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5 Rules of
Virtual Brand
Management
                                                                                             A KZero Worldswide report

The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                    Page 1
2   008 can officially be called the ‘Year of the
    Metaverse’ with virtual worlds such as Second
Life, Stardoll, Habbo and WeeWorld attracting
millions of new members and many real-world
brands.
For brand owners in 2009, virtual worlds present
a new type of marketing opportunity.
But, with opportunities come challenges. For
many brands considering a virtual world
marketing strategy, the first decision they have to
make is how to manage the unofficial
representations of their products already present
in these spaces.
The 5 Rules of Virtual Brand management
explains the options available to marketers.

The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009   Page 2
What is a virtual world?                                                              However, as the chart below left shows, other regions
                                                                                      and in particular Europe, have embraced Second Life.
The World Wide Web as we know it today consists of                                    In late 2006, Second Life resident numbers broke
static 2D pages. You visit a website and read/watch                                   through the 1m mark, helped by significant media
the information or media presented on it. Virtual                                     coverage. During 2007, resident numbers grew by 1m
worlds (metaverses) are different.                                                     per month and now (Jul 2009) the total number of
They are digital 3D environments accessed in real-                                    registered accounts is over 19m.
time that allow people to explore, examine and                                        However, even greater growth has been observed in
interact with the objects created within the world and                                virtual worlds catered towards younger audiences.
importantly they allow people to interact together in a                               Stardoll for example, has over 34m accounts, Barbie
shared collaborative space regardless of their                                        Girls over 10m and IMVU over 39m. Appendix one
geographical location.                                                                shows the KZero universe graph, an illustration of the
Second Life was the first glimpse into the future of the                               size and range of virtual worlds available.
Internet, a future of ‘Places, not Pages’. However, other
                                                                                      Using Second Life as an example, as explained in the
virtual worlds such as There, Kaneva, Stardoll and
                                                                                      following sections, the unique characteristics of a
many others are now available for marketers in this
                                                                                      typical resident has expedited the take-up, and the
emerging space.
                                                                                      range of different countries represented.
Why are virtual worlds growing?
                                                                                      Who is a typical resident?
The most popular commercial metaverse to date,
Second Life, is a global application, meaning that                                    Second Life is not a gaming application. There are no
anyone can become a resident. Initially, North America                                scores, no ‘lives’ to protect, no objectives and no end-
drove take-up due largely to the fact that the                                        result.
company behind Second Life, Linden Lab is based in
                                                                                      Comparison has been drawn to World of Warcraft, an
San Francisco.
                                                                                      extremely popular MMOG (massive multiplayer online
                                                                                      game) but the only real similarity is the fact that they
             Rest of World                                                            are both virtual worlds.
                 23%
                                                             US                       Importantly, whereas the average age of a Warcraft
                                                            37%                       player is 17, for Second Life, the average age is 32. It is
                                                                                      this fact which stimulated the interest in major brands
                                                                                      to consider entering Second Life. Below (next page) is
                      Europe                                                          the age range spread for residents.
                       37%                      Canada
                                                  3%

The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                       Page 3
The graph below shows the regional breakdown of
                                                                                      fashion-themed world Stardoll.

                                                                                             Rest of World
                                                                                                 16%


                                                                                                                                    US
                                                                                                                                   37%



Also of note and further interest to brand owners is
                                                                                              Europe
the fact that females account for 45% of users. A                                              43%
surprising, yet valuable piece of information. So, a                                                                  Canada
combination of the average age and gender ratio has                                                                     4%
made brands realise that there are benefits to be
reaped by developing metaverse marketing strategies.                                  KZero has in-depth data and research available for a
                                                                                      wide selection of virtual worlds and is best-placed
Further analysis of the demographic profile of                                         to make media planning and virtual world selection
residents reveals that these people reside heavily                                    decisions for marketers across the world.
within the Innovator and Early Adopter groups.
                                                                                      It will not be long before virtual world marketing
Pre-December 2006, Innovators were the main types                                     initiatives are promoted in TV, print and other
inside Second Life, but, as explained by the Rogers                                   mediums as promotion and then cross-promotion
Technology Adoption Curve, Innovators act as a                                        initiatives are used to attract as many visitors as
catalyst for Early Adopters. Whereas Innovators are                                   possible.
very keen to trial new technologies, they have local
social networks.                                                                      There are even newspapers and magazines available
                                                                                      now purely for virtual news stories and worlds. One
The media landscape                                                                   example is the Avastar - a metaverse red-top
                                                                                      newspaper available via website and in Second Life.
Second Life aside, marketers now have a wide range                                    The newspaper (published two to three times a week)
of options available to them. And, importantly,                                       has stories about the latest virtual developments and
traditional media planning techniques can now be                                      just like real media, offers advertising space.
used to select the most appropriate virtual world for
the marketing objectives.

Different worlds have widely different resident bases
from a geographical perspective as well as different
age ranges - as demonstrated by appendix one.

The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                     Page 4
Defining the Marketplace                                                               As explained in the following sections, a proportion of
                                                                                      these products are in fact virtual copies - unofficial
Before we start looking at the options available to                                   replicas of real world brands created within the
marketers in virtual worlds, it’s important to identity                               permission of the legal owner.
and size the marketplace to determine which types of                                  A question you may be asking yourself now is:
products (and therefore brands) are actively sold in
metaverses and the size of this market.
                                                                                                 ‘Why do people actually want to
In terms of total financial transactions in Second Life,                                           spend money on virtual goods?’
on a daily basis over $1m (real US dollars) is
exchanged between parties involving over 12m                                          The answer to this question is the primary reason for
individual transactions.                                                              explaining the major opportunities presented by
It is difficult to obtain further detail on specifically                                 metaverses. A virtual world is full of different people,
what is being bought, however it falls mainly within                                  different sexes, ages, genders and ethnicities.
two categories - land and products. In terms of                                       To demonstrate the current size and future growth of
estimating the proportion of these transactions                                       the virtual goods sector, shown below is the latest
involving unofficial brand products, estimates put this                                 KZero revenue forecast for this sector.
in the 3% - 5% range.
Focussing on the product category, the chart below
shows data obtained from SLexchange.com, a website
that allows Second Life sellers to promote their
creations. At the end of Dec 2008, over 200,000
different products were available on SLexchange - a
sizable marketplace.


                                                                                      Just like in the real world, people don’t want to all
                                                                                      look the same - they want to create a digital identity
                                                                                      that reflects their real world person or demonstrates
                                                                                      how they choose to visualise their avatar.
                                                                                      Very shortly after an account (avatar) is created, the
                                                                                      owners of the avatar wants to customise their
                                                                                      appearance, hence the demand (and therefore supply)
As shown above, the Apparel and Avatar Accessories                                    of virtual items. Many avatars then go on to purchase
categories are very well represented in Second Life.                                  land (if the virtual world permits this). This then
Between them there over 100,000 different products                                     explains why people also require items related to
available on SLExchange.                                                              housing - their virtual house.

