Is Second Life (secondlife.com) significant for customer engagement, brand promotion, and even commerce? This is undoubtedly the number-one question for corporate research in this new medium. Recently, there have been many stories written about both the successes and failures from corporate efforts in Second Life (SL). This article will clarify what’s happening in Second Life and explore corporate engagement with its leading research firm, the First Opinions Panel, a service of the non profit Social Research Foundation.
We’ll start with a brief orientation on Second Life and the reason for its success, albeit they’ve experienced some growing pains.
Blurred lines The most common mistake for marketers to make is to think of Second Life as a game. This is a totally understandable misconception! For over twenty years millions of consumers flocked to proprietary game consoles - Atari, Mattel, eventually Sony, Nintendo, and now Wii. In recent years, massive numbers of consumers have been able to play simultaneously online from casino games to simulated Warcraft. Although Second Life appears similar to this environment, it is in fact an entirely new medium.
Unblurring the lines Second Life is a medium or it can be thought of as a technology to facilitate communication, interaction, professional and social networking. There is no real “goal” to SL, which confuses many people when they first enter this environment. No one “wins” against another in SL as they would in a gaming environment.
The unique success of Second Life is attributed to the content which is created almost entirely by the residents or “avatars”. Every building, landscape, event, and commercial enterprise to be found in SL is privately owned by its creator. A creator is typically an individual sitting at their home and can be located anywhere in the world. In fact, a large real estate developer in SL is actually a butcher from New Zealand!
This is a core strategy of Linden Labs (the owner of SL); they focus all their efforts on maintaining and scaling the infrastructure. For example, earlier this year it was common for 10,000 to 15,000 people to be online in SL at any given one time. Now, SL can accommodate over 45,000 people. Next stop is 100,000 and eventually millions.
Growing Pains Recent reports in the media speak about technological or other problems in Second Life. In our opinion, these are merely growing pains and not at all signs of demise. Interestingly to note, the founders and funders of SL were also behind Amazon.com and other successful start ups. Do you recall that these companies were once considered insignificant by marketers?
Why did we choose First Opinions Panel? Because they are the only source for all of the following:
• Thousands of the most active residents - while Second Life (or “SL”) defines “active residents” as being there at least once a month for an hour, First Opinions members average one to two hours per day.
• Group owners and leaders – leaders of thousands of users and uniquely qualified to provide a voice of their constituents.
Second Life transacts millions of dollars on a daily basis and creates new forms of value (Intellectual property). In addition to a flurry of consumerism that supports this new economy, the question of Brand perception comes into play. Since the rules for SL are somewhat different, the problem arises - how does this environment react to similar mass communication vehicles found in RL? Do virtual consumers prefer “in-world” brands over real life “RL” counterparts, or does it make a difference? In addition, do channels to market in virtual environments require a different approach? To begin the process of addressing these questions, let’s begin with a definition of market research.
A firm created specifically for corporate marketing in Second Life is the Social Research Foundation (SRF). Andrew Mallon formed this nonprofit venture to understand consumer behavior through the use of surveys to select panels. The following interview with Andrew may prove helpful to prospective firms that want to consider SL as a new market channel and understand this landscape of consumerism.
Q. Tell me a little background about yourself?
A. I spent almost thirty years in trade and business magazine publishing starting as an independent ad sales rep, eventually becoming president of the National Association of Publishers Representatives in the 1980s. In 1992, I founded and served as Editor and Publisher of Credit Union Technology, a banking-technology magazine. In 2002, just when I thought about retirement, I was asked to serve as a consultant for one year to introduce the BusinessWeek Investor Education program to credit unions nationwide. Amazed at how interactive features could be used to educate and instruct, I created the Social Research Foundation in 2003 to explore education technology-based solutions.
Q. What are a few of the interesting things you’ve done in your professional career?
A. Whether it was ad sales, editorial or consulting, I always had to first understand how my prospect, reader or client thought. Often, I would advise the publisher on how emerging technologies were affecting the marketplace. Other times I advised advertisers including IBM and small software companies on marketing to our audience.
Q. When did you first become interested in conducting market research in Second Life?
A. It developed gradually in 2006 out of a set of assumptions. The BusinessWeek cover story on Second Life in early 2006 first caught my attention and I began to take SL seriously. Something was going on there, albeit in the early stages, that we needed to know about. We discussed it with a consultant who has sold almost all the Fortune 500 for his online consumer research services.
