THOUGHT (aka Centric's Blog)

Okay, I shouldn’t be doing this. This is in no way or measure "professional." But I have to.

By now, you’ve probably seen the Forbes article saying "woe to Second Life, the party is over, American Apparel and Starwood are packing up because of ‘insignificant’ sales and few visitors, respectively."

And you may have heard the response from the virtual worlds community: "well, American Apparel didn’t really offer anything interesting and Aloft had no events to bring people back."

Well, I’m not going to comment on that. What I’m going to throw the flamethrower of truth on is Forbes’ implication that marketers don’t think it worth investing in new media platforms like Second Life–indeed, that they are so spendthrift that the ongoing $295 per month investment is something they have to slice from their marketing budget.

I have only one word for that: bullshit.

Add up all the money that American Apparel and Starwood spent on getting their Second Life builds done, plus the ongoing cost for a year of island ownership, and I guarantee you it’s not even a rounding error on their mainstream media budget.

I’ll repeat that: the total amount of money they spent on Second Life could be lost in a rounding error on their media budget. And the amount of money they spend per month to keep it running would buy one dinner for one client at the Beverly Wilshire’s mid-line restaurant.

So I don’t want to hear about Second Life being a waste of funds. When large corporations spend $20MM, $50MM, $100MM, $200MM or more on television, print, and outdoor advertising–media which are not directly measurable in terms of bottom-line results–then I don’t want to hear about some five- or six-figure project being a waste of marketing dollars.

And, if it’s already built, saying a low three-figure investment per month to keep it running is unsustainable is Beyond the Valley of Ridiculous.

Let’s face it. If marketers are pulling out of Second Life, it’s not to save money. They spend tens to hundreds of millions of dollars every year on media which cannot be tied directly back to sales, media which are losing effectiveness with every passing year, media which reach a shrinking segment of the population–and they ask comparatively few questions about those tens to hundreds of millions of dollars.

So why are they pulling out? Maybe they simply don’t believe in the platform. Maybe they don’t have the time to manage one more media channel. Maybe top management thinks it’s not the way to go. Maybe they don’t have the internal staff to commit to the ongoing Second Life presence they need. And all of these reasons are valid. There’s no reason that every company needs to rush headlong into virtual worlds.

Actually, rushing headlong into Second Life isn’t the right idea for any company.

Before stepping in, every organization should take a deep breath, sit back, and ask some tough questions: What are your goals? What results do you expect? What business model is right? Or is there a correct business model at all? Do you expect to make money on Second Life the same way you do on a PPC program? If so, there’s a big wake-up call needed–before any development starts. Do you expect to move the brand perception needle? If that’s the case, you need to understand the people you’re talking to, and the culture of the world–again, before making any investment in Second Life. 

But for companies with a sense of adventure, companies willing to look at this world as a world, companies who are comfortable with experimenting with new business models, and especially companies who understand that a well-known RL brand doesn’t necessarily translate to SL, we believe there are great opportunities.

Opportunities we’re only just beginning to explore. 

This entry was posted on Monday, June 25th, 2007 at 8:37 am and is filed under Ruminations. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.