SecondLife: Is The Party Over?
Posted by scottjduffy on September 30, 2007
Many of you may have heard of this virtual world called SecondLife, and maybe even heard of companies such as Nissan, IBM, American Apparel, Reuters, Scion, and Nike building a corporate presence there. Perhaps it’s something you’ve put on your “to do list” in terms of learning more about it and figuring it all out.
(If you haven’t heard of SecondLife, I have written a short definition of it here.)
Well, I’ve never been entirely convinced of the viability of SecondLife as a marketing platform. And I believe SecondLife is less attractive as a game now that it was a year ago. Let’s list all the various ways SL has been used by corporations in the past:
1) Nissan provided visitors with a free car, and gave them race track on which they could drive it
2) American Apparel opened a retail store, selling virtual versions of its real life products
3) Nike opened a shoe store, same idea
4) Other companies have used SL as a place to hold events, such as company annoucements, corporate meetings
5) Reuteurs famously opened a “branch office” inside SL and has full-time reporters there reporting on events from inside SL
6) Scion opened a virtual car dealership, and even allowed people to customize their Scion’s
I’d conservatively estimate that a company would need to spend in the neighborhood of $20,000 – $50,000 a year to have an active presense inside that game (not even including the initial investment). So the question is, are those companies getting a reasonable return on that investment?
Certainly, the companies that were the first to do something inside SL got some real life press out of it. But if you are now the fifth brick-and-mortar clothing store inside SL, you won’t get much in the way of mainstream media coverage.
So can companies make real money from inside SL? Well, yes, if you create a product to sell, you may be able to recoup some of the investment back. Certainly Nike sold thousands of virtual running shoes and made back a percentage of their investment that way. But can you make some serious “real money” from SL? The answer has to be no, not really. One of the most profitable SL businesses is selling land, and one of the most successfull real estate moguls in SL claims to have made $1 million of paper net worth from it. But virtual land is an illiquid asset. The second most successful business has to be pose balls (both innocent and of the adult variety) and news reports have said the most successful people in those business make US$200 per day, which most companies looking at SL would consider chickenfeed.
So then the question becomes, will you convert any of the 500,000 regular SL players into customers, or at least increase brand awareness with this campaign? I’m certain that happens to some degree. For a company like Nike, who already has massive worldwide brand awareness, I doubt being in SL will bring a single new customer. But perhaps American Apparel made a few more people realize who they were and what they sold.
For now, I think SecondLife is losing some of its appeal as a game. Certainly no marketer there has discovered what I consider to be the secret formula for success. There might be something still that someone can come up with that will get me excited, and cause me to log in and see. But if someone is just going to follow the same models as others have already done, I would say the money would better be invested elsewhere in the new digital marketing space.
Companies Doing Cool Things In This Space:
