right clicking on the ball and a stream of yellow laser pulses shoots from your fingertips, allowing you to record your voice for up to 45 seconds (you’ll get used to the laser effect and you’ll soon wonder how you could have lived without it.). After making a comment, you can choose to make you view public or private, and messages are then sent by in-world instant messaging or via e-mail to the owner.

Fundinger’s communication tool, like many others, was created by an in-world resident to satisfy a need. Identifying what Second Life’s residents need represents a business opportunity for small, agile entrepreneurs. Andy, like many other residents, fantasizes that someday his in-world creations will become his real business.

An Ideal World
If you were to bump into Andy in both the real and virtual worlds, you would see that his in-world avatar is an idealized version of himself. This style of representing oneself is very much the norm in the many virtual worlds such as Second Life, There and KENEVA.
 
To understand virtual worlds you might imagine yourself as a semi-realistic, three-dimensional character – think of the movie Toy Story – who moves inside a computer generated-landscape populated by other characters. These characters represent real people with whom you can engage and converse in ways not limited by the physical constraints of the real world, i.e., gravity. Everything you see happens in real-time and the avatars with whom you interact may be controlled by people from anyplace in the real world. (Click here to see avatar examples.)

The Second Life economy is in some ways familiar to the real business world. The economic numbers at face value are notable, but the big money makers are limited, at this point, to the service companies: Millions of Us, The Electric Sheep, Rivers Run Red, the real-estate speculators and to a modest extent, Linden Labs, the creators of the technology that runs Second Life. On May 4, Second Lifers spent $1,397,000 at an exchange rate of L$269.1 to US $1. The Linden dollars are purchased via a credit card from an exchange operated by Linden Labs or informal currency exchanges run by Ailin Graef aka Anshe Chung. Caveat emptor: there is no agency like the SEC regulating these exchanges.

Marketing Smarts
One of the more thought-provoking answers to a question that was nagging attendees came during my second day at the conference. Paul Hemp, Senior Editor of the Harvard Business Review, asked, “as a marketer who are you marketing to, the consumer behind the avatar or to the avatar him or herself?” Small and large businesses share a common interest as one of the essential ingredients to becoming a successful merchant of anything is to know who you are selling to. In the virtual world, the answer may not always be as easy as defining your target market by demographics alone.

“We are changed when we step into our avatar self; we are somehow different: we may be more candid, we may be more uninhibited,” said Mr. Hemp. “I’d like to say that advertising has long targeted the consumer’s alter ego – that hip, attractive, incredibly talkative person that’s waiting to emerge with the help of an avatar that’s probably a product of our very real self. Now that all those alter egos are on display, they can now be marketed to and segmented just like in the real world.”

As a small business owner in Second Life you have to be flexible, have a sense of humor and play to be comfortable and thrive, whether you are wearing your marketer’s hat or are just there for a good time. This is important to understand because unconventional occurrences can happen at any moment. For instance, in Second Life, I was in a location called Ivory Tower of Prims (prims is short for primitives, which are the building blocks of everything you will see in Second Life) one day when, out of the blue, a resident expert informed me that I should “rebake” myself. What? Apparently my avatar suffered a not so uncommon Second Life malady: my avatar’s clothing, which I purchased from a reputable Second Life retailer, was disappearing. Of course, I was sheepish, if not grateful, after she stepped me through the simple procedures to restore my outfit.

Second life and its other virtual world brethren sit firmly on the shoulders of such previously successful online games as Worlds of Warcraft. After all, who can argue with the facts: currently Worlds of Warcraft has 7 million active subscribers forking over $15.99 a month. These kinds of numbers should sound inviting to any entrepreneur, large or small. While the hype machine may focus on the total number of Second Life residents, 5,968,395, I’ve never been in-world when there were more than 40,000 residents active.

