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02 September 2009

Marketing lessons from Second Life to Web 2.0

In 2007, Giga OM wrote a post about marketing in Second Life "Marketing in Second Life doesn't work... here is why!". What's interesting is how, 2 years on, those same arguments apply to Web 2.0 and all forms of social media, not just the virtual:

Teleporting is to SL Advertising What the Channel Clicker is to TV Ads

The standard means of travel in SL is point-to-point teleportation, near-instantaneous transit from one location to another. P2P teleporting renders billboards and most other location-based advertising useless

Advertisers want to hang on to your eyeballs. In the old days of a few TV channels, it was considered an easy task - insert ads between the TV programmes. As the number of channels increased, we all became channel hoppers. Adverts start and off we click. In Second Life, the clicker is replaced with the teleport. People do a 'beam me up Scotty' and go direct from one destination to the other, making it hard to insert ads along the way.

But the Internet is no different. The only successful placement of ads has been discretely embedded alongside search results and web parts. The indiscrete ones are so in your face they cause an instant channel hop/teleport/link to another digital location, be it 2D web or 3D virtual world. And increasingly we hop direct via our social networks, receiving a message or shared link from someone we trust. Ads in their traditional format will struggle to succeed in this environment. It is telling that a non-advertising company (at the time) - Google - invented the current profitable form of web advertising. Advertisers did not believe a simple text box would work...

Death by Green Dots (or lack thereof)

"Every avatar in-world is represented by a green dot...Any noticeable clump of green dots attracts more dots, and as those grow, more follow– a feedback loop colloquially known as “the green dot effect”. Second Life’s most successful entrepreneurs sustain this flurry of dots by holding constant events, giveaways, and games, and even go so far to pay Residents to visit. Amazingly, corporate marketers have been slow to replicate these homegrown strategies."

As GigaOM highlights, the challenge to advertisers here are good old fashioned network effects - dots attract dots. And where else do we see network effects? Everywhere in Web 2.0, be it MySpace, Facebook, Twitter, Bebo or any other social site. All are affected by exponential growth or complete lack of growth, there's little in between. To sustain interest requires effort. It's not just advertisers who are affected by this phenonemon. Journalists and other professions are also struggling to compete against newcomers often dismissed as amateurs but who offer more to their audience.

A Failure of Imagination

"To play in Second Life, corporations must first come to a humbling realization: in the context of the fantastic, their brands as they exist in the real world are boring, banal, and unimaginative"

Second Life is not the only place on the web that makes traditional brand advertising seem boring and bland. The same is true of every single site that has enabled people to have their say, contribute and be creative. Look at the videos on YouTube, compare the mash-ups being made by individuals compared to professional speeches, fan pages on Facebook versus staid corporate web sites. None of them remotely resemble traditional marketing designed for mass consumption and yet they attract viewings by the million.

Here's a simple example. When United Airlines lost a passenger's luggage, the passenger made a song and posted it to YouTube. It achieved 3.5 million views in 10 days. Few adverts achieve such a voluntary audience. The net effect - it wiped 10% ($180 million) off the value of United Airlines. But full marks to them, apparently United Airlines are now going to use it as part of their training.

These marketing lessons dished out to companies trying to succeed in Second Life are equally relevant to companies trying to succeed in this new Web 2.0 world that the Internet has become.

To summarise what brands need to do to in Web 2.0:

  • Find ways for your product or service to become part of the story. Product placement in a film trumps an advert in the coffee break. Sometimes, the ads in and around the search results are the result you were looking for. They succeed because they look part of the search results (i.e. mostly text), rather than trying to bling their way annoyingly into your now disrupted attention.
  • Reinvent your marketing department. Stop outsourcing work to agencies and staring at campaign statistics. Learn from individuals who have leveraged Facebook, MySpace, Twitter and others to create an incredible personal brand. Apply their lessons and understand it will take effort to achieve those network effects. (It usually involves a story...)
  • Be prepared to not understand what someone is proposing but let them do it anyway. Imagination and creativity are valuable commodities, don't clip their wings so much. I would go so far as to say, if your marketing department doesn't frighten you with their ideas, they aren't good enough.

And having written this, I'm guessing less than 5% of companies will follow the advice. More may try but few will actually follow it to the letter. Instead they will customise the advice to make it feel safer, and most will fail because they failed to change. Here's a simple example...

Reverse Marketing - Start with the discount and increase the price of products

In the real world, when new clothes come out they are sold on the high street at full price. Then, as the season ends or a new collection is due, the clothes go on sale at a fraction of their original price.

In Second Life, a virtual retailer lauches new clothes on sale for 48 hours (L$99, about $0.36) before raising them to full price (L$299, about $1.11) where they remain for as long as she wants to sell them. It is the reverse situation. She doesn't actually call it a sale, rather a promotion. To get the promotion, you have to be a member of her group and will receive a notice when new clothes are available. Within seconds of a notice being issued, her shop will be so packed with avatars nobody else can teleport in. I am guessing more than 80% if not more of her sales of new items come from within that 48 hr period. Without the promotion, far fewer would bother to turn up on a regular basis and check out new items. The price is cheap enough many automatically buy regardless of whether they really want the item, knowing it is the only time it will be available at such a large discount.

Imagine if a retail shop could be bothered to do the same. Some do offer special store discounts on occasion, but usually for no more than 20%. It needs to be a better deal and a systematic approach to attract customers to buy on a regular basis. Create a Fan page on Facebook to announce promotions for new collections, with 40%* discounts during a 24 hour period when the stores are open. And make it a regular activity, not an occasional event. Good or bad for business? (* I'm guessing here the mark-up is more than 40%)

References

Side note: To embed the video above, I had to go find it on YouTube. The version included in the BBC article appears to be a copy that doesn't let you embed it anywhere else. (They do include a 'video courtesy of YouTube' reference.) A blogger wouldn't make it so difficult to share...