The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                    Page 5
Interestingly (and of interest to brand owners of                                     category a little further, over 47% of this product
female products), within the Apparel category, over                                   group reside in the Jewelry and Watches category -
70% of the products available are for women. So,                                      often copied in Second Life. Here is the breakdown of
clearly, females are more likely to be interested in                                  this group.
purchasing virtual clothes.
The graph below shows the breakdown of the over
51,000 Female Apparel products available in Second
Life.




                                                                                      Unofficial brand examples
                                                                                      This section will clearly highlight the need for
                                                                                      marketers to implement a policy of virtual brand
                                                                                      management.
So, the top three categories of Women’s Apparel
products available via SLexchange, are Dresses, Outfits                                In Second Life the most likely way for people (avatars)
and Footwear, accounting for almost 30,000 products.                                  to find shops selling products is to use the built-in
                                                                                      search functionality. Quite simply, you access the
Looking at the Men’s Apparel segment, the graph
                                                                                      search box and entry a description of what you are
below shows the approx. 11,000 products available.
                                                                                      looking to find. The result is an alphabetical listing of
                                                                                      the areas/shops/stores in Second Life that have
                                                                                      ‘tagged’ their venue with the same words used by the
                                                                                      searcher.




So, for Men’s Apparel, shirts are clearly the most
popular and as explained in later in this report, there is
a high level of unofficial brands in this sector.

Within the Avatar Accessories category, there are also
over 30,000 individual products. Breaking down this
The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                     Page 6
The graph above (previous page) shows the number                                      Now, for an unofficial example. This next store was
of results shown when entering a selection of real                                    found by searching for ‘Adidas’ in the search box. The
world brand names.                                                                    search result returned displayed this venue as ‘Adidas
                                                                                      and Nike Sneaker store’.
What this graph is telling us is that there are over 450
different places in Second Life promoting the word                                     Shown below is the interior of the shop. Several
Nike, for example. Nike does not actually have an                                     different real world brand products are available for
official presence in Second Life.                                                       purchase. Adidas has its only section.
In fact, the only brands shown in the graph that has
an official presence are Adidas and Armani. To
highlight the scale of unofficial brand activity, there
are 248 unofficial Adidas venues! This statistic is a very
clear signal that real-world brands need to pay
attention to activities taking place in virtual worlds
involving real products.

Let’s compare the official Adidas venue with an
unofficial one. The two pictures below show the
Adidas virtual store, on Adidas Island in Second Life.
                                                                                      Rather than show the virtual product recreated as
                                                                                      done at the official venue, this shop shows the
                                                                                      products as 2D images on wall displays. Here’s the
                                                                                      Adidas section.




Shown above is the interior of the official Adidas store,
complete with company branding, merchandising and
of course products. Shown below is the main shoe
sold in the store, the Microride.


                                                                                      This style of displaying products is very common in
                                                                                      Second Life. Other than displaying the logo of the
                                                                                      brand, very little other consideration is giving to
                                                                                      thecorporate identity of the brand in question.



The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                   Page 7
Also of interest here are the selling prices for these                                But is choosing to Ignore really an option?
products. In the official store, the Microride retails for L
$50 (about 18 Cents or 10 pence).                                                     Simply turning a blind eye to unofficial virtual world
                                                                                      activity has several consequences.
The unofficial store shown above retails their Adidas
                                                                                      Too many companies are devoting significant amounts
shoes at L$200 (70 cents or 35 pence). An interesting
                                                                                      of effort and money in virtual worlds for them to be
variance to consider and one explored further in this
                                                                                      considered insignificant. Couple to this the profile of a
report.
                                                                                      typical resident (already explained) and the
Time to explain the 5 rules of Virtual Brand                                          population numbers and growth, already in the
Management.                                                                           millions of users globally and the decision to ignore
                                                                                      virtual worlds becomes a poor decision.

1: Ignore                                                                             Market intelligence
               Virtual worlds are a fad and the                                       Importantly, valuable market intelligence is
             people that live in them are weirdos                                     completely lost if a brand chooses to ignore metaverse
                                                                                      activity. This is not only research into how their brands
Well, you can make your own mind up on that one.                                      are being used but also a loss in intelligence on what
                                                                                      the competitors are doing in virtual worlds.
However, some brands may choose to simply ignore
the presence of their products in virtual worlds.                                     This is particularly important in categories that already
                                                                                      have adopted virtual worlds faster than others.
This decision might be made because the brand                                         Companies that are already engaged in metaverse
manager has insufficient knowledge of virtual worlds                                    activity are harvesting data, insight and market
and therefore is unable to make an informed decision                                  research not only about their competitors but also on
about a strategy, so in this instance the option is to                                how the marketing initiatives they are using are
ignore.                                                                               actually performing.

Secondly, the concept of ‘No such thing as bad
publicity’ may also be present. Of course, if people in
virtual worlds are choosing to purchase branded items
then at the very least they are selecting the brand
above others.

Thirdly, the decision might be made because very few
companies actually generate a revenue stream at
present from virtual world activities. Therefore, virtual
trademark infringement is not stealing an actual
revenue stream from the brand. If the company is not
present them there’s no revenue stream to protect.

The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                      Page 8
Shown above (previous page) is the timeline for                                       regulated corporate identity guidelines. These
Second Life entry from the Automobile sector. As                                      guidelines are created to ensure the correct usage of
observed, several brands entered in a short space of                                  logos and typefaces associated with a brand, not only
time, each new entrant learning from the others.                                      for internal use by also use by third parties such as
So, from a competitive positioning perspective, the                                   advertising agencies, partners and media outlets.
strategic position of a brand is weakened if activity is                              Brand guidelines cover platforms such as email
ignored in virtual worlds.                                                            communications, signage, brochurewear and
                                                                                      websites. Well, virtual worlds are simply another
Undesirable associations and locations                                                channel where guidelines have to be catered for.
It’s important to remember that virtual worlds mirror                                 A main reason for this is the ease in which a brand can
the real world in many ways. One similarity is real                                   be brought in and displayed in Second Life.
estate and the concept of shopping. Products available
for purchase in virtual worlds such as Second Life are                                It’s a very straightforward process involving the
typically displayed in constructed shops or shopping                                  uploading of a jpeg containing the logo (for example)
malls.                                                                                and creating an object with the logo showing on it as
                                                                                      a texture. This object can then be made into virtually
Shops in Second Life are either rented from real estate                               any shape, size or colour.
owners or purchased outright and then developed.
However, the owner or renter of the shop only has                                     But, it’s not just limited to logos and brand names.
control over the content displayed on their own land -                                There are many products actually recreated in Second
they have no powers over what happens on land                                         Life in 3D done so without brand approval. Again,
surrounding them. This means any type of product,                                     ignoring these activities means closing the door on
service or establishment can be experienced directly                                  how people are using valuable real world brand
by someone in close proximity to the real world brand                                 assets.
displayed in the virtual space.
                                                                                      2: Remove
To illustrate, an avatar could be looking at a virtual
                                                                                                  We came, we saw, we deleted
watch unofficially displayed in a shop and then walk
next door into a virtual strip club. Sex in Second Life is                            Taking steps to get unofficial brands removed from
as popular as it is on the World Wide Web. The key                                    virtual worlds once they have been discovered is
here is for brands to manage this exposure. Ignoring                                  probably the first decision considered by brand
the presence of their brands in metaverses means they                                 owners.
have no awareness of potential issues such as these.
                                                                                      After all, their brands are being used without their
Brand guidelines                                                                      permission, which, in the real world is an illegal
Companies spend billions of pounds developing their                                   activity.
corporate identities and building their brands. As
                                                                                      There’s also the lack of control to consider and
such, most brands adhere to tightly defined and
                                                                                      potential in-correct guideline usage. So, for some
The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                    Page 9
companies, it’s the right decision to remove unofficial                                 below shows the search results returned from a search
brands. Here are some other reasons that could lead                                   for ‘Oakley’.
this decision.

Reviewed and removed
The metaverse sector is a very new channel and on
this basis, not all companies benefit from entering in
the initial stages of the platform.

This might be because the audience of Second Life is
the wrong target market for the brand or product in
question or any other marketing-led reason.

In any event, following a review, in some instances a
brand may opt to remove unofficial brands in virtual
worlds in order to totally remove all brand-related
presence: the Control - Alt -Delete approach.

Pre-campaign brand sweep-up
Using a real-world analogy, if you’re expecting guests
at home, you usually tidy up beforehand.

In the content of virtual world activity, is makes a lot
of sense to have a thorough audit of unofficial brands
prior to deploying an official campaign.
                                                                                      Oakley is not currently officially in Second Life,
This clears the way for the approved project to enter                                 however, if they were implementing metaverse
the metaverse knowing that the only way avatars will                                  activity, they would have to address the results of this
come into contact with the brand will be via official                                   search.
channels.
                                                                                      The first 11 results when searching for Oakley refer to
This option not only applies to removing the presence                                 virtual stores in Second Life using ‘Oakley’ as a word
of logos and branded items but also to the use of                                     tagged against their land (store).
tagged words and phrases often used by retailers in
Second Life to promote unofficial brands.                                               People are using this word to attract visitors to their
                                                                                      stores who are seeking Oakley branded glasses. As
These keywords are used to drive the search mechanic                                  shown, some of these shops are attracting significant
in Second Life which is usually the first method                                       traffic levels.
people use to find things. To illustrate, the screen grab

The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                     Page 10
Brand consistency during campaign                                                     sending a message to Linden Lab via right-clicking
                                                                                      the object in question via the in-world navigation.
Real-world counterfeiting typically takes place when                                  Once this report has been sent, the report should then
brands launch new products and services and new                                       be followed up.
demand chains are created as a result.
                                                                                      Of course, another way of attempting to remove items
The same principles apply in virtual worlds. On this                                  is simply to contact the owner of the item via an
basis, a brand owner may take the decision to remove                                  instant message.
unofficial versions of their products whilst they are
running sanctioned metaverse activities.                                              3: Observe
Removal process                                                                                          Look and Learn
When a brand owner ultimately decides to remove
                                                                                      A lot can be learned by studying how brands are
unofficial representations of their goods in Second Life
                                                                                      created and used in Second Life. This is particularly
(specifically), there is a clear removal process to be
                                                                                      true as virtual worlds are only starting to be adopted
followed once the items in question have been
                                                                                      by real world companies and thousands of individuals
identified.
                                                                                      already have the upper hand in terms of
Firstly, Linden Lab (the operators of Second Life) has a                              understanding how people interact in these new
policy for trademark infringement, as follows:                                        environments.

‘Linden staff generally removes content that uses                                      For companies not concerned with the presence of
trademarks without apparent authorization, with or                                    their brands being shown unofficially in Second Life,
without giving notice to the object owner. This generally                             an excellent first proactive approach is to closely
includes all RL corporate logos and brand names.’                                     watch how their brand is presented. This is a first-
                                                                                      hand technique to gather market research.
It is often difficult to tell what may or may not be
trademarked. However, use of designer logos and                                       How the brands are created
brand names without permission, such as Gucci, Nike,
Louis Vuiton, etc., are usually not acceptable.                                       Companies can learn a lot by studying how people
                                                                                      choose to create their brands in Second Life. One thing
So, although Linden Lab acknowledges and sets out a                                   that will become extremely clear is the different ways
procedure for dealing with trademark infringements,                                   they are created.
what is clear is that they do not pro-actively seek to
locate items in Second Life. This therefore means that                                For some brands, their logo’s have just been very
brand owners do need to conduct audits in the first                                    simply pasted onto existing designs such as t-shirts
instance.                                                                             and bags. Here is an example of this quick and dirty
                                                                                      approach.
Once the owners of the unofficial branded items have                                    Other people in Second Life have gone to greater
been identified, companies then need to submit what                                    lengths to recreate brands. And, for these creations,
is known as an ‘Abuse Report’. This method involves
The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                    Page 11
the length of time taken to produce them can range                                    So, observing how brands are recreated in virtual
from a few days, to several weeks if not months.                                      worlds can greatly assist real world marketers in better
                                                                                      understanding how the platform can be leveraged.
Here’s a selection of objects created in Second Life to a
very high degree of realism, without permission.                                      How the brands are presented
                                                                                      Of course, once someone has created a brand or
                                                                                      product in Second Life, they need to then provide the
                                                                                      platform to display it. And, again, in many ways,
                                                                                      virtual worlds mirror the real world.

                                                                                      For example, many car brands are copied in Second
                                                                                      Life by unofficial avatars. These items are offered for
                                                                                      sale in virtual dealerships/showrooms.

                                                                                      Some people have even modeled virtual world
                                                                                      creations entirely and accurately on real world brand
                                                                                      venues. Probably the best example of this in Second
                                                                                      Life is an unofficial Apple store. The venue in question
                                                                                      is actually a near clone of the real world Apple store
                                                                                      on 5th Avenue, NYC.




                                                                                      Visitors to the real world NYC Apple store would soon
                                                                                      realise that this is a pretty good replica.

                                                                                      So what can be learnt from this type of activity?

                                                                                      Firstly, retailers can learn about traffic patterns - do
                                                                                      avatars move around stores in the way way that they
                                                                                      do in the real world?

                                                                                      Do different configurations make a difference? What
                                                                                      are avatars attracted to? And a key benefit of using
The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                     Page 12
virtual worlds for this type of research is that changes                              With the still relatively low-cost of items in Second
can be made instantly at virtually zero cost.                                         Life (average price 1 USD, GBP 0.50), most avatars
                                                                                      have inventories full of different products.
Secondly, marketers can learn about how their
customers interpret brand values in a virtual space.                                  From a clothing perspective for example, one area that
After all, all creations in metaverses start from                                     would benefit marketers of these types of products
nothing. People that create unofficial brand presences                                  would be the way avatars change their clothing for
start with just an idea and from here then visualise                                  different events or purposes.
these thoughts. It’s a useful insight into the minds of                               There is a rather large community of music lovers in
their customers.                                                                      Second Life across many different genres. One of the
The way that products are presented in virtual worlds                                 most popular genres (due to the profile of a typical
will be an interesting space to monitor over the next                                 resident) is Jazz and there are several virtual jazz clubs
few years. As shown below, the virtual MacBook’s on                                   across Second Life.
display are sat on virtual tables - but why should                                    What’s interesting at venues such as the Phat Cat’s
they?                                                                                 Jazzy Blue Lounge is that avatars here tend to dress
                                                                                      up, into tuxudos and ball gowns - not the typical attire
                                                                                      you would see in most areas in-world.
                                                                                      Taking another category, Automobiles, a question to
                                                                                      be asked here is what do people do once they have
                                                                                      bought them?




For example, these products could simply be
suspended in mid-air - because in virtual worlds you
can do that.

Alternatively, why not enlarge the products to an
unreal size, this allowing avatars to see the design and
features on a more detailed basis.
                                                                                      Most people tend to teleport or fly around virtual
How brands are used                                                                   worlds and there is not really a road network that
                                                                                      operates.
Perhaps one of the most useful benefits of observing                                   So perhaps they are bought simply as trophies, placed
virtual brand activity is more to do with the consumer                                statically outside virtual houses on virtual driveways.
of the product rather than the creator.


The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                      Page 13
4: Endorse                                                                            Leveraging the brand
                       Give them an Inch... :)                                        One such example of a real world brand endorsing
                                                                                      unofficial activity is the case of Vint Falken and the
Putting an official stamp of approval on unofficial                                       Coca-Cola outfit. Vint is a Belgian-based resident of
virtual world activity might at first seem like a strange                              Second Life who created a outfit featuring Coke
decision to make. However, as this section will                                       branding without their permission.
demonstrate, this policy opens more doors than it
closes.

The act of endorsing unofficial brand activity in virtual
worlds basically means acknowledging that the
activities are taking place and making a clear
statement that the company allows it.

Instant access
One very obvious benefit to endorsement is instant
access into virtual worlds. A typical development                                     The item in question was promoted on
lead-time for a commercial project into Second Life is                                SLExchange.com for a period of time until she received
three months. By opting to approve existing products,                                 an email from them informing her that the outfit was
immediately the brand can claim to have a virtual                                     in violation of Coca-Cola’s trademark policy and had
world presence, at zero hard cost.                                                    been removed from the site. So, a company making a
                                                                                      decision to remove an item from Second Life.
Also related to this option is the issue of acceptance in
Second Life. Much has been written about some of                                      Shortly after the removal Vint received another email
the commercial projects in Second Life which were                                     from SLExchange stating:
not fully accepted or appreciated by the web-savvy,
                                                                                      “We have spoken to Coca-Cola and they have released
brand-sensitive residents.
                                                                                      their trademark to SL Merchants, Therefore, any of your
Endorsement bypasses this issue because the brand                                     items that were disabled on June 7, 2007 have been
existed prior to commercial attention.                                                retrieved...”

But it’s not just instant access in terms of having an                                So, by Coca-Cola opening up the usage of the
official virtual world presence. Arguably more                                          trademark in Second Life, not only have they
important is the instant access to statistics and                                     positioned themselves as a progressive company but
research relating to the brand. A fair trade-off for real                              more importantly they can now see the different ways
world brand owners should be access to this                                           in which people use their brand in virtual worlds such
information in return for the usage endorsement.                                      as Second Life.


                                                                                      Real world activity integration
The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                    Page 14
Another concept to be considered when thinking                                        has a series of islands in Second Life under the banner
about Endorsement is the Sponsorship approach.                                        of ‘Motorati Life’.

Inside virtual worlds such as Second Life is a thriving
number of communities. These communities are
typically interest-led and the people involved with
these groups use virtual worlds to complement their
interest in the various interests.

It’s important here to remember that these enthusiasts                                The islands are themed inclusively around the world of
in many cases are interested in a particular topic                                    Pontiac cars with features such as a racetrack with
regardless of the platform.                                                           regular races, monster trucks and various other car-
                                                                                      related areas.
Taking formula one racing is an example, their are
several venues in Second Life (official and unofficial)                                   Taking this approach has created a venue dedicated to
built around the concept of racing.                                                   people interested in the brand with many different
                                                                                      ways in which fans can interact. The concept is directly
Brands related to this category could quite easily lend                               advertising the specific products is not a primarily
their name in a sponsorship environment to these                                      objective in this context. Instead, the models facilitate
establishments.                                                                       interaction and provide a platform to do other things.

5: Engage                                                                             A similar approach this time in a different category is
                                                                                      the the initiative by the NBA. The NBA has created a
                     Give, then you will receive
                                                                                      destination for basketball fans complete with video
The most collaborative approach when considering                                      and news feeds, interactive games, a virtual store and
how to manage a brand in a virtual world is                                           a game arena.
Engagement. As explained in the following sections,
this approach can yield significant upsides.                                           Engaging for NPD
What does Engagement mean?                                                            Who better to steer the future of a brand in a virtual
                                                                                      world than the people who are already shaping it?
When a company discovers that their brands are being
used unofficial in virtual worlds, engagement relates                                   Probably the largest opportunity for engagement is
to an approach of actively working, collaborating and                                 the concept of actively allowing people to create new
opening a two-way communication channel with the                                      products related to the brand, thus harnessing the
creators of the unofficial products.                                                    knowledge, creativity and know-how of the brand
                                                                                      advocates.
Engaging to grow communities
A great example of engaging communities in Second                                     Although this is a new field in marketing, there are
Life is taking place in the automobile sector. Pontiac                                already some early examples of this approach in
                                                                                      Second Life and other worlds.
The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                      Page 15
Both Pontiac and Toyota encourage visitors to their
virtual venues to take their models and create
customised versions of them.

Shown below is Scion City, the venue promoting the
Toyota Scion range. Part of the venue is the Owners
Showcase, an area completely dedicated to car
creations made not by official Toyota designers but
instead, simply people interested in the brand and
willing to make their own versions.                                                   The Virtual Thirst challenge is an example of
                                                                                      leveraging the values associated with a brand in the
                                                                                      real world and facilitating new product development
                                                                                      in a virtual space. Taken from the supporting website:
                                                                                      ‘Imagine a world in which a simple vending machine
                                                                                      could dispense - not Coca-Cola - but the ESSENCE of
                                                                                      Coca-Cola: refinement, joy, unity, experience.
                                                                                      Well, we know this vision can become reality in Second
                                                                                      Life, and we’re looking for everyone with ideas for such
As a consumer, being able to have your own creation                                   as experience to submit their design. To our advisory
featured and promoted by a major brand is a powerful                                  panel, the quality of the idea and the possibility for
concept, and one that greatly assists the advocacy felt                               exhilaration are more important than the visual
towards a brand. Here’s one such example, the                                         execution displayed in the submission documentation.
Cowboy Car on Motorari.                                                               3D professionals, existing Second Life residents - and
                                                                                      first life submitters have the same opportunity to win’.
In return, the real-world brand owner gets terrific
insight into how their customers interact with and                                    So, what Coke has done here (assisted by Crayon and
view their products.                                                                  Millions Of Us) is create a competition (with a L$
                                                                                      500,000 first prize) that is effectively allowing
                                                                                      residents to take the Coke brand and create completely
                                                                                      new interpretations of an existing product - the
                                                                                      vending machine.
                                                                                      So, as shown in this section, brands can enter virtual
                                                                                      worlds without necessarily having to recreate their
                                                                                      real world brands. Instead, a key option for
                                                                                      consideration is to openly Engage the audience
                                                                                      residing in metaverses such as Second Life.
Coca-Cola is again a good example of virtual brand
management, this time from an Engagement
perspective as opposed to Endorsement.
The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                                     Page 16
In summary
Virtual worlds are becoming more                                                      arguably their most important
popular than ever with todays                                                         asset, their brand.
consumers and this trend will        KZero works with global brands
continue to grow at a rapid rate.    to provide cutting- edge
This trend is not just being seen in marketing initiatives in virtual
‘grown-up’ worlds such as Second worlds.
Life but also in metaverses aimed
towards younger demographics
such as There, Habbo, Stardoll and
Poptropica.
Real-world brand owners now
have a new channel to assess and
consider, metaverses. And,
without direct involvement, many
brands already have virtual world
presences without the permission
of the owner.
This means that brand owners
now have to strongly consider the
concept of virtual world brand
management in order to future
proof, position and protect
The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009                 Page 17

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The 5 Rules of Virtual Brand Management

