Brands and Worlds. Who’s the Daddy?

So clearly, there’s a relationship between brands and worlds and virtual world owners want to publicise these engagements. But where does the balance of power actually lie?

Let’s start with the brands and the current de facto location for brands in virtual worlds – Second Life. During 2007 over 150 brands took the plunge into SL, as shown in the table on the right.

So why did all these companies go in? Well, firstly because SL was a brand new and exciting channel to place their brands into. Full of early adopters and new opportunities, brands (mainly from the US) wanted to be the first in, so first mover advantage and positioning were reasons given for entrance.

The PR generated from SL activity was also a reason. Whilst this isn’t a worthy strategic basis to go in-world, nevertheless, many companies saw it as a media opportunity. Unfortunately for some of these brands the press release wasn’t enough to generate interest in their efforts.

‘Me-too’ was also a reason to enter Second Life. One of the best example of this is in the Automobiles sector. Toyota entered, then Nissan. BMW entered, then Mercedes.

The graph on the left shows the timeline for automobile brands entering Second Life against the growing number of total registered accounts.

Again, the ‘Me too’ decision is strategically flawed is there isn’t a differentiated concept in place to attract interest - If you build it, they might not come.

But, regardless of the primary reason for entrance, brands were fundamentally experimenting and exploring the brave new world of virtual environments – Second Life offered them this opportunity. And on the theme of exploration, brands also ventured out into other worlds.

These other platforms providing additional reasons and benefits. The issue of brand control and management attracted brands to worlds such as There, vMTV, Whyville and Gaia Online. Toyota to date has been the most adventurous brand, with activity across five different virtual worlds (the table right shows Explorer activity). Outside of SL, other worlds removed the threat of residents ‘doing things’ to the brand identity or product, as Playboy is currently discovering.The TINY DANCING blog also has a take on the current Iron Man campaign in SL (note: NSFW).

The different demographic (and geodemographic) profiles offered by the range of existing virtual worlds also made brands look into the space. Want a teen audience? Try Gaia Online or vSide. Tweens? How about Club Penguin or Habbo. And that’s just a starting point.

So, brands are looking at virtual worlds as a way of connecting with consumers in ways much more engaging than TV, print and banners. This is the new battleground for advertising and marketing and brands have started to realise this.

Do brands need virtual words? Absolutely. The high proportion of kids brands in attendance at VW08 NYC is testament to this – they’re paying close attention. The high number of brands across all sectors currently in Second Life is also proof. Further evidence can be found on Giff Constable’s blog over at ESC. He cites recent research conducted by MTV with respect to Pepsi activity in vMTV…

Among the findings was that Pepsi positive brand image traits increased dramatically among fans who not only watch the show but browse The Hills content online, where Pepsi runs 30-second spots and banners. Positive brand image increased even more among fans who played in The Hills virtual world as well. (The average time spent there, according to MTV, is about 28 minutes per encounter.)

The valuable audience segment of teenagers and young adults are bombarded with advertising messages and are savvy enough to know when they’re being sold too. They’re also media and activity ‘grazers’ – they switch between channels and media products at lightening speed (read more about marketing in teens online). Virtual worlds offer an engagement platform unlike anything else in the market and increased brand equity is the currency.

But do virtual worlds need brands?

The best starting place here is to isolate the primary objective of any virtual world – to grow their resident base.

Looking at Second Life growth in 2007, I would argue that at least 50% of the new accounts (circa 5m) created in 2007 were a direct result of brand activity. If brands hadn’t have entered SL, registered accounts would have been significantly lower. So, from this perspective, brands are crucially important to virtual worlds – they need them.

What brands bring to a virtual world is a base of fans/advocates/ambassadors people who have a relationship with a real world brand and follow the brand in-world. On this basis, getting a brand inside a virtual world is an excellent vehicle to grow the population numbers.

This aspect can also be pivotal for newly established worlds or platforms in development. Brand awareness and understanding of the majority of new virtual worlds is low – no-one really understands what’s on offer and the only way (until these worlds start advertising) is to actually sign-up. Real world brands bring a safety blanket of awareness and can act as a catalyst for registration, not to mention kudos. Another reason why virtual worlds need real world brands.

Some virtual worlds place real world brands at the centre of their positioning, Stardoll being a good example of this. Members flock to Stardoll to dress their avatars in branded clothing and celebrity-based activities.

But the concept of using brands to leverage populations could be a strategy with a finite life. Consider the schematic shown below.

This schematic attempts to demonstrate the dynamics surrounding virtual world growth. The journey starts with a newly established virtual world starting to attract residents (point one). As the population starts to grow, it reaches a sufficient membership base, audience profile or awareness level to attract interest from a real world brand. The brand enters (point two) and the initiative is reported by the media (point three). Naturally, people read the media stories (point four) and are interested in finding out more about the world, increasing the population base (point five). So far so good. And the good news for the world at this point is that typically other brands take notice and also move in-world (point six). The dynamics evolve once more and again the media reports on these additional brands going virtual (point seven). Again, people read the media stories (point eight) and are interested in the world.

The crucial element to this schematic is target audience saturation, media fatigue and even viral marketing dilution. If brands act as a catalyst for new registration sign-ups, how many new brands entering does it take to stimulate entrance? If the target audience didn’t sign-up after the third brand entrance, does the fourth make any difference? And how hard and far will viral marketing work and travel? There must be a point in the future where brand activity has no effect on boosting the population. On this basis, virtual worlds only need brands for a specific, as yet undefined period.

Of course, in this scenario, the virtual world has actually done extremely well to get this far. With the number of virtual worlds increases rapidly, the need to differentiate the proposition is paramount, as is the requirement to pay as much attention to existing members as it does to new ones – classical CRM (even new marketing channels are influenced by ‘old world’ marketing methodology).

Do virtual worlds need brands? In the short to medium term, again, absolutely.

In turn, this assessment leads us to real world brands creating their own virtual worlds. This is becoming an extremely compelling business case. After all, why compete with other brands in someone else’s virtual world when you can own and manage your own?

We’re already seeing this strategy taking place in the kids and tweens sectors. Companies already doing this include Barbiegirls, Buildabearville and of course Disney, who are committing heavily to creating virtual spaces for their products and assets. The upcoming Lego Universe is another obvious example of this and expect many many more brands operating in younger age markets to launch dedicated virtual worlds over the next few months. Bad news for some virtual worlds.

Will this trend continue into environments tailored towards older consumers? More than likely, but not as quickly as it’s happening in the kids and tweens space. Playstation Home is an early illustration of a company creating their own branded and controlled platform. There’s also early reports that Playboy is considering their own virtual world.

In interesting nuance in this area though is brand tie-ins – in other words brands creating their own world and they ‘inviting in’ complementary, not competitive brands. vMTV is the benchmark operator in this instance.

So, Brands and Worlds. Who’s the Daddy?

As explained, both brands and worlds have reasons to work together. However, for the foreseeable future, it’s the brands that have the controlling power over the worlds. Until of course, a virtual world comes along that’s so compelling, so different and so ’sticky’ that brands have to queue up to get it (or eve not be allowed into the world full stop). This hasn’t happened yet, but it will. Some may argue that Club Penguin is in this bracket. I’d say it’s nearly there but not quite.

This entry was posted on Wednesday, May 14th, 2008 at 10:22 am and is filed under KZero Clients, Strategic Marketing, Virtual Research. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Brands and Worlds. Who’s the Daddy?

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