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                                     October 2007




AN OASIS IN THE DESERT OF THE REAL
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    Why do people use the Internet? In the beginning, it was novelty.
    I can recall my first encounter with the web, sitting in a University
    science lab waiting patiently for an image to download from half a
    world away. From memory it took about one hour to complete, yet at
    the time the minutes passed like nanoseconds.

    At that time, the web had yet to escape the confines of academia
    where it had resided for almost two decades. Then in 1991 the Internet
    soon crossed over to the mainstream thanks to the intervention of Tim
    Berners-Lee, who created the World Wide Web as a form of indexing,
    organization and standards control.

    This in turn has brought about the second age of the Internet, based
    on entertainment, enabling and escape. Or maybe it should be termed
    the second life of the Internet, given how much of that new bandwidth
    is taken up with virtual worlds. As we will see, however, the killer app
    of the Internet as a social networking tool remains unchanged.

    The concept of virtual worlds first surfaced in a work of fiction.
    In his 1992 novel Snow Crash, Neal Stephenson imagined a virtual
    environment called the metaverse in which people could create virtual
    ‘avatars’ of themselves and control them right down to the most subtle
    facial expressions.

    Today, the virtual is becoming reality. World of Warcraft is easily
    the most popular of the Massively Multiplayer Online Role Playing
    Games (MMPORG) and has over eight million subscribers (although
    they prefer the term residents), according to BusinessWeek online. Plus
    it is growing at a faster rate than any real-world city.

    Second Life, by contrast, is a Virtual World rather than an MMPORG
    and with a much smaller population at just over one million residents
    according to BusinessWeek online. However, it is growing at a rate
    even faster than that of World of. But there are other reasons why
    Second Life is the world’s most virtual environment.

    Unlike World of Warcraft, the boundaries between the physical and
    virtual worlds of Second Life residents are often porous. People use
    hard currency to buy virtual property, real brands set up virtual shop
    fronts and actual discussions take place in virtual settings. All are part
    of the Second Life experience.

    There is a reason why some residents call Second Life ‘the new golf ’.
    According to BusinessWeek online, one resident of Project Entropia, a
    Second Life competitor, paid US$100,000 for a virtual space station he
    hopes to rent out to other players.




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Virtual Worlds are evolving so rapidly and are being embraced by such
a large number of people that the impact on branding, marketing and         Baudrillard called
advertising will be immense. For us to understand the impact, however,      the end result ‘the
requires examining the scientific and philosophical dimensions.
                                                                            desert of the real’
Simulacra
A French intellectual, Jean Baudrillard, wrote in his book Simulacra
and Simulation that the modern world had become so media-saturated
as to be devoid of all genuine meaning. Science played a part, too.
Cartography had become so advanced, he said, that people now place
more value on the map than the landscape.

Baudrillard called the end result ‘the desert of the real’.

His work directly inspired the creators of ‘The Matrix’, so much
so that the character of Morpheus quotes this exact phrase. If we
extrapolate current trends out by one or two generations, it is not
inconceivable that a variation on The Matrix will be realized – with
the crucial difference that people will have chosen a virtual reality, of
their own making.

Consider bowling. Ten years ago, sociologist Robert Putnam
highlighted ten-pin bowling as symbolic of the way in which the US
had become a fragmented, disjointed place. Whereas Americans used
to bowl as part of suburban leagues, now most are ‘Bowling Alone’
(the title of Putnam’s book on the subject).

Well, the bowling league is on the way back. Except now we have
virtual bowling leagues, powered by the Nintendo Wii console which
simulates sporting actions in a digital environment. The average age
of the Wii user is 47 and retirement homes across the US are ordering
them in bulk.

While the visual output of the Wii is clearly computer-generated, the
digital special effects in many recent Hollywood movies are photo-
real. Imagine this level of detail in a virtual world.

We can see it emerging now. Wired magazine has just opened a new
headquarters. It is an impressive building for a publication with a
circulation of only 600,000 people; a 50 story glass and steel structure
with state of the art work, meeting and conference facilities. If you
have trouble finding it, it is just down the road from CNet and near
Reuters.

You will need a computer to find any or all of them, though, as these
buildings exist only within Second Life. There is of course an element
of gimmickry to these efforts and the real world brands behind them
admit as much. Still, some other brands have jumped in with both
feet.
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                 Intel, for example, has found Second Life to be a valuable environment
Clearly, brand   for seminars, training and inter-office collaboration. It is now taking
owners must      the place of video-conferencing in many business units, with employees
                 interacting online using their respective avatars as opposed to being
adapt to this    filmed in meeting rooms.
brave, new
                 Further, advances in motion-capture technology will one day make
and purely       it possible for the smallest and most subtle facial expression to be
virtual world    received and transmitted in a Second Life meeting.