  • 1. 5 Rules of Virtual Brand Management A KZero Worldswide report The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 1
  • 2. 2 008 can officially be called the ‘Year of the Metaverse’ with virtual worlds such as Second Life, Stardoll, Habbo and WeeWorld attracting millions of new members and many real-world brands. For brand owners in 2009, virtual worlds present a new type of marketing opportunity. But, with opportunities come challenges. For many brands considering a virtual world marketing strategy, the first decision they have to make is how to manage the unofficial representations of their products already present in these spaces. The 5 Rules of Virtual Brand management explains the options available to marketers. The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 2
  • 3. What is a virtual world? However, as the chart below left shows, other regions and in particular Europe, have embraced Second Life. The World Wide Web as we know it today consists of In late 2006, Second Life resident numbers broke static 2D pages. You visit a website and read/watch through the 1m mark, helped by significant media the information or media presented on it. Virtual coverage. During 2007, resident numbers grew by 1m worlds (metaverses) are different. per month and now (Jul 2009) the total number of They are digital 3D environments accessed in real- registered accounts is over 19m. time that allow people to explore, examine and However, even greater growth has been observed in interact with the objects created within the world and virtual worlds catered towards younger audiences. importantly they allow people to interact together in a Stardoll for example, has over 34m accounts, Barbie shared collaborative space regardless of their Girls over 10m and IMVU over 39m. Appendix one geographical location. shows the KZero universe graph, an illustration of the Second Life was the first glimpse into the future of the size and range of virtual worlds available. Internet, a future of ‘Places, not Pages’. However, other Using Second Life as an example, as explained in the virtual worlds such as There, Kaneva, Stardoll and following sections, the unique characteristics of a many others are now available for marketers in this typical resident has expedited the take-up, and the emerging space. range of different countries represented. Why are virtual worlds growing? Who is a typical resident? The most popular commercial metaverse to date, Second Life, is a global application, meaning that Second Life is not a gaming application. There are no anyone can become a resident. Initially, North America scores, no ‘lives’ to protect, no objectives and no end- drove take-up due largely to the fact that the result. company behind Second Life, Linden Lab is based in Comparison has been drawn to World of Warcraft, an San Francisco. extremely popular MMOG (massive multiplayer online game) but the only real similarity is the fact that they Rest of World are both virtual worlds. 23% US Importantly, whereas the average age of a Warcraft 37% player is 17, for Second Life, the average age is 32. It is this fact which stimulated the interest in major brands to consider entering Second Life. Below (next page) is Europe the age range spread for residents. 37% Canada 3% The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 3
  • 4. The graph below shows the regional breakdown of fashion-themed world Stardoll. Rest of World 16% US 37% Also of note and further interest to brand owners is Europe the fact that females account for 45% of users. A 43% surprising, yet valuable piece of information. So, a Canada combination of the average age and gender ratio has 4% made brands realise that there are benefits to be reaped by developing metaverse marketing strategies. KZero has in-depth data and research available for a wide selection of virtual worlds and is best-placed Further analysis of the demographic profile of to make media planning and virtual world selection residents reveals that these people reside heavily decisions for marketers across the world. within the Innovator and Early Adopter groups. It will not be long before virtual world marketing Pre-December 2006, Innovators were the main types initiatives are promoted in TV, print and other inside Second Life, but, as explained by the Rogers mediums as promotion and then cross-promotion Technology Adoption Curve, Innovators act as a initiatives are used to attract as many visitors as catalyst for Early Adopters. Whereas Innovators are possible. very keen to trial new technologies, they have local social networks. There are even newspapers and magazines available now purely for virtual news stories and worlds. One The media landscape example is the Avastar - a metaverse red-top newspaper available via website and in Second Life. Second Life aside, marketers now have a wide range The newspaper (published two to three times a week) of options available to them. And, importantly, has stories about the latest virtual developments and traditional media planning techniques can now be just like real media, offers advertising space. used to select the most appropriate virtual world for the marketing objectives. Different worlds have widely different resident bases from a geographical perspective as well as different age ranges - as demonstrated by appendix one. The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 4
  • 5. Defining the Marketplace As explained in the following sections, a proportion of these products are in fact virtual copies - unofficial Before we start looking at the options available to replicas of real world brands created within the marketers in virtual worlds, it’s important to identity permission of the legal owner. and size the marketplace to determine which types of A question you may be asking yourself now is: products (and therefore brands) are actively sold in metaverses and the size of this market. ‘Why do people actually want to In terms of total financial transactions in Second Life, spend money on virtual goods?’ on a daily basis over $1m (real US dollars) is exchanged between parties involving over 12m The answer to this question is the primary reason for individual transactions. explaining the major opportunities presented by It is difficult to obtain further detail on specifically metaverses. A virtual world is full of different people, what is being bought, however it falls mainly within different sexes, ages, genders and ethnicities. two categories - land and products. In terms of To demonstrate the current size and future growth of estimating the proportion of these transactions the virtual goods sector, shown below is the latest involving unofficial brand products, estimates put this KZero revenue forecast for this sector. in the 3% - 5% range. Focussing on the product category, the chart below shows data obtained from SLexchange.com, a website that allows Second Life sellers to promote their creations. At the end of Dec 2008, over 200,000 different products were available on SLexchange - a sizable marketplace. Just like in the real world, people don’t want to all look the same - they want to create a digital identity that reflects their real world person or demonstrates how they choose to visualise their avatar. Very shortly after an account (avatar) is created, the owners of the avatar wants to customise their appearance, hence the demand (and therefore supply) As shown above, the Apparel and Avatar Accessories of virtual items. Many avatars then go on to purchase categories are very well represented in Second Life. land (if the virtual world permits this). This then Between them there over 100,000 different products explains why people also require items related to available on SLExchange. housing - their virtual house. The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 5
  • 6. Interestingly (and of interest to brand owners of category a little further, over 47% of this product female products), within the Apparel category, over group reside in the Jewelry and Watches category - 70% of the products available are for women. So, often copied in Second Life. Here is the breakdown of clearly, females are more likely to be interested in this group. purchasing virtual clothes. The graph below shows the breakdown of the over 51,000 Female Apparel products available in Second Life. Unofficial brand examples This section will clearly highlight the need for marketers to implement a policy of virtual brand management. So, the top three categories of Women’s Apparel products available via SLexchange, are Dresses, Outfits In Second Life the most likely way for people (avatars) and Footwear, accounting for almost 30,000 products. to find shops selling products is to use the built-in search functionality. Quite simply, you access the Looking at the Men’s Apparel segment, the graph search box and entry a description of what you are below shows the approx. 11,000 products available. looking to find. The result is an alphabetical listing of the areas/shops/stores in Second Life that have ‘tagged’ their venue with the same words used by the searcher. So, for Men’s Apparel, shirts are clearly the most popular and as explained in later in this report, there is a high level of unofficial brands in this sector. Within the Avatar Accessories category, there are also over 30,000 individual products. Breaking down this The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 6
  • 7. The graph above (previous page) shows the number Now, for an unofficial example. This next store was of results shown when entering a selection of real found by searching for ‘Adidas’ in the search box. The world brand names. search result returned displayed this venue as ‘Adidas and Nike Sneaker store’. What this graph is telling us is that there are over 450 different places in Second Life promoting the word Shown below is the interior of the shop. Several Nike, for example. Nike does not actually have an different real world brand products are available for official presence in Second Life. purchase. Adidas has its only section. In fact, the only brands shown in the graph that has an official presence are Adidas and Armani. To highlight the scale of unofficial brand activity, there are 248 unofficial Adidas venues! This statistic is a very clear signal that real-world brands need to pay attention to activities taking place in virtual worlds involving real products. Let’s compare the official Adidas venue with an unofficial one. The two pictures below show the Adidas virtual store, on Adidas Island in Second Life. Rather than show the virtual product recreated as done at the official venue, this shop shows the products as 2D images on wall displays. Here’s the Adidas section. Shown above is the interior of the official Adidas store, complete with company branding, merchandising and of course products. Shown below is the main shoe sold in the store, the Microride. This style of displaying products is very common in Second Life. Other than displaying the logo of the brand, very little other consideration is giving to thecorporate identity of the brand in question. The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 7
