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Virtual Worlds: The Latest Fashion
American Apparel, Coke Pioneer New Marketing Frontier
Advertising Age
Gavin O'Malley
July 10, 2006

NEW YORK -- Before American Apparel launches its first denim line this fall, the offerings are getting a virtual debut and being bought and worn by virtual people. Just as other marketers-from Coca-Cola Co. to Wells Fargo-are creating their own virtual niches, the hip clothing company is letting members of the online game Second Life try the line on for size.

"Since we opened in May, we've sold over 2,000 items to people outfitting their avatars," said Raz Schionning, director of web services for American Apparel, which opened an elaborate retail store last month in Second Life with the help of ad agency Ad Option and web developer Aimee Weber. Virtual shoppers who buy virtual clothes get 15% off the same items in real life.

'Massively multiplayer' games

Second Life, created by San Francisco-based Linden Lab, is one of several virtual online worlds where trendsetters are flocking to exchange ideas, egos and virtual property using IM-equipped "avatars," or highly-customized 3D representations of themselves. With nearly 200,000 "residents," and its open-ended structure, Second Life has become something of a testing ground for marketers to explore this new genre known as "massively multiplayer" games.

Second Life currency, known as Linden, can actually be exchanged for U.S. dollars, but American Apparel didn't set up virtual shop to turn a profit. And, of course, the company has to pay Second Life in real dollars. Linden Lab charges $1,250 for an island like the one on which American Apparel's virtual store is located, plus another $195 a month.

Another Second Life locale, dubbed Baseball Island, will host live ESPN coverage of this year's Major League Baseball home-run derby on several virtual stadium Jumbotrons-while the event is simulated on the virtual field. The event, engineered by Electric Sheep-a company that builds games and environments in Second Life-is being sponsored by Budweiser.

"What's special here is us participating in a new phase of the social-networking evolution," said Mr. Schionning.

And Mr. Schionning's sentiment is shared by a growing number of media agencies and marketers. "There's an opportunity here for marketers to communicate the real meaning of their brands," said Chad Stoller, executive director of emerging platforms at agency Organic. "Think if Snickers puts its candy bars in Second Life, and they gave players real energy."

More interest

"I'm getting an inquiry about Second Life basically every day," said Tim Harris, senior VP and co-founder of Play, a division of Publicis' Denuo Group. "Hosting virtual events seems like a logical first step, but we're looking into far more creative ways to make brands relevant in this space."

The key is adding value to the virtual experience, said Greg Smith, exec VP-media insights, planning and analysis at Carat Fusion. "Games like Second Life could literally be a real marketplace for a lot of our clients," he said. "We're still thinking about the best way to add value, not just brand messaging."

But while Mr. Smith and others in the industry contemplate the possibility of effective virtual marketing, some brands are already enjoying success in the space. Coca-Cola's mycoke.com already offers a virtual setting in which visitors can play games, listen to music and chat. Wells Fargo's Stagecoach Island is an independent world where one can find all the comforts of virtual life, and even learn something about personal finance.

Simpler versions of the massively multiplayer phenomenon have found a following with tween audiences as well. One of the more popular is Whyville.net, which has accumulated nearly 1.7 million members since it was hatched in 1999 by Numedeon. In April, Toyota signed up for a 14-week experiment with Whyville to promote its Scion brand of cars. Members can visit Club Scion and trick out a car. If they have enough virtual currency, they can even buy one and drive it around Whyville with their friends.

MySpace 'too mainstream'

"When you're going after young trendsetters, you have to stay on the cutting edge," said Adrian Si, interactive-marketing manager for Scion. "We did MySpace about two years ago, but ... I think it's a little too mainstream now."

And, he added, "studies show that kids start thinking seriously about what type of car they'd like to drive as early as eight or nine."

Other advertisers in the Whyville space include Adobe, NASA and the Getty Museum. Cost-per-thousand rates range from $6 to $30, while one-time sponsorship setup fees range from $25,000 to $250,000. Numedeon plans to launch five more virtual worlds, each targeting different demographics. (See Mediamorph, P. 36).

In May, technology startup Doppelganger launched a 3D virtual lounge where fans of Interscope Records' Pussycat Dolls can hang out and dance with members of the bands.

Doppelganger CEO Andrew Littlefield has ambitions that go far beyond the Pussycat Dolls lounge, however. What he and his team of engineers have created is a virtual 3D world-imagine a trendier version of L.A. and Tokyo combined-where young people can hang.

Beyond Doppelganger's initial partnership with Interscope, Mr. Littlefield said deals with clothing labels and other brands are in the works. "This is the next generation of interaction between people and brands online," Mr. Littlefield told Advertising Age at launch.

Early misstep

But it goes without saying that marketers' entrance into unfamiliar virtual worlds will be tricky. One early misstep is the now-dead Cadbury-Adams deal to sponsor a "World of Warcraft" tournament.

Aware that the wildly popular virtual environment might not be an ideal world for direct product placement, the company had planned on teaming this summer with GameSpot-CNET Networks' online gaming review-to sponsor a four-month gaming tournament in order to introduce its Stride gum brand.

These tournaments have been gaining momentum, with the final games averaging more than 100,000 on-demand streams and more than 10,000 spectators watching and participating in the live broadcasts, via GameSpot "TournamentTV." But the partnership fell through at the last minute, and, while no official reason was given, people close to the deal say the popular massively multiplayer role-playing game wasn't ready for such overt brand sponsorship.
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