I haven’t met many avatars in Second Life whose creators haven’t taken some liberties with their appearance. Each one of these worlds – the technoratti call them platforms – have differing approaches to what matters to avatars and the people who pull their strings. The essentials include entry level online avatar building tool sets, costs of in-world clothing, body parts, custom skins, and avatar-attached animations that allow your avatar to perform any kind of maneuver, i.e., dance steps, you could imagine.

There’s much in virtual worlds like Second Life that might be viewed as off-beat in our every day lives, but in a world where normal physical laws do not apply, they seem almost common place. The avatar in front of you may be attired as a medieval warrior, a furry creature – are very popular – a vamp, a winged creature, or a young man in the attire of an 18th century gentleman: me. Of course, not everyone has a distinctive costume, sometimes the representation is a slightly enhanced version of them.

Second Life has a number of different methods of conveyance. Most avatars teleport un-walkable distances; there are more conventional means of transportation such as virtual cars. Second Life’s land space spans the equivalent of 100 square, real-world miles. Fortunately, unlike Star Trek, you don’t have to stand on a transporter platform and tell Scottie to “beam you up”, you can do that yourself. Another method is flying, which I’ve come to rely on increasingly even for short distances. I can certainly walk, but offered something I could only do in my dreams, I prefer to take to the air; besides, looking at the world from high above offers a breathing-taking aerial view.

There are different approaches to building or renting a residence or commercial space as well as to get to an online fashion showcase, press conference or musical performance in-world. Second Life, in particular, is very free-wheeling and just about anything goes in just about every category.

When it comes to new, new media there are those in marketing and advertising who “get it” and those who don’t. Roger Holzberg, Vice President and Creative Director of Walt Disney Parks and Resorts Online, definitely gets it. He understands that the motivation behind playing a game in a virtual world is about bragging rights and winning points that entitle you to “credits” which you can then redeem for rare in-world items. For Disney, who hosts and maintains their own virtual worlds, these interactive environments offer an exciting approach to extending their brand.

But beyond the traditional rationale for gaming there is an equally significant strategy: Mr. Holzberg said, “When you launch a virtual world you have to have some level of entertainment before the user generated content kicks in.”

Because small business is our focus let us look at a small business run by a sole entrepreneur whose avatar’s name is Moopf Murray. In the real world he is Gareth Lancaster, a resident of the United Kingdom. 

Without relying on focus groups Gareth came up with the idea in 2005 of selling roller skates. With Second Life’s astronomical growth in the last six months his business has really started to take off. He has sold 60,000 virtual skates vs. 30,000 in the prior period. Gareth observed that the existing in-world skates could only go back and forth and there’s nothing fun about that so he thought “let’s make some skates that can do some outrageous things.”

Because he is a sole proprietor without a sales force, Gareth sells bubble gum, skates and his other products via vending machines available throughout Second Life. Wherever the machines are placed the location owners get a 20 percent return on sales. Gareth’s prescription for developing other engaging ideas is based on the lack of physical constraints and what he determines to be “outrageous fun.” An example of the outrageous fun part of his bubble gum is that your avatar can blow bubbles as big as balloons allowing you to float upwards.

Gareth’s first life’s programming skills certainly helps control costs. However if you’re not a programmer there are still workarounds that will enable you to keep your costs down. Of course, when Gareth entered Second Life the scale of getting attention was considerably less daunting than it is today; there were only, according to Gareth, 10,000 residents.

Gareth’s view of a winning marketing campaign is purely viral. “If you have something that people want the word will spread like wildfire,” he said. The word-of-mouth element remains a consistently strong promotion method in Second Life putting small, agile businesses on a more equal footing with larger ones. Residents of virtual worlds don’t respond to a force-fed, repetitive broadcast marketing message.

In creating products for virtual worlds, you have to be flexible in your reaction to what in-world residents can do with your products. Once again, a small business might have an advantage over a large business that has spent millions of dollars defining how, when, where and why a consumer uses their branded products. In Second Life, an avatar, unless you have created a restriction, can modify your product in any number of ways that might not be to your liking. Mr. Holzberg proclaimed, “If you expect that you can control what goes on in the virtual world, it’s shear lunacy. Players will take your content using mashups and mixups to turn your brand into their own idea of fun.” 