  • 8. Also of interest here are the selling prices for these But is choosing to Ignore really an option? products. In the official store, the Microride retails for L $50 (about 18 Cents or 10 pence). Simply turning a blind eye to unofficial virtual world activity has several consequences. The unofficial store shown above retails their Adidas Too many companies are devoting significant amounts shoes at L$200 (70 cents or 35 pence). An interesting of effort and money in virtual worlds for them to be variance to consider and one explored further in this considered insignificant. Couple to this the profile of a report. typical resident (already explained) and the Time to explain the 5 rules of Virtual Brand population numbers and growth, already in the Management. millions of users globally and the decision to ignore virtual worlds becomes a poor decision. 1: Ignore Market intelligence Virtual worlds are a fad and the Importantly, valuable market intelligence is people that live in them are weirdos completely lost if a brand chooses to ignore metaverse activity. This is not only research into how their brands Well, you can make your own mind up on that one. are being used but also a loss in intelligence on what the competitors are doing in virtual worlds. However, some brands may choose to simply ignore the presence of their products in virtual worlds. This is particularly important in categories that already have adopted virtual worlds faster than others. This decision might be made because the brand Companies that are already engaged in metaverse manager has insufficient knowledge of virtual worlds activity are harvesting data, insight and market and therefore is unable to make an informed decision research not only about their competitors but also on about a strategy, so in this instance the option is to how the marketing initiatives they are using are ignore. actually performing. Secondly, the concept of ‘No such thing as bad publicity’ may also be present. Of course, if people in virtual worlds are choosing to purchase branded items then at the very least they are selecting the brand above others. Thirdly, the decision might be made because very few companies actually generate a revenue stream at present from virtual world activities. Therefore, virtual trademark infringement is not stealing an actual revenue stream from the brand. If the company is not present them there’s no revenue stream to protect. The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 8
  • 9. Shown above (previous page) is the timeline for regulated corporate identity guidelines. These Second Life entry from the Automobile sector. As guidelines are created to ensure the correct usage of observed, several brands entered in a short space of logos and typefaces associated with a brand, not only time, each new entrant learning from the others. for internal use by also use by third parties such as So, from a competitive positioning perspective, the advertising agencies, partners and media outlets. strategic position of a brand is weakened if activity is Brand guidelines cover platforms such as email ignored in virtual worlds. communications, signage, brochurewear and websites. Well, virtual worlds are simply another Undesirable associations and locations channel where guidelines have to be catered for. It’s important to remember that virtual worlds mirror A main reason for this is the ease in which a brand can the real world in many ways. One similarity is real be brought in and displayed in Second Life. estate and the concept of shopping. Products available for purchase in virtual worlds such as Second Life are It’s a very straightforward process involving the typically displayed in constructed shops or shopping uploading of a jpeg containing the logo (for example) malls. and creating an object with the logo showing on it as a texture. This object can then be made into virtually Shops in Second Life are either rented from real estate any shape, size or colour. owners or purchased outright and then developed. However, the owner or renter of the shop only has But, it’s not just limited to logos and brand names. control over the content displayed on their own land - There are many products actually recreated in Second they have no powers over what happens on land Life in 3D done so without brand approval. Again, surrounding them. This means any type of product, ignoring these activities means closing the door on service or establishment can be experienced directly how people are using valuable real world brand by someone in close proximity to the real world brand assets. displayed in the virtual space. 2: Remove To illustrate, an avatar could be looking at a virtual We came, we saw, we deleted watch unofficially displayed in a shop and then walk next door into a virtual strip club. Sex in Second Life is Taking steps to get unofficial brands removed from as popular as it is on the World Wide Web. The key virtual worlds once they have been discovered is here is for brands to manage this exposure. Ignoring probably the first decision considered by brand the presence of their brands in metaverses means they owners. have no awareness of potential issues such as these. After all, their brands are being used without their Brand guidelines permission, which, in the real world is an illegal Companies spend billions of pounds developing their activity. corporate identities and building their brands. As There’s also the lack of control to consider and such, most brands adhere to tightly defined and potential in-correct guideline usage. So, for some The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 9
  • 10. companies, it’s the right decision to remove unofficial below shows the search results returned from a search brands. Here are some other reasons that could lead for ‘Oakley’. this decision. Reviewed and removed The metaverse sector is a very new channel and on this basis, not all companies benefit from entering in the initial stages of the platform. This might be because the audience of Second Life is the wrong target market for the brand or product in question or any other marketing-led reason. In any event, following a review, in some instances a brand may opt to remove unofficial brands in virtual worlds in order to totally remove all brand-related presence: the Control - Alt -Delete approach. Pre-campaign brand sweep-up Using a real-world analogy, if you’re expecting guests at home, you usually tidy up beforehand. In the content of virtual world activity, is makes a lot of sense to have a thorough audit of unofficial brands prior to deploying an official campaign. Oakley is not currently officially in Second Life, This clears the way for the approved project to enter however, if they were implementing metaverse the metaverse knowing that the only way avatars will activity, they would have to address the results of this come into contact with the brand will be via official search. channels. The first 11 results when searching for Oakley refer to This option not only applies to removing the presence virtual stores in Second Life using ‘Oakley’ as a word of logos and branded items but also to the use of tagged against their land (store). tagged words and phrases often used by retailers in Second Life to promote unofficial brands. People are using this word to attract visitors to their stores who are seeking Oakley branded glasses. As These keywords are used to drive the search mechanic shown, some of these shops are attracting significant in Second Life which is usually the first method traffic levels. people use to find things. To illustrate, the screen grab The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 10
  • 11. Brand consistency during campaign sending a message to Linden Lab via right-clicking the object in question via the in-world navigation. Real-world counterfeiting typically takes place when Once this report has been sent, the report should then brands launch new products and services and new be followed up. demand chains are created as a result. Of course, another way of attempting to remove items The same principles apply in virtual worlds. On this is simply to contact the owner of the item via an basis, a brand owner may take the decision to remove instant message. unofficial versions of their products whilst they are running sanctioned metaverse activities. 3: Observe Removal process Look and Learn When a brand owner ultimately decides to remove A lot can be learned by studying how brands are unofficial representations of their goods in Second Life created and used in Second Life. This is particularly (specifically), there is a clear removal process to be true as virtual worlds are only starting to be adopted followed once the items in question have been by real world companies and thousands of individuals identified. already have the upper hand in terms of Firstly, Linden Lab (the operators of Second Life) has a understanding how people interact in these new policy for trademark infringement, as follows: environments. ‘Linden staff generally removes content that uses For companies not concerned with the presence of trademarks without apparent authorization, with or their brands being shown unofficially in Second Life, without giving notice to the object owner. This generally an excellent first proactive approach is to closely includes all RL corporate logos and brand names.’ watch how their brand is presented. This is a first- hand technique to gather market research. It is often difficult to tell what may or may not be trademarked. However, use of designer logos and How the brands are created brand names without permission, such as Gucci, Nike, Louis Vuiton, etc., are usually not acceptable. Companies can learn a lot by studying how people choose to create their brands in Second Life. One thing So, although Linden Lab acknowledges and sets out a that will become extremely clear is the different ways procedure for dealing with trademark infringements, they are created. what is clear is that they do not pro-actively seek to locate items in Second Life. This therefore means that For some brands, their logo’s have just been very brand owners do need to conduct audits in the first simply pasted onto existing designs such as t-shirts instance. and bags. Here is an example of this quick and dirty approach. Once the owners of the unofficial branded items have Other people in Second Life have gone to greater been identified, companies then need to submit what lengths to recreate brands. And, for these creations, is known as an ‘Abuse Report’. This method involves The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 11
  • 12. the length of time taken to produce them can range So, observing how brands are recreated in virtual from a few days, to several weeks if not months. worlds can greatly assist real world marketers in better understanding how the platform can be leveraged. Here’s a selection of objects created in Second Life to a very high degree of realism, without permission. How the brands are presented Of course, once someone has created a brand or product in Second Life, they need to then provide the platform to display it. And, again, in many ways, virtual worlds mirror the real world. For example, many car brands are copied in Second Life by unofficial avatars. These items are offered for sale in virtual dealerships/showrooms. Some people have even modeled virtual world creations entirely and accurately on real world brand venues. Probably the best example of this in Second Life is an unofficial Apple store. The venue in question is actually a near clone of the real world Apple store on 5th Avenue, NYC. Visitors to the real world NYC Apple store would soon realise that this is a pretty good replica. So what can be learnt from this type of activity? Firstly, retailers can learn about traffic patterns - do avatars move around stores in the way way that they do in the real world? Do different configurations make a difference? What are avatars attracted to? And a key benefit of using The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 12
