Marketing 2.0 – Business in the Virtual World

Joseph Satish V

The next generation of internet, termed Web 2.0, is driven largely by user content. This content has manifested itself in the form of blogs, wikis and social networking. It did not take much time for the gurus in the marketing world to take note of this development. Thus, user driven content led to user desired ads. But in June 2003, the definition of marketing took on a whole new dimension when Linden Labs launched ‘Second Life (SL)’.

Second Life or SL, is a virtual world accessible via the internet. To call it a social networking site would trivialize the plethora of opportunities that this medium provides. Rather, it is exactly what it is called – a second life where each person in the real world can develop a virtual personality. The person can either mirror his/her ‘real’ self or develop a whole new entity called an ‘avatar’. Users in this virtual world are called ‘Residents’ and they can meet and socialize with other residents. But what makes SL different from other social networking sites is that it comes in a three dimensional model – much like watching a movie. One can watch his/her virtual self act out their respective intentions on the client program called the ‘Second Life Viewer’. And unlike other sites, the residents actually live alternate lives on SL. For instance, Janine Hawkins is a student in Ontario. But in SL, she is Iris Ophelia and works as a fashion reporter. She earns Linden Dollars for her work and as Iris she buys the latest virtual outfits, and goes for a completely new virtual makeover. Janine does all this clicking away on her desktop.

SL first caught the attention of the business world when BusinessWeek carried out a cover story in May 2006 on the prospects of marketing in the virtual world. While purists might argue that SL has led to consumerist lifestyle, businesses were eager to grab the opportunity of placing banners in clubs and hoardings on the virtual roadside. SL initially attracted the likes of Nike Inc., and Coca-Cola which used the portal as a digital marketing test bed.

Cynics watched the developments with scepticism, awaiting the downfall of virtual marketing at any moment. The reasons being that the growth rate of SL has been minimal compared to other sites like Facebook or AOL – there are only around 5 million users with only about 1.6 million having logged in the past two months.

Virtual shopkeepers on the other hand are optimistic. Rivers Run Red, the agency that created Reebok’s SL store distributed more than 27,000 pairs of digital shoes in the first 10 weeks of launch. Building space on SL is available for a price in Linden Dollars, which in turn needs to be purchased using real dollars through credit card. SL does not charge any commission for sales made on it though.

A common complaint that residents have is that companies approach virtual marketing in terms almost identical to the real world. Experts suggest that customers should be allowed to contribute to the marketing content. Further, the focus should be on the web community and not on the content. Taking note of this, Coca-Cola is currently promoting a competition for a virtual Coke machine in SL. Businesses should also be willing to experiment with digital media.

Healthcare firms have taken an interest in SL with doctors willing to provide virtual information on medical conditions. Such initiatives can make business communication in the virtual world more welcoming. SL also has to deal with virtual crime where products designed by residents could be plagiarised by other users. Small vendors like Electric Sheep Co., which creates virtual spaces for companies like Sony and Reuters have expressed concern about property and copyright control.

One of the biggest contributions of SL to the real environment is its contribution to Green IT. IBM scripted one of the biggest successes when its Academy of Technology hosted a Virtual World Conference in 2008 followed by an Annual Meeting with over 200 participants. IBM estimates that the return on investment was roughly $320,000. The Annual Meeting, it says, was executed at almost one-fifth of the cost of a real event. On similar lines, Intel conducted a Virtual Embedded Channel Conference, saving $265,000 of the $300,000 budget.
While marketing in Second Life is still in its nascent stages, it is clear that it provides ample opportunities to companies that use it effectively. Certainly, it has its share of hiccups and there are risks associated with control in the hands of the users. But if companies encourage user generated marketing content, intertwined with authenticity of the message, it will eventually result in a healthy relationship between market and consumer. The potential that Second Life holds for the marketing world is too high to be discouraged, and it is heartening to note that more and more companies are willing to experiment with it.

REFERENCES:

1. Second Life – IBM Case Study; http://secondlifegrid.net/casestudies/IBM
2. Second Life – Intel Case Study;
3. http://secondlifegrid.net.s3.amazonaws.com/docs/Second_Life_Case_Intel_EN.pdf
4. “Awaiting Real Sales From Virtual Shoppers”, Bob Tedeschi, The New York Times, June 11, 2007
5. “Marketing Using Web 2.0”, Salvatore Parise, Patricia J. Guinan, Proceedings of the 41st Hawaii International Conference on System Sciences – 2008
6. “A Second Chance for Second Life”, Scott Morrision, Wall Street Journal, August 19, 2009
7. “The Dark Side of Second Life”, Catherine Holahan, BusinessWeek, Novemeber 21, 2006
8. “Second Life Marketing: Still Strong”, Wagner James Au, BusinessWeek, May 5, 2008
9. “Even in a Virtual World, ‘Stuff’ matters”, Shira Boss, The New York Times, September 9, 2007
10. “My Virtual Life”, BusinessWeek, May 1, 2006

Joseph Satish V, PGDM(RM)-I, XIMB