Q. What need are you filling that other research firms are missing?
A. SL is a medium to a market which can be studied with many of the standard techniques plus a few unique to a virtual environment. To my knowledge there is no other large, standing panel of SL residents, thoroughly studied for both their RL and SL attributes. And one more thing - unlike My Space and Youtube, etc., SL residents generate the content, the value, the commerce there. This means if RL companies do not get in there and start establishing value, thousands of small entrepreneurs are ready to do it.
Andrew’s sentiments were affirmed in a recently published book “Wikinomics” where the authors suggest a “new mode of innovation and value creation is called peer production, or peering – which describes what happens when masses of people and firms collaborate openly to drive innovation and growth in their industries.” The authors continue by stating “the speed and complexity of change is such that no one company can create all the innovations needed to compete in information technology; or in any other industry.” Wikipedia, the largest encyclopedia in the world, is a great example of peer production and their error rate per page is very close to that of Britannia!
Q. What types of services do you sell both in RL and SL?
A. Consumer research on SL and its residents plus consulting on how to develop branding and corporate strategies in Second Life. This can start with an online survey at our secure website or a virtual focus group meeting in SL. We can parse the panel by any combination of over 33 attributes from age, income, gender, education, etc. to how long they have been in SL, if they own or lead a group, favorite SL activities, etc.
According to SRF’s research, SL gender for US Citizen Membership is almost evenly split: 56% Female and 44% Male. Of those, 25% reside in 18 – 25 age group and over 50% in their 30’s and 40’s. Additionally, 39% claimed to be single and 42% married with home ownership constituting over half the residents polled. Finally, the annual income reported indicates that 40% make $50,000 annually and another 40% fall in the $50,000 to $100,000 range. This demographic, to any marketer, would be attractive due to their affluent stature and earning potential.
Mallon continues…In addition to Consumer Research, one of the emerging areas of interest is the use of SL for secure staff meetings and recruitment. The savings in travel could eventually offset the cost. We have one client with 20,000 sales reps worldwide considering this. We can pipe-in video or PowerPoint presentations, create interactive feedback for collaboration and more.
Q. Take us through the process of creating a research panel?
A. Good question. I think it would best serve your readers first to know how I created the First Opinions Panel. You can’t just run an ad somewhere and hope for the best when you have a SL survey, especially when you want targeted attributes and serious responses.
The first step for me was to learn as much as possible about this medium. Little did I know that would require daily visits for at least an hour over the course of six months. Sometimes I had an agenda, e.g. attend a class or meeting, join a specific group, etc. Other times I would just scour the landscape or interview people to see how it all worked, what was attracting and retaining involvement by the “residents” and what would be meaningful to branding efforts.
As I built a reputation and credibility with key group leaders, they were willing to help promote my panel idea to their members. Some groups have over a thousand members so this was very helpful. Early adopters jumped right in and brought their friends. It was very rewarding to see hundreds of group leaders themselves registering as they have knowledge about how to draw and retain a crowd. Also, as advised by our consultant, we did not compensate people for registering.
Q. What is the composition of SL Avatars?
A. Linden gives general information about its registered users. I can only speak about the members of our First Opinions Panel where it depends on which countries they physically reside in.
Based on SFR’s findings, these avatars tend to be college educated (87%), whereas 35% have some college and over 51% either obtained an Undergraduate or Graduate degree. Their investment preference tends to be Stocks and Bonds followed by real estate. Research indicates that their primary news source is the Internet (53%) and television usage below ten hours per week (60%). They indeed are technology savvy since 65% claim the use of the Internet between three to 12 hours per day.
From a business standpoint, 26% of these avatars provide a service or some professional endeavor in SL. From a commitment perspective, 23% treat their business as a hobby while 20% consider their SL efforts as part-time or full-time employment.
Q. Aside from Demographic and Psychographic profiles, what do we know about these SL consumers?
A. We have done preference studies with them, e.g. which brands they have seen presented in SL, which they feel were done successfully or not, and why. We make this available at no extra charge as soon as a company signs up with us for any research or survey project.
