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American Apparel Opens Virtual Boutique
Promotional Products Business
Melanie Medina
October 2006

Hipster promotional products supplier and apparel retailer American Apparel (UPIC: AMER 9421) has become the first major retailer to set up shop in a new landscape: an online video game called Second Life. Yep, videogame players can now pay real dollars to get virtual currency (read: play money) to buy virtual apparel—from a real-world retailer—for their virtual characters (read: dolls).

Second Life is an online world owned by its residents, some 400,000 players worldwide who log on and create pixilated representations of themselves, called avatars. Players use virtual currency, called Linden dollars (which they can earn through the game or buy with real dollars), to pay for digitally rendered land, houses and now, American Apparel tops.

"One of the key aspects of Second Life is how avatars look," says Raz Schionning, American Apparel's director of web services. Players can create realistic-looking avatars, or they can choose to represent themselves as an animal or imaginary creature. "It's a crazy thing that so many people are buying our [virtual] stuff because it's not fantastic or outrageous. What this shows us is a lot of people are interested in our brand and what it stands for." So far, Schionning says, Second Lifers have bought some 3,000 American Apparel items in its virtual boutique.

American Apparel isn't alone in its foray into this parallel digital universe. For example, in September, Starwood Hotels, parent company of the Westin, Sheraton and W chains, began test marketing a new loft-style hotel called Aloft in Second Life, even though the company doesn't plan to open a brick-and-mortar prototype of Aloft until 2008, according to a Business Week article.

So, will Second Lifers be sipping digital coffee from logoed coffee mugs any time soon? "Yeah, why not? Some people look at it as business is infringing upon [players'] fun," but as long as the brand doesn't impose too much on the players' experience, it's possible, Schionning says. "The primary objective is to engage people by making something fun and not being so heavy handed and sales-y."

While most promotional consultants' clients' marketing plans don't call for in-game product placement, it's worth having a handle on the trend because it's one way marketers can reach an audience that's averse to traditional advertising: youth.

"Marketing to a youth audience—a broad youth audience, ages 18-30—is more challenging than ever because it's fragmented. Marketers can't put all their money into one thing or another," like television or print, Schionning says. Instead, they'll have to try new channels, "and places like Second Life are going to be examples of those [channels]."