Conquering New Worlds – Virtual Marketing To Virtual Consumers

Millions of consumers spend a major proportion of their leisure time living in virtual worlds where their avatars enjoy a parallel existence and buy products in their own right.

Key Trends

  • Virtual worlds, MMORPGS, being spaces, and metaverses
  • Social sites
  • Online gaming
  • Avatars purchasing virtual products

Commercial Opportunities

  • Virtual products
  • Marketing in virtual worlds
  • Complementary marketing – from virtual to real

Summary

Online gaming has an appeal to a mainly young but ageing demographic of hundreds of millions who wish to live outside mundane reality. The time consumers spend doing this makes the virtual world of MMORPGS (massive multiplayer online role playing games), being spaces (social sites), and metaverses (virtual online representation of reality) key territory for marketers.

Assuming identities, creating ones own avatar (graphic personification of the user) in a vivid and exciting online world has a clear psychological appeal, in that online games can offer both adventure and a social world peopled by kindred spirits.

It is low cost tourism but it is not a brief getaway, for devotees virtual games are a permanent and ongoing second life, with homes, friends, families, possessions. The number of consumers spending their time wandering through metaverses makes virtual reality a major opportunity for brands and marketers. And, for consumers, the virtual life looks more like a long term growth trend than an ephemeral craze.

Background

Online games, like other online experiences, are proactive entertainment rather than passive viewing. Online multiplayer games go beyond console games (though these can have an online dimension) in that relationships can be formed with other ‘real’ virtual people – ‘players’.

In online games the consumer can personalise an avatar, who will then live in a self designed home capable of receiving visits from friends, or rather their avatars. This might particularly appeal to teens and Generation Ys still living with their parents – they get their own place where they can chill without being bothered by parents.

Players

Online gaming sites with virtual worlds have membership (including membership of more than one site) of over 150 million. Social sites have some 500 million members (including multiples). More than 100 million people worldwide log on every month to play interactive computer games (source: New York Times December 2005) and, in the US alone, over 70% of males in the 18 to 34 demographic play video games. Young men play 12.5 hours of video games a week, while they watch television 9.8 hours, and three-quarters of households with a male member aged 8-34 own a video game system (Nielsen Entertainment).

Habbo Hotels, Virtual Magic Kingdoms, NeoPets, IMs and MySpaces of this world are now an integral part of tens of millions of customers’ daily lives. Habbo Hotel is a virtual meeting place for teenagers and young adults. The Habbo Hotel concept has been introduced in 18 countries on 5 continents, and attracts over 7 million unique visitors every month.

Teens join by creating a fully customized online persona called a Habbo. They then explore the hotel where they can hang around and make friend with other Habbos. Rooms may be decorated with furniture purchased with ‘Habbo credits’. These credits are bought with real world currency, using credit cards, mobile phones, or prepaid stored value cards.

Brands can check into (and sponsor) rooms and have rooms named after the advertiser. In 2005, in Canada, Habbo Hotel integrated Sprite products into its public spaces, and introduced brand spokesperson ‘Miles Thirst’.

In the future there is likely to be a blurring between ‘being spaces’, social networking sites, MMORPGS, and chat sites. For marketers the key issue is time spent online and living virtually.

Online virtual world gaming sites 2006
million members Members (millions) Notes
Neopets 70 virtual pet owners
Habbo Hotel 50 moderated visual chat with custom character avatars
Ragnarok Online 17 MORPG
Coke Studios 8.5 customised music mixes
World of Warcraft 5.5 MORPG
Goonzu 3 Korean MORPG
Guild Wars 2 MORPG
Virtual Magic Kingdom 1.5 virtual recreation of Disney’s theme parks
Project Entropia 0.4 MORPG
Second Life 0.3 MORPG
Total 158.2
Source: Trendwatching/Euromonitor
Online social sites 2006
million members Members (million) Notes
QQ Messenger 170 China
MSN Messenger 120
MySpace 68
Yahoo! Messenger 65
AOL Messenger 43 USA
MSN Spaces 35
Cyworld 17 S Korea (= 33% of population)
Hyves 1.6 NL (=10% of population)
Lunarstorm 1.4 Sweden (= 10% of population)
Cyworld 1.3 China
Hyves 0.6 Latin America, mainly Peru
Total 522.9
Source: Trendwatching.com/Euromonitor

Time spent

An average European gamer will play for 10.9 hours a week. Recent research shows that 87% have played in the last week, and 72% play at least three times a week. This means that gaming is, for gamers, the third-most-popular use of media entertainment in the last week, after watching TV (96%) and listening to music (94%) (Mediaedge). Some 33% of mainstream 14-34 year-olds have a social networking page (TrendCentral).

Online game advertising

Consumer time spent means advertising opportunity, especially in the context of the gradual migration of advertising onto the Internet. It has been forecast that the in-game advertising market will be worth $732 million by 2010 (in 2005 advertisers spent $56 million placing ads in video games, up from $34 million in 2004). In-game advertising has been on the increase for a number of years.

Types of advertising include (static) billboards alongside virtual race tracks, or soccer fields and dynamic billboards which can be updated at any time. Brands that have already used them include Nike, Reebok and Pizza Hut. However, according to analysts, the real excitement is in ‘virtual product placement’ and the integration of brands into story line.

Instant messaging and avatars

Some 70% of internet users in the US used IM (instant messaging) in 2005, and two-thirds of those aged 13 to 21 now send more IMs than e-mails, according to a recent survey by AOL. Millions of IM users have created chat avatars: avatars can be dressed, fed, and equipped. Yahoo Avatars claims 7 millions visitors to its avatar-creation site each month.

According to Yahoo, the most popular Yahoo Avatar items tend to be those that allow people to express their own interest. Skype has introduced its own family of avatars, the Klonies, which offer a high degree of personalization. Eccky, a multi-player concept that allows two people to create a virtual baby, add it to their MSN buddy list, and guide it through its childhood and teens.

American Apparel, a virtual clothes store recently opened a store set on a private island within Second Life virtual reality site.. The store sells 20 familiar American Apparel items that avatars can wear at a cost of about $1 per item.

Outlook

As the traditional media fragments and more advertising spend moves online , the captive audience offered by virtual games is being widely recommended as frontier opportunity country for advertisers. For FMCG marketers there are literally new world’s to conquer

The general view is that a subtle approach is required to reach the virtual world and gamer audiences: finding a place for a familiar brand within an otherworldly environment. The trick according to analysts is to strike a balance between enhancing realism and not damaging escapism. For some online games, particularly in Asia, the game venue, in a crowded Internet café, or large hall, with other players is an additional social element which may be used.

Research indicates that virtual world advertising works. A study in October 2005 by Nielsen Interactive Entertainment found that in-game advertising resulted in a 60% increase in awareness for a new product and that animated 3-D ads achieved twice the recall of static billboards. In another survey some 50% of players agreed that in-game advertising makes a game more realistic. Just 21% disagreed. In addition, 54% agreed that the in-game advertising caught their attention while 17% disagreed. Another Nielsen study found that ads that are relevant to the game resulted in improved brand awareness and positive feelings about the product.

Marketing between worlds

In summary, marketing in the virtual world can include: interactive billboards, virtual product placement strategies, avatars to be dressed, fed and equipped, and virtual stores to be opened. To date the focus has been predominantly on integrating offline goods, services and experiences into virtual worlds.

However, ss online worlds mature, ‘production’ solely for online use may become the norm, before launching into the ‘real world’. American Apparel planned to test market its first line of jeans within the Second Life store in Summer 2006, two months before they appear in bricks and mortar stores for the back to school market.