Q. What were the most surprising research findings regarding the consumers behind the Avatars?
A. From our perspective, clearly the number one surprise is the average age of the most active SL residents. Can you guess it? 18? 24? Under 30? The answer is mid-30s. The most active SL residents are typically successful in their RL. Another surprising fact is that Second Life is absolutely not a game to them. While they are there for personal enjoyment that can take many serious forms such as building a network of online friends they may never actually meet.
Also, despite the fact that you can create anything you want in SL at virtually no cost, being in groups is the most common activity. They don’t see this is “social networking,” a rather clinical term. They are just doing what comes naturally in RL but in a virtual world.
Q. Based on your research findings, can a RL firm make a definitive decision to transition to SL?
A. Have they a website that is significant to their business? I believe virtual worlds are the next great medium. With more time, experience, bandwidth and involvement, the transition point to corporate commitment is not a question of if but when. Wait long enough and it will become obvious. The only question to me is which competitors will get there first, building a knowledge-base and community of loyal members.
Q. What research would you like to see in the future?
A. I can’t think of an industry that hasn’t experienced value aided by the Internet. Second Life represents the next step; we recommend that you go slowly and test your approach. The research should take place both on the web and in SL when it makes sense. For example, a web-based survey can get you quantitative answers. But a focus group in SL allows for the interaction of the participants. You can have the volumes of participants a physical focus group could never have combined with the interactivity very possible in SL. Products and packaging can be rendered in 3D, blown up so participants can “walk through” them; simulations can be done for training.
Q. What are your plans for the future?
A. Like the song says, “When the saints go marchin’ in..” - I want to be in that number. I want to play a key role with bringing the very serious business of brand promotion into the very personal experience in SL. Residents will run from blatant plugs, billboard and virtual strip-malls. You have to be more creative than that, more interactive, and more in-tune with the feelings of the residents. That is what our research is meant to help you achieve.
Research Results:
The second aspect of this article was to examine brands and their role in SL. When the question was posed to Andrew Mallon - Do Avatars maintain Brand preference in SL, he responded…
“They first come to SL to have fun. That is their number-one preference, by far. If they can have fun interacting with a brand, that is just fine with them. For example, one major car manufacturer created a giant vending machine in SL that distributes virtual versions of their cars. Over 18,000 residents have clicked on it and driven off (some flew off, a feature of cars in SL!) We don’t have numbers from the company if this translated into real sales. But again, do you want your potential customers driving around in only your competitors’ products?”
To address the “Brand” question, two avenues of market research were conducted. First, two focus group sessions with Group Leaders were recently held in SL. A Group Leader establishes an area of interest and invites residents sign up to that group. In turn, these members are included in group notices, events, and social networking instant chats. Several major group leaders were invited to attend these sessions where specific research questions were posed.
Secondly, an independent brand survey directed toward SL business owners (B2B) was created to provide insight into brand perception. The intent was to gain an honest appraisal and these responses were completely owner inspired – they were not paid to take the survey.
Group Leader Focus Group:
A Group Leader’s pool of residents possesses two key characteristics: they have a common interest that draws them together (hobby, opinion, belief) and they share these views during events or daily chatter. In essence, the group leader can assess and speak on behalf of this group’s opinions since they are the epicenter of most communications.
The transcripts of both sessions were merged together and the common responses are noted under each questions posed. The highest number of responses were drawn from this first question.
Q. Fortune 500 companies are confused about Second Life. How should they promote their brand here in a way residents will applaud?
Summary of Responses:
• Companies need to understand this is a new Technology…like TV in 1948
• They can't just knock together a site or a sim and then leave it to run on autopilot
• Get opinions for future products here
• Interesting spaces and places over time – not one time thing
• Interface between SL & RL
• Know your customer base and target them
• Fun events, creative builds, and reason to return to sim
• Companies should provide seminars on cutting edge technology/products
• People don’t come to SL for advertising
• Push marketing doesn’t work –lack understanding of basic SL principles
• How they can bring value to residents
Q. What have you seen companies do - right and wrong - in SL?
Summary of Responses:
• No company representatives (need real people)
• Not assume we want to buy – should ask first
• Personal help is good – but when asked for
• Want to talk to real people
• Machine greeters is bad
• Motorati does it right – a space for car culture as does Scion City
• Provide a SL service associated with a RL brand
• SL should bridge to RL and vise versa
• Just because you’re a high tech company.... don’t assume you know what it takes to be here long term
• Be involved with the SL community and not just build a sim!
