July 17, 2007

The case of Second Life: What is in it for the Marketer?

IBM, Philips, Adidas, Toyota and ABN AMRO Bank are just a few examples of a growing number of international (as well as local) brands who have opened digital shops in Second Life, the most widely known virtual village with a few million registered users. According to the 2007 McKinsey Survey on Internet Technologies 37% of the participating businesses in the survey are investing already in social networking as a marketing tool. The logic behind this is simple: This is an environment attracting interest and users so I have to be visible there.
While the logic is sound the benefits of such an undertaking are quite contentious and fuzzy. The whole fad brings back memories of the Internet gold rush of the 90s when joining the online world was a must for everyone although most businesses building up web sites did not know how to do that and why they actually were doing so.
The hype around Second Life seems to hinder marketers from realizing that engaging social sites as a new marketing channel requires new thinking and different approaches than those used in traditional mass media or mass promotional actions.
News from the field is not very upbeat so far. I read recently an article written by a journalist who counted the number of visitors walking around in Second Life shops of Dutch firms and found them in numbers ranging between 0 and 10. Other studies (like one conducted by Komjuniti, a German research firm) found that a high percentage of Second Life patrons are disappointed with the marketing efforts taking place there; it seems that the story of the 90s is repeated, firms create online shops in social networking sites and then simply forget about them hoping that business will follow.
There is lack of scientific evidence as to the potential and effects of this marketing channel and not much known about to social network user’s behavior. The only information as to Second Life marketing is patsy based or reports or speeches of (sometimes self-proclaimed) experts about the staggering future of this type of marketing.
Can somebody give any advice to the impatient marketer about Second Life? Maybe a very simple one i.e. to ask himself the most basic question for evaluating any marketing communication channel: How many of your customers or potential customers is the channel able to reach and of course at what cost per customer? In other words how many of the regular users of Second Life (about 15% of the total registered) are likely to be their customers or potential customers? I am afraid that for many the answer to this question would make think twice before investing in Second Life Marketing

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