Businesses are rushing to get involved in web-based 'virtual worlds' such as Second Life, to take advantage of the marketing opportunities they offer.
Catherine Smith of Linden Lab, the creators of the hugely popular Second Life community, spoke to us about the pros and cons of launching these campaigns.
How many users do you now have and how large do you see Second Life becoming?
As of the end of October, there were over 1.2 million registered users in Second Life.
We believe Second Life is poised to grow significantly. Last month alone, in-world residency grew by 35%. Maintaining a virtual presence may become ubiquitous in a few years, as perhaps cell phones and email addresses are today, and we’d like to be there to facilitate that transition.
What are the major challenges you have found yourself dealing with as the community has grown larger?
As with any growing community, there can be the occasional sticking point. When the population began to grow rapidly, we scaled quickly to meet demand.
Scaling remains our most pressing issue. Ultimately, we are here to provide a technically sound, robust, stable and highly functional platform on which our users can create fully autonomous lives.
Are you looking at any other revenue streams other than leasing virtual property?
At this time, the sale and upkeep of virtual property is our primary focus in terms of revenue, though we’re exploring other revenue streams
Interest from businesses and advertisers seems to be growing rapidly – what opportunities are on offer?
As both the number of Second Life residents and the amount of unique content grows, the overall experience will become increasingly rich for businesses and individuals alike.
In Second Life there are virtually no boundaries or limits to what you can do or create, and it will ultimately be up to companies to develop unique ways of interacting with their respective communities.
Do you have any observations on advergaming and how users interact with brands in a virtual environment?
Second Life offers brands an opportunity to interact with their communities in innovative and entertaining ways.
Applying real life, traditional advertising techniques to Second Life would not take advantage of the potential Second Life offers. Conversely, when executed thoughtfully, we believe this brand interaction will increase the value of the residents' experience.
Which types of organisations have been early adopters and do you feel any have yet to recognise the opportunity?
In terms of early adopters, brands such as American Apparel, Starwood Hotels, Reuters and Sony BMG jump to mind.
These in-world movements wouldn’t be possible however, if it weren’t for the Second Life private developers, and companies like Rivers Run Red , Millions of Us , Electric Sheep Company and The Ad Option .
But perhaps the most impressive in-world businesses are those grassroots efforts, started in-world from the ground up. These include real estate moguls and retailing pioneers who have created fully legitimate and sustainable, revenue generating entities.
Ultimately, we think the possibilities are endless, for a wide range of companies and individual entrepreneurs large and small.
Do you need a serious budget to consider this kind of campaign?
The nature of the medium makes it highly accessible to those with even the smallest of budgets.
Successful in-world presence is measured in the level of interaction, and it takes creativity, not lots of money, to foster this type of relationship.
What are the main things companies should consider before getting involved?
If you are not authentic and do not offer anything to the community, you are likely to be ignored, at best. But those firms who commit to a long-term presence in Second Life have an opportunity to interact with their community in new and innovative ways.
We recommend that people join, learn and really feel things out before jumping in.
Is advergaming all about brand? How can advertisers measure response?
It is all about the brand at this point. Second Life provides a way for brands to reach out and connect with their audience in new and different ways.
Regardless of how you choose to measure this interaction, it would ultimately be qualitative over quantitative.
Have you any plans to provide consultancy services?
At this point there are no plans to provide any consulting services, though in-world businesses that do just that are popping up left and right.
Is there a danger that users could be put off if Second Life becomes too commercial?
We equate more residents and companies coming in-world with a richer experience for everyone. Of course, this will require balancing the concerns of early adopters and other niche demographics, with that of the population as a whole.
Ultimately, the more people that choose to come in-world, the more opportunities it will create for all residents. We think residents recognise this and will accommodate an increasing variety of presences in-world. At present there is such a wealth of activity that participation in any commercial aspect is completely voluntary.
People have talked about a housing price bubble on Second Life – could there be a crash? Do real-life economics apply?
I think it would be getting ahead of ourselves to talk about a bubble. As in the real-world economy, material valuation is based on a number of factors.
We will always look for ways to provide value to our users to do everything we can to ensure price stability. Towards that end, we are carefully looking at and evaluating all aspects of stipends and other sources that will let the L$ find its natural value.
Do you expect to allow Linden dollars to become exchangeable with other currencies?
In order to appeal to broad international audiences, we expect third party currency exchanges will crop up to service individual countries.
How near profitability is the Second Life project, and can you give us an idea of how much it cost to set up?
As a private company, our policy is not to disclose revenue or profit figures, but I can say we are nearing profitability.