Lessons Learned from Second Life

Virtual worlds give participants an opportunity to be whoever they want, wish or hope to be. With a custom designed "avatar," you can look, behave and speak any way you want. It's your "second life," after all.

Brands, however, don't have that luxury. They bring established reputations and perceptions into a realm where everything is new and anything goes.

The "Wild West" nature of virtual worlds frightens brand managers schooled in carefully crafted and controlled messages, and Second Life indeed chased many away.

But with technology -- and especially social media -- becoming more and more pervasive in consumers' lives, virtual worlds will get a second chance. Here's how to capitalize on it.

Second Life and other virtual worlds have enormous branding opportunities. In terms of social media, virtual worlds really are communities in the most literal sense, and it is the level of interaction and engagement that creates such a strong platform for branding. Some brands (like Vodaphone) have found ways to develop interactive spaces in world that intrigue and engage prospective customers. For these brands, virtual world marketing is much like participating in a sponsorship: the presence is valuable if there's a good fit between the space, the target market and the brand -- and if the brand can find a way to add value for those visiting the space.

For some brands, though, virtual worlds are not the most friendly of communities. They may find that other forms of social media marketing are better suited -- or at least simpler to manage (particularly if the virtual world in question is Second Life)! Here are a few factors that can help you understand "why" . . . or "why not."

Ease of Use
Second Life is complex and user-unfriendly. Time magazine called it a case of Fortune 500 companies trying too hard to be hip. A recent report from Forrester suggests that marketing in virtual worlds is still too complex for broad adoption as a business strategy, but that this is likely to change in the next five years. Complexity is an issue, not only from the marketer's perspective, but also from the consumer perspective. It is one of the primary characteristics that can slow the rate of adoption for innovators. Some virtual worlds are easier to learn than others; Second Life is likely the most difficult to learn.

Software Requirements
Second Life, and some other virtual worlds, requires users to install its software. Software installation could be a deterrent to growth beyond the innovators and early adopters already a part of the virtual world phenomenon.

Number of Active Members
Second Life, for example, does not have the reach that other online advertising venues garner. Despite the claim of millions of residents (with continual growth), under a million are active and engaged.

Opportunities for Negative Response
Residents of Second Life are known to dislike and distrust big brand promotion. "Griefing," vandalizing and harassing in world, is a common problem for brands. Linden Labs takes a hands-off approach to managing griefer attacks, relying instead on resident governance. How bad can griefing be? A helicopter crashed into a Nissan building, starting a fire that left a couple of dead bodies, and American Apparel customers were attacked by members of the Second Life Liberation Army armed with virtual guns.

Accuracy of Results Reporting
Second Life offers publicity and the value of free media impressions as social and other media cover new developments. However, no distinction is made between positive coverage and negative coverage. When the media attention is negative, such as reporting attacks on customers, the publicity does not build brand equity.

User Security
Aside from the security from griefers, Second Life has struggled to provide security to the real life people behind the avatars. In 2006, hackers obtained credit card information for some residents.

User Capacity
Second Life's infrastructure limits the capacity at some events. Your brand might do a phenomenal job of planning and executing a relevant brand experience with an outpouring of enthusiasm, only to find the system crashes when more than 70 avatars are present at a time.

Number of User Interactions
Of course, capacity concerns are only an issue if things go well. Spend some time walking or flying around Second Life. It is filled with exquisitely detailed representations of real and fantasy locations. Yet seeing other avatars is rare unless one is spending time earning free Linden $ (the currency of Second Life) at Money Island.

Tie-In to Real World Sales
Some brands have sold digital versions of their products. Toyota, Reebok, Adidas, and Dell are all examples. No brand has yet announced success at using the in world branding site as a direct response tool for real world sales. Bob Tedeschi, in his article entitled "Awaiting Real Sales from Virtual Shoppers," explains that brands experience little measurable influence on real world sales that can be tracked to virtual branding efforts.

Number of Media Outlets
There are still a limited number of Second Life media outlets and advertising opportunities (beyond supporting retail space, experiential facilities, and events). NPR and Reuters are there, along with the AvaStar newspaper, but for brands accustomed to buying ad space in hundreds of television networks, consumer and trade magazines, and national, regional, and local newspapers, this is not a rich media landscape. Ad inventory will develop over time. A "MetaAdverse" network has been established to provide in-world billboard advertising.

Scalable Branding Initiatives
It is difficult to gain economies of scale in branding initiatives. One cannot lower the average costs of products by making mass amounts of products, and there are no huge media buys to lower the costs of advertising.