  • 13. virtual worlds for this type of research is that changes With the still relatively low-cost of items in Second can be made instantly at virtually zero cost. Life (average price 1 USD, GBP 0.50), most avatars have inventories full of different products. Secondly, marketers can learn about how their customers interpret brand values in a virtual space. From a clothing perspective for example, one area that After all, all creations in metaverses start from would benefit marketers of these types of products nothing. People that create unofficial brand presences would be the way avatars change their clothing for start with just an idea and from here then visualise different events or purposes. these thoughts. It’s a useful insight into the minds of There is a rather large community of music lovers in their customers. Second Life across many different genres. One of the The way that products are presented in virtual worlds most popular genres (due to the profile of a typical will be an interesting space to monitor over the next resident) is Jazz and there are several virtual jazz clubs few years. As shown below, the virtual MacBook’s on across Second Life. display are sat on virtual tables - but why should What’s interesting at venues such as the Phat Cat’s they? Jazzy Blue Lounge is that avatars here tend to dress up, into tuxudos and ball gowns - not the typical attire you would see in most areas in-world. Taking another category, Automobiles, a question to be asked here is what do people do once they have bought them? For example, these products could simply be suspended in mid-air - because in virtual worlds you can do that. Alternatively, why not enlarge the products to an unreal size, this allowing avatars to see the design and features on a more detailed basis. Most people tend to teleport or fly around virtual How brands are used worlds and there is not really a road network that operates. Perhaps one of the most useful benefits of observing So perhaps they are bought simply as trophies, placed virtual brand activity is more to do with the consumer statically outside virtual houses on virtual driveways. of the product rather than the creator. The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 13
  • 14. 4: Endorse Leveraging the brand Give them an Inch... :) One such example of a real world brand endorsing unofficial activity is the case of Vint Falken and the Putting an official stamp of approval on unofficial Coca-Cola outfit. Vint is a Belgian-based resident of virtual world activity might at first seem like a strange Second Life who created a outfit featuring Coke decision to make. However, as this section will branding without their permission. demonstrate, this policy opens more doors than it closes. The act of endorsing unofficial brand activity in virtual worlds basically means acknowledging that the activities are taking place and making a clear statement that the company allows it. Instant access One very obvious benefit to endorsement is instant access into virtual worlds. A typical development The item in question was promoted on lead-time for a commercial project into Second Life is SLExchange.com for a period of time until she received three months. By opting to approve existing products, an email from them informing her that the outfit was immediately the brand can claim to have a virtual in violation of Coca-Cola’s trademark policy and had world presence, at zero hard cost. been removed from the site. So, a company making a decision to remove an item from Second Life. Also related to this option is the issue of acceptance in Second Life. Much has been written about some of Shortly after the removal Vint received another email the commercial projects in Second Life which were from SLExchange stating: not fully accepted or appreciated by the web-savvy, “We have spoken to Coca-Cola and they have released brand-sensitive residents. their trademark to SL Merchants, Therefore, any of your Endorsement bypasses this issue because the brand items that were disabled on June 7, 2007 have been existed prior to commercial attention. retrieved...” But it’s not just instant access in terms of having an So, by Coca-Cola opening up the usage of the official virtual world presence. Arguably more trademark in Second Life, not only have they important is the instant access to statistics and positioned themselves as a progressive company but research relating to the brand. A fair trade-off for real more importantly they can now see the different ways world brand owners should be access to this in which people use their brand in virtual worlds such information in return for the usage endorsement. as Second Life. Real world activity integration The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 14
  • 15. Another concept to be considered when thinking has a series of islands in Second Life under the banner about Endorsement is the Sponsorship approach. of ‘Motorati Life’. Inside virtual worlds such as Second Life is a thriving number of communities. These communities are typically interest-led and the people involved with these groups use virtual worlds to complement their interest in the various interests. It’s important here to remember that these enthusiasts The islands are themed inclusively around the world of in many cases are interested in a particular topic Pontiac cars with features such as a racetrack with regardless of the platform. regular races, monster trucks and various other car- related areas. Taking formula one racing is an example, their are several venues in Second Life (official and unofficial) Taking this approach has created a venue dedicated to built around the concept of racing. people interested in the brand with many different ways in which fans can interact. The concept is directly Brands related to this category could quite easily lend advertising the specific products is not a primarily their name in a sponsorship environment to these objective in this context. Instead, the models facilitate establishments. interaction and provide a platform to do other things. 5: Engage A similar approach this time in a different category is the the initiative by the NBA. The NBA has created a Give, then you will receive destination for basketball fans complete with video The most collaborative approach when considering and news feeds, interactive games, a virtual store and how to manage a brand in a virtual world is a game arena. Engagement. As explained in the following sections, this approach can yield significant upsides. Engaging for NPD What does Engagement mean? Who better to steer the future of a brand in a virtual world than the people who are already shaping it? When a company discovers that their brands are being used unofficial in virtual worlds, engagement relates Probably the largest opportunity for engagement is to an approach of actively working, collaborating and the concept of actively allowing people to create new opening a two-way communication channel with the products related to the brand, thus harnessing the creators of the unofficial products. knowledge, creativity and know-how of the brand advocates. Engaging to grow communities A great example of engaging communities in Second Although this is a new field in marketing, there are Life is taking place in the automobile sector. Pontiac already some early examples of this approach in Second Life and other worlds. The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 15
  • 16. Both Pontiac and Toyota encourage visitors to their virtual venues to take their models and create customised versions of them. Shown below is Scion City, the venue promoting the Toyota Scion range. Part of the venue is the Owners Showcase, an area completely dedicated to car creations made not by official Toyota designers but instead, simply people interested in the brand and willing to make their own versions. The Virtual Thirst challenge is an example of leveraging the values associated with a brand in the real world and facilitating new product development in a virtual space. Taken from the supporting website: ‘Imagine a world in which a simple vending machine could dispense - not Coca-Cola - but the ESSENCE of Coca-Cola: refinement, joy, unity, experience. Well, we know this vision can become reality in Second Life, and we’re looking for everyone with ideas for such As a consumer, being able to have your own creation as experience to submit their design. To our advisory featured and promoted by a major brand is a powerful panel, the quality of the idea and the possibility for concept, and one that greatly assists the advocacy felt exhilaration are more important than the visual towards a brand. Here’s one such example, the execution displayed in the submission documentation. Cowboy Car on Motorari. 3D professionals, existing Second Life residents - and first life submitters have the same opportunity to win’. In return, the real-world brand owner gets terrific insight into how their customers interact with and So, what Coke has done here (assisted by Crayon and view their products. Millions Of Us) is create a competition (with a L$ 500,000 first prize) that is effectively allowing residents to take the Coke brand and create completely new interpretations of an existing product - the vending machine. So, as shown in this section, brands can enter virtual worlds without necessarily having to recreate their real world brands. Instead, a key option for consideration is to openly Engage the audience residing in metaverses such as Second Life. Coca-Cola is again a good example of virtual brand management, this time from an Engagement perspective as opposed to Endorsement. The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 16
  • 17. In summary Virtual worlds are becoming more arguably their most important popular than ever with todays asset, their brand. consumers and this trend will KZero works with global brands continue to grow at a rapid rate. to provide cutting- edge This trend is not just being seen in marketing initiatives in virtual ‘grown-up’ worlds such as Second worlds. Life but also in metaverses aimed towards younger demographics such as There, Habbo, Stardoll and Poptropica. Real-world brand owners now have a new channel to assess and consider, metaverses. And, without direct involvement, many brands already have virtual world presences without the permission of the owner. This means that brand owners now have to strongly consider the concept of virtual world brand management in order to future proof, position and protect The 5 Rules of Virtual Brand Management : A KZero Worldswide Report. Copyright 2006 - 2009 Page 17