Mixing and Mashing
Nimble, small business entrepreneurs can begin to exploit mashups as another marketing tool while paying careful attention to the evolving interpretations of copyright law as to “fair use.”

Pete Cashmore’s post on the social networking site, Mashable, suggests two useful, amusing Second Life data-type mashups: Slurlmarker, binding together Second Life and del.icio.us for in-world book marking and Matt Biddulph’s Flickr hack which facilitates easy import of your photos into Second Life. It’s just what you always needed.

Pushing the idea a bit further is a mental mashup that comes from real-world architect turned virtual architect, Jon Brouchoud, now going by the title 3D Experience Architect. Brouchoud mashes up Wikis with architectural design by providing a collaborative, in-world, 3D design work space for real-word architects as well architect wannabes. A Wiki is a Web site that allows any user to add content, but also allows that content to be edited by any other user more easily than a blog.

On a more personal level, working for the digital marketing company, Clear Ink, Brouchoud provides a demonstratively improved alternative to two dimensional floor plans which require a considerable amount of a client’s imagination to interpret. Taking a client in-world as an avatar and walking them through their house design is certainly preferable to the cardboard model that the client can touch. Using the virtual world design method, Brouchoud is able to quickly respond to such formerly hair curling questions such as: what if the kitchen opened-up to a dinning room or the bedroom was moved? Couple the quick modification capability to a client-reassuring bonus that allows for an early group think in the design stage, you get the ideal virtual house tour can now include friends, builders, interior designers and well as husbands and wives which is better for the architect than Tums.

Investing in the Virtual World
While there may be bulbs lighting up in some small business people’s heads right now let me point out that virtual worlds are where the Internet was before there were any search engines.  Significantly, the learning curve in wide-open worlds like Second Life is steep. I wasn’t getting up to speed fast enough so I had to go out and by a book titled, “Second Life: The Official Guide” for about twenty dollars.  For a small business, an all-out Second Life, There or KENEVA effort may translate into more time than they can justify short term for a return on their investment.

There is no proof that, at least in the next year, you can ever make back your investment in a virtual world. There are stories about a  woman named Ailin Graef, aka Anshe Chung, whose cumulative net worth is purported to be $1 million dollars which she made by selling virtual real estate in Second Life, but that strikes me as gold rush stuff. The solid research is just starting to filter in with no-nonsense titles like “Real Life Brands in Second Life” which was released by Marketing Truths in March 2007.

But as a small business person hasn’t your life been all about taking risks?  Think about this: if you had gotten in on the World Wide Web before Amazon staked its claim as the brand to be in e-commerce, where would you be now? Also, I find it helps to put virtual worlds in a larger perspective by placing them in an Internet lineage that includes newsgroups, Web rings, bulletin boards, text chat rooms, blogs, vlogs and wikis. All these interactive gathering places are opportunities for socializing as well as making business contacts. Virtual worlds are just another step up, but they add commerce and collaboration in a way that has not been seen before.

So what do I suggest for right now? Suit up your avatar and get in-world to explore with the idea of joining a group, i.e., The First Opinions panel or perhaps sponsor an event at $10-20, which might draw a crowd of 20 or so interested people. You don’t have to build or buy anything, although the cost in real world dollars according to the ever optimistic programmer, Mr. Fundinger is remarkably low, i.e., 1024 square meters is about $30 USD with a $5 monthly fee paid to Linden Labs, the creators of Second Life. Putting aside buying and the responsibility that that entails, you can always rent a small space in a mall. Your broadband Internet connection is standing by.

Donald Schwartz is the director of marketing for Imagelink Productions, a full-service Web branding company. For more information about his company or examining the virtual world, he can be contacted at donald.schwartz@imagelinkproductions.com.