Design Costs
There are expenses to brand building in Second Life. Linden Labs sells land and then requires ongoing maintenance fees. Those are minimal compared to the design expenses brands encounter. Alex Veiga points out that brand building requires artists, designers, writers, and marketers to develop all aspects of the brand's identity in Second Life. Scion City, a Toyota initiative, took about 10 weeks and probably cost in the range of $100,000. Importantly, brands that enter Second Life must be committed to operating there. It does no good (and in fact could harm a brand) to have a presence there that is not manned, managed, and leveraged towards accomplishing the brand's objectives.

In open worlds, economies are free markets. Brands are welcome to compete and the spoils go to the brands with the best strategy, the best targeting and the best engagement propositions for their target audiences (mindful, of course, to ensure the strategy is suitable for the virtual culture in question). The brands with the wherewithal to strategically plan a social media marketing campaign will also know to commit to the campaign and to provide ample time for the strategy to work prior to making judgments of success or failure and redirecting resources to other marketing executions.

In other words, they'll understand and capitalize on why . . . or why not.

(c)2008 Dr. Tracy L. Tuten

-from The IBM Way by Buck Rodgers and Robert Shook [out of print]

[hat tip: PowerShell Team Blog]

The Sept 8th cover story of BusinessWeek titled "Managing By The Numbers" was an excerpt adapted from the book about amazing work being done at IBM:

"I'm here to find out how Takriti and his colleagues go about turning IBM's workers into numbers. If this works, his team plans to apply these models to other companies and to automate much of what we now call management."

You can find the introduction excerpted and an active weblog on The Numerati website.

The book I would correlate this with is last year's Super Crunchers by Ian Ayres, which is out in paperback now.

One author, Nancy J. Hafkin, has worked in these fields for thirty-plus years and has been the Chief of Research and Publications at the African Training and Research Centre for Women of the United Nations Economic Commission for Africa. Hafkin has also headed the Pan African Development Information System. She also has a degree in African history from Boston University.

The other author, Sophia Huyer, is the Executive Director of Women in Global Science and Technology and Senior Research Advisor with the Gender Advisory Board of the United States Commission on Science and Technolgy for Developement. She has a Ph.D. in Environmental Studies and International Development form York University.

The essays include case studies from Africa, Asia and Latin America to show different perspectives from all over the world of how women are participating in today's information society.

From the introduction posted yesterday:

Crucially, we will need to work out how we can add value as publishers within a circular, networked environment.

One of the key perception shifts that publishers need to make, then, is about the book as 'product'. Whilst the book continues to be viewed as a definable object within covers, as a singular 'unit', publishers will continue to limit their role in its production and distribution, and this is a sure fire way for publishers to write themselves out of the future of content creation and dissemination.

This is a conversation we have quite often here. While we were handing out books at an author event recently, a gentleman walking by turned to us and said, "no one reads books anymore"--and, keep in mind, this man was there to see the author of the book speak. It's that sentiment that causes so much panic in our industry about the possible demise of the printed book, and I think that that panic sometimes clouds our vision of the future and what great possibilities it holds. So far, Sara Lloyd's essay has provided a very thoughtful and sober view of the situation. I'm looking forward to the next four posts.

And, speaking of the future of publishing, you can now browse inside HarperCollins books on your iPhone.

A few approaches mentioned in the article:

• Specialized guides are available online - you can get an entire guide to pubs and inns in the UK, without the other information available in more comprehensive guides. And, you can get a version that connects to the GPS in your rental car.
• Dorling Kindersley (DK) has made all of the content in its Eyewitness Travel guides available online at traveldk.com
• Lonely Planet plans to have all of its guides online in two years, but currently offers individual chapters available for download at a few dollars each.
• Several publishers allow web site visitors to create and print out or order customized guides. Others are getting their stuff into the backs of airplane seats.

Todd and I were discussing the dilemmas of choosing the right book(s) for your travel needs. For instance, you could create a customized guide to New York City with the maps of certain neighborhoods, history on the art in the museum you're visiting that day, and a subway map with certain stops highlighted. But, Todd pointed out, what do you do when it's 4:00, you're in an unfamiliar neighborhood, famished, and you want to eat at a great New York restaurant? Or, as I pointed out, what happens when you're on the Brooklyn Bridge and you want to know how many years it took to build?

Many travel guides boil down the history and cultural information that comes in handy when you're out and come across something new, something you didn't plan for when putting together your guide. Or you only visit sites in the chapters you've printed, and miss out on something cool right around the corner. Some of the spontaneity is lost.

On the other hand, when you're lugging around an iPod, a digital camera, a cell phone, bottled water, and a couple of kids, do you really want to carry a book? And, chances are, you'll need a couple of books, just in case one works well for, say, transportation, and the other works well for selecting restaurants and accommodations. And then there are the books you pore over before the trip and leave at home when you go...

