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Hey! Big Business is wearing NO CLOTHES!

December 10th, 2006 Leave a comment Go to comments

Having now conducted a number of tours of real life businesses in Second Life I suggest to you that the medium is not working as advertised. I’m talking in particular about trying to sell real life goods.

Here are the traffic numbers in avatar minutes/week:
Adidas 1,122
American Apparel 2,588
Dell Factory 577
Warner Bros’ listening loft for Regina Spektor 62
Sony 128
Average: 650 per week ~ 900

The poor traffic numbers are in spite of the fact that these companies have used their PR infrastructure to generate tremendous free kicks from the media, who seem obsessed with the real/virtual transition. The media however are largely missing the point which is the unpredictable phenomenon of a virtual world for adults. This is a little harder to report.

Contrast the real life traffic figures from leading in-world companies:
Ricx Jewellery 22,260
Xcite (virtual sex equipment) 59,011
Ice Dragon (casino) 75,695
ETD (hair) 17,294
Vindi Vindaloo (clothing) 5,579
Average: per week ~ 36,000 or 40 times the volume of the real-life businesses.

The failure of real life companies to spark interest in their venues is partly flawed strategies and partly the nature of the medium. Let me make the point visually. Here is a pair of shoes that Adidas are marketing in Second Life.

adidas

And here’s the in-world competition:

boots
Ladies! Cast your vote!

The people in Second Life are having an immersive experience. One of those self-expression things. They are not in Second Life hankering for the real world. Developers need to (a) understand that and (b) explain it to their clients. The opportunity for businesses is to tap into the creativity of Second Life and take that into the real world, NOT THE OTHER WAY AROUND.

I just included Dell on the tour. They allow you to configure a computer in Second Life. But only one model is available and you still need to go to the web to complete the sale. Why not just use the web? Just because you can do something in Second Life does not mean you should do it. The web is a better tool for database applications and I am not convinced that Second Life is destined to be the web’s front end.

Businesses should consider the possibility that Second Life’s principal value might not be to help them sell more widgets but to help them communicate powerfully, especially amongst remotely located employees. Instead of second rate virtual shopfronts they should be building virtual offices and virtual communities.

Glutton for punishment? See my previous article on GM and IBM.

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  1. December 10th, 2006 at 17:54 | #1

    One of the things that the traffic numbers don’t show is RL buzz metrics. Also, keep in mind that some of those listed have alternate venues. For example, Talib Kweli’s build on the MOU sim received traffic of 344; the one in Saijo City: 2500 (with an additional 1000 across the way at related content).

    And on competition, I can’t compare apples to can openers; a tennis shoe is one thing; a stilletto boot is another. I wear these name brands in RL, yet in SL, I choose to wear dingy work boots, unlaced. Reebok can’t compete against that no more than Pacific Sunwear can’t compete with the Men’s Wearhouse.

    Also, I think we’re overlooking a cultural thing. Nissan cars in SL are tons of fun but uh, it’s a Nissan. I’ll take a Scion over a Nissan. In fact, if Porsche shows up, I’m dumping that Scion. In the meanwhile, I prefer the things that no car maker in RL can do. You can’t sell RL cars to a cyberpunk no more than you can sell to subcultures of furs or vampires.

    Or, just look to the normal video game industry. In Need for Speed: Most Wanted, I challenge you to tell me about the brands like Cingular, Burger King, Autozone and others that are there. It’s a RL company, right? In a fake place (I mean I’m not *really* runnin’ from the cops)

    Great conversation, keep it up!

  2. December 10th, 2006 at 19:23 | #2

    I think there are a lot of ways marketing projects in Second Life can
    continue to improve, and ways they need to stay realistic about how a
    direct translation of an RL product is not necessarily relevant
    depending on the product, but throughout this healthy discussion, I
    would like us to stay honest about what that “traffic” stat is and is
    not. It is *not* avatars minutes/week. “Traffic” is an obscure
    formula that is a combination of number of avatars, how long they
    stayed, how long their overall session in SL was, and (I think) the
    size of the plot of land. It is easily gamed by “camping
    chairs/poses”, which many local stores (like RICX) use. It is useful
    as a metric within an SL business, but not really that effective as a
    comparative metric. It also does not help you understand the quality
    of the traffic.

    Now, I don’t really expect an SL auto presence to have more traffic
    than an ETD, which serves a much more universal need in SL, but that
    point aside, there are many things that corporations can do to expand
    their presences in SL, add more value, and better engage residents.
    It is starting to happen. It will improve with SL’s growth, because
    companies will shift from experimental “dip the toe in” stage to total
    engagement… it’s starting to happen.

  3. December 11th, 2006 at 04:33 | #3

    Couple of critical distinctions needed here:

    First — in-world businesses measure success exclusively by the traffic they draw in-world and the revenue that results. The same is NOT true for real world businesses entering Second Life, where the SL activity is just one component of a larger ROI picture.

    Secondly, I think you’re correct that RL businesses have not attained the sophistication of their SL pureplay brethren yet and still have a lot to learn about community building in virtual worlds.

    We think it’s important to view SL not as an island but as part of a spectrum of social media that include blogs, social networks liek Myspace and user created content communities like Flickr and Youtube. The goal of campaigns that provide really big ROI is to construct them so that the campaign can leave SL and live in all these other forms of social media.

    What we’ve seen in our last 4 or 5 campaigns is the following phenomenon:

    1. Launch in Second Life. Our targets over the life of a campaign are pretty modest (5 – 50,000 visitors, depending on scale). What makes this piece interesting is the level of engagement (hours) and who the audience is
    2. (When sucessful) the campaign captures people’s imagination and explodes into the blogosphere getting millions of impressions
    3. (When successful) the campaign also gets a lot of mainstream media coverage.

    I’ve talked about this a lot recently on our blog
    http://millionsofus.com/blog/archives/125 and
    http://millionsofus.com/blog/archives/128

    The net/net is that in order to succeed, all these efforts need to
    1. Add value to SL
    2. embrace the user-created content of SL
    3. Allow for chaos so that nobody really knows where it will go

    This last criterion, in our opinion, is the most important one for driving ROI. If users don’t have the ability to change the direction of where one of these efforts goes, they will be uniterested and without that chaotic element, observers will have little to discuss (and therefore the blog coversations and media coverage will be minimal.).

    Just my two cents — but I’m really glad to see that the conversation is starting around this topic.

    Reuben

    Reuben Steiger
    CEO
    Millions of Us
    80 Liberty Ship Way, Suite #5
    Sausalito, CA 94965
    http://www.millionsofus.com
    Cell: (415) 425 2482

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