• I'd like to see crossover in products and services. If they sell a product in RL, why not create that product in SL, either low cost or free?
• They need to be more proactive in making SL a more enjoyable experience for the new residents
• RL companies should do a SL market research first
Q. How do you think firms should measure their success?
Summary of Responses:
• Not with money
• Traffic
• Return visits
• Conversation generated
• Dependant on the kind of company
• By the weight of the feedback and inquiries and purchases in conjunction with the number of visits
• Blog comments
• A freebie or note card and measure how many time it gets "bought”
• How many visits to the RL web site?
• Surveys to find out if SL has been an influence in their decision to purchase a product or service from a company.
• SL offers an excellent opportunity for RL companies to generate profits due to the low costs of doing business in SL
• Voting stations
• Maybe success here is something that can't be measured
Q. What do successful companies have in common with their product type or strategy?
Summary of Responses:
• Brand reputation
• Quality
• Good design that’s cool
• Association with design statement
• Quality buzz
• After sale experience
Clearly a gap exists based on the sentiment of focus groups in SL and the direction that Fortune 500 firms have taken. It seems evident that a 24/7 company presence and invoking customer feedback may help bridge this gap between providers and consumers. The last section focuses on business owners inside of SL.
A brand survey was conducted that spanned several months and used a variety of sites around the grid. The method used to collect this data was a scripted survey form that SL residents could interact with and independent of a moderator to administer. A series of twenty questions were posed that centered on their experience with brand creation, awareness, and acceptance in SL. In addition, the most notable RL brands that have transitioned to SL were presented and respondents were asked to vote on which brand was most prevalent in SL.
The first two questions asked were – did you transition your business to SL or create a new brand in-world? Only 25% said they transitioned their RL business and the balance were newly created in-world. Of those polled, 39% sold a unique product that they created (IP) and 61% offered some form of professional service. It appears that most offerings are new brands that solve a particular SL-based problem.
When asked if their offering was premium, competitive, or low price, 39% stated their pricing scheme was low price while 26% was competitively priced. Only 16% felt their pricing was at a premium and another 23% failed to respond.
A key topic for SL business owners was – what form of promotional vehicle do they use? 52% claimed they actively use advertising to solicit business while 39% relied on word-of-mouth to attract new business. Only 13% stated they used both.
To understand how consumers act in SL, they were asked if purchases were made in the heat of the moment or on impulse - 29% said yes and 71% said no. When asked if they actively seek out brands, 19% said yes while 81% said no. When business owners were asked what the most important attribute of a brand was, the majority felt Trust and Quality were absolute requirements.
Lastly, those that completed the survey form were offered the opportunity to “vote” on brand awareness in SL. The choices of brand logos offered include IBM, Toyota, Sun Microsystems, BMW, Circuit City, and Sony. The intent was to understand brand awareness in SL. Of the respondents, 38% noted Sun Microsystems as having the most brand awareness. This might be a result of their participation in B2B conferences and technology events within SL. Sony received 27% of the vote and could be attributed to their island that enables users to review artists, watch videos, and attend certain events. BMW came in third (23%), followed next by IBM (12%).
In summary, what do group leaders, business owners, and residents in SL tell us? This article uncovers both quantitative and qualitative data concerning consumer’s (avatars) make-up and disposition towards Fortune 500 brands. Although SL is a newly created environment, it’s clear that there are two distinct eco systems – one resident created and the other transitioned from the real world. Based on the feedback derived from focus group and self-administered surveys, in order to be successful in this environment brand engagement does require a greater effort and care. The opportunity exists to not only create a deeper bond with the customer, but to use this unique setting to engage them in such a way not attainable in the real world. The key, it seems, may simply be to provide greater dedicated resources, have a continuous in-world presence, and obtain constant feedback. Customer satisfaction knows no bounds in the real world, and the same holds true in a virtual world!
Bill Nissim helps organizations create synergy between their Business and Branding strategies. His website www.ibranz.com contains reference materials, links, and helpful articles on the many facets of branding.
Social Research Foundation
Andrew B. Mallon
Executive Director
New York City
andy@socialresearchfoundation.org
http://www.socialresearchfoundation.org
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