Several publishers are looking at these strategies as a game plan for if (or when) the print publishing industry collapses.

"'We want to be in a position where, if the business suddenly collapses in five years, we have a plan -- unlike the music industry,' said Martin Dunford, publishing director of Rough Guides, which is part of the Penguin division of the media company Pearson, based in London."

But that big IF isn't looming on the horizon at this time:

"So far, the digital media revolution has been much less turbulent for guidebook publishers than for record companies, which are fighting rampant online copying. Sales of travel guides, while flat in some traditionally stalwart markets like Britain, have been growing strongly in developing countries and in the United States -- despite a weak dollar, which has made overseas trips more expensive for Americans.

Travel publishers sold 14.8 million books in the United States last year, up 11 percent from two years ago, according to Nielsen BookScan. Still, guidebook companies may have missed an opportunity on the Internet..."

Check out the article. I know I'll be visiting DK Travel and Lonely Planet's web sites to see what I can do for a little trip I'm planning.

http://www.nytimes.com/2008/01/03/business/media/03guides.html?_r=2&oref=slogin&oref=slogin

As we're thinking about ways to expand our online presence, Todd and I have been talking a lot about the best ways to approach new projects. It used to be that we decided to do something--print a new brochure, redesign a web site, incorporate a new technology--and then presented a plan to a designer. There might be some initial back-and-forth about needs and goals, but what the designer came back with in the end was essentially a finished product. We had to be sure we knew exactly what we wanted before we asked (and paid) for it. Today, though, there's a lot of wiggle room. Especially online, we can try and fail at something new without taking a significant hit (or any at all, sometimes).

A few weeks ago Todd wrote about a book called Super Crunchers by Ian Ayres:

http://800ceoread.com/blog/archives/007328.html.

http://800ceoread.com/blog/archives/007292.html.

This week I opened up Do It Wrong Quickly: How the Web Changes the Old Marketing Rules (IBM Press). The subtitle might make you think "Um, where have you been?" but the author, Mike Moran, actually gets at something close to what Ayres talks about in Super Crunchers. Using a bow-and-arrow analogy, Moran suggests that the archer with three arrows has a higher chance of success than the archer with one. In other words, it's great if your shot in the dark hits the bull's eye, but chances are it won't every time. On the other hand, if you take three shots at the same time, you might not hit the bull's eye, but you'll score more points--and learn more along the way.

I'm probably not doing justice to the author's message, here, but I think that the important thing to take away is that it no longer makes sense to expect that even a carefully thought-through, well-executed marketing campaign will hit the target in today's world. In fact, Moran believes that the new marketing means getting away from the plan-then-execute approach, and starting to try lots of approaches at the same time. In addition to systematic ways of assessing your online marketing (conversions, metrics), you have to listen better to your customers. He talks about the social media phenomenon, incorporating multi-media approaches in your message, and creating deeper relationships with your customers by engaging them in a conversation.

As Moran puts it, "whether change gets your blood pumping or leaves you in a pool of sweat, marketing is undergoing a revolution more profound than any of us are likely to see the rest of our lives." Do It Wrong Quickly is a friendly invitation to that revolution.

The normal verbal melee ensued:

link for the RSS folks

Copaken thinks that neural networks can improve scriptwriting in Hollywood. Most of his clients don't want the world to know what he is doing or that they are paying for it.

Malcolm Gladwell changed that in October 2006 when he made Copaken a subject of his article titled The Forumula: What if you built a machine to predict hit movies? Read the piece. It is brilliant.

Super Crunchers picks up where the article left off.

Epagogix's neural equations have also let studios figure out how to improve the expected gross of a film. The formula not only tells you what to change but tells you how much more revenue that change is likely to bring in. "One time they gave us a script that just had too many production sites," Copaken said. "The model told me the audience was going to be losing its place. By moving the action to a single city, we predicted that they would increase revenues and save on production costs."

Epagogix is now working with an outfit that produces about three to four independent films a year with budgets in the $35-$50 million range. Instead of just reacting to completing scripts, Epagogix will be helping from the get-go. "They want to work with us in a collegial, collaborative fashion," Copaken explained, "where we will work directly with their writers...in developing the script to optimize the box office."

Now, Copaken hangs out with agents, studio executives, and even hedge fund managers. The story starts on page 144 and is an update to the original New Yorker piece.

Andrew also wrote a ChangeThis manifesto titled Against You: A Manifesto In Favor of Audience.

I encourage you to check these out. There is a deeper, more nuanced discussion going here than most are giving credit.

This may be the answer to keeping the modern day version of Abagnale at bay.

We got a free book with the class for future reference. C2 Graphics gives all of their pupils PeachPit Press Visual Quickstart Guide for InDesign. Our instructor Fritz also recommended Adobe InDesign CS2 Classroom In A Book for additional exercises.

In the chapter on The Prosumers, Tapscott and co-author Anthony Williams ask some good questions:

So here's the prosumption dilemma: A company that gives its customers free reign to hack risks cannibalizing its business model and losing control of its platform. A company that fights users soils its reputation and shuts out a potentially valuable source of innovation. Apple and Sony may feel the latter option is an acceptable risk so long as hacking remains as the fringes. After all, product hackers are still a small minority of their customers, and there is little evidence yet that product hacks and home-brew applications are leaking out into the mainstream. Any company that believes that the status quo will hold for long, however, is mistaken. Product hacking is just getting started.

Customer with the skills and inclination to hack their products may be in the minority today, but what about in five or ten years, as increasingly technology savvy kids will become the norm? Will companies choose to fight all of their customers then? How will they cope with the proliferation of tools and Web sites that enable prosumer communities to flourish? Will they unleash the lawyers and risk driving their customers to alternative platforms? Indeed, how will they compete with the inevitable rise of hacker-friendly platforms that let customers do whatever they want and in return tap unlimited pools of free innovation? The answer is they can't and won't fight their customers for long. Customer hacking will live on.

Like any good business book, the authors offer some good answers:

Prosumption is becoming one of the most powerful engines of change and innovation that the business world has ever seen. Cocreating with customers is like tapping the most uniquely qualified pool of intellectual capital ever assembled. A reservior of talent that is as keenly and uniquely enthusiatic about creating a great product or service as you are. But it comes with new rules of engagment and tough challenges to existing business models. Anyone who tells you different has not fully grasped the implications of the impending prosumer revolution.

More than customization
Just as prosumption is more than marketing disguised as customer advocacy, it goes way beyond product customization. Customization occurs when a customer gets an off-the-shelf product adjusted to his or her specification. There is nothing wrong with mass customization: Customers get to tailor products to specific uses while companies get to maintain the economies of large-scale production.

The problem is that mass customization generally entails mixing and matching prespecified components, which significantly limits flexibility and innovation for users. When you order a Dell computer, for instance, you can slot in any DVD drive you want, but it's still a DVD drive. True prosumption entails deeper and earlier engagement in design processes (ie Lego's next-generation Mindstorms) and products that facilitate customer hacking and remixing (iPod, PSP, and mashups)

Losing control
Customers will increasingly treat your product as a platform for their own innovation, whether you grant them permission to or not. As both the iPod and PSP cases illustrate, they invent new ways to create extra value by collaborating and sharing information. Over time, value migrates from your product or service to what customers do with the information. If you do not stay current with customers, they invent around you, creating opportunities for competitors. Inevitably, it is preferable to sacrifice some control than it is to cede the game completely to a more adept, prosumer-friendly competitor.

Customer tool kits and context
Forget about static, immovable products. If your customers are going to treat products as platforms anyway, then you may as well be ahead of the game. Make your products modular, reconfigurable, and editable. Set the context for customer innovation and collaboration. Provide venues. Build user-friendly customer tool kits. Supply the raw materials that customers need to add value to your product. Make it easy to remix and share. We call this designing for prosumption.

Becoming a Peer
After gaining some experience with this new world of prosumption you'll realize that your real business is not creating finishing products but innovation ecosystems. Companies will participate in these ecosystems in the same way that IBM participates in open source--it harvests value from Linux, but it does not own or control the Linux ecosystem. Similarly, Second Life creates an environment in which customers do 99 percent of the value creation. As prosumption matures, expect to treat customers like peers, not patrons.

Sharing the fruits
Customers will expect to share in the ownership and fruits of their creations. If you make it profitable for customers to get involved, you will always be able to count on a dynamic and fertile ecosystem for growth and innovation.

Don't think communism. Think of the eBay microeconomy instead. Hundreds of thousands of eBay's customers make their living there, while eBay takes a cut of their transactions. Indeed, with Second Life's customers creating so much of the game's content, it only seems right that they should own all of the IP rights to their creations and make real money by selling in-game assets. IP rights spur prolific rates of customer cocreation and make Second Life's thriving virtual economy a source of real-world income for customers. Why couldn't your products and services support similar kinds of value-added activities?

The Wall Street Journal wrote a piece on him earlier this year (couldn't find the link). They mentioned some of his inspirations in the piece and I remember wanting to write a short post on them. I never got to it.

The New Yorker has written an even more extensive profile and Kottke has already written the bibliography.