                 Brave New World
                 Clearly, brand owners must adapt to this brave, new and purely
                 virtual world. In-game advertising is one of the most rapidly evolving
                 segments of the media market, expected to grow from US$176 million
                 in 2006 to nearly one billion dollars a year before the decade is out
                 according to BusinessWeek online.

                 Most brands that have entered virtual worlds have done so as if they
                 were basically an extension of the physical environment. Ford has
                 experimented with product placement, allowing players to drive virtual
                 Volvos, while Coca-Cola has bought space on virtual billboards, bus
                 shelters and other media.

                 Other brands have been slightly more lateral in their approach. Lacoste
                 recently ran a contest in the form of a fashion parade in Second Life
                 with a prize of one million virtual dollars to the best avatar model.
                 Calvin Klein has created a virtual variant of its CKIN2U fragrance
                 purely for Second Life avatars.

                 While such tactics may help generate awareness and recognition, they
                 do not necessarily serve to enhance their respective brands. Moreover,
                 gamers of all ages have a tendency to share a liberal, anti-authority
                 streak, meaning that the wrong commercial message could result in
                 rejection and negative brand perception.

                 It is also important to note that a game is a game, at the end of the
                 day. Unless it can establish a completely secure environment with
                 controlled access, any company that deals in sensitive issues or personal
                 well-being (e.g. life insurance, healthcare, wealth protection) may
                 want to steer clear.

                 But a brand in the content creation business such as Apple, Sony or
                 Disney would be well suited to this context and run a low risk of
                 player rejection. Viacom, one of the biggest media companies in the
                 world, has already taken the plunge and has produced virtual versions
                 of TV shows such as Laguna Beach.

                 As all forms of media become fully digitized the virtual world
                 possibilities of books, film and television will begin to multiply. One




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can imagine that in the near future, media will not only be bought
online but consumed there as well. The printing press may finally
be a thing of the past, dramatically improving the economics of the
publishing industry.

In fact all products and services that exist in a purely digital form
stand to benefit. For example, virtual worlds use their own form of
currency and an enterprising (and appropriately branded) financial
services firm could carve out an extremely profitable niche. Ginko, the
most popular bank in Second Life, would no doubt agree.

But even tactics such as these are only skimming the surface of what
a virtual world can offer in a commercial context. To fully grasp the
potential, one most stop thinking of Second Life and its ilk as channels
and start thinking of them as a new, virtual wing to be added to the
business itself.

As with other forms of Internet marketing, the key to virtual branding
is to understand and adhere to the principles of the medium. The
use of virtual worlds must be done in a way that preserves the core
brand personality and proposition while meshing seamlessly with the
aesthetics, purpose and spirit of the game.

To begin, that means treating the virtual space as 3-D rather than 2-D.
For any business with an e-commerce platform, this has tremendous
implications. Rather than a basic list of products, services and prices
one is now free to create a virtual store where residents can roam,
browse and test the product before buying.

In this sense, the physical retail environment can be built, enhanced
and extended in a virtual setting. But it should never be an exact
duplication, nor should it conform to the rules of the world into which
we are born. The last thing a resident of Second Life wants to be faced
with is real life.

As Neal Stephenson wrote in Snow Crash, what draws people from
the physical world and into a virtual environment is imagination –
their own and that of other people. To attract attention, marketers
must apply the same level of uninhibited creativity to their brands as
residents do to their avatars.

That means finding other ways of representing brands, product and
services beyond graphic identities, logos and photos e.g. developing
visual metaphors around the feelings evoked by the consumer instead
of tangible attributes. Another key element may be a visual identity that
is constantly evolving, in line with the virtual worlds themselves.

Where virtual worlds may offer the most value, however, is as a
Petri dish for new ideas. One can easily imagine market researchers
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                           replacing the focus groups and concept testing of the physical world
                           with the placement of new brands, products and services in a virtual
                           context and measuring the resulting resident reaction.

                           The strongest ideas, developed via collaboration with residents, could
                           be commercialized for use either solely within a virtual environment
                           or could cross over into the physical world. Given the growth of
                           Second Life in both popularity and resolution, it will not be long
                           before it serves as a perfectly valid test bed for the real world.

                           However, as noted earlier it should never be a complete simulation.
                           The imagination applied to virtual branding should extend to the
                           ideas that are to be tested. That means free and open experimentation
                           of often outlandish concepts rather than a conservative and grounded
                           process.

                           “We can and we should use synthetic worlds as unregulated playgrounds
                           for economic organization” says Edward Castranova, a leading authority
                           on Second Life, in his book Synthetic Worlds. As any resident could tell
                           you, there is no point to simply recreating your First Life.

                           Emergence
                           The long-term commercial applications are even more significant.
                           Virtual worlds may even precipitate a revolution in the way brands,
                           products and services are developed – one based on the concept of
                           emergence, the governing principle behind the theory of evolution
                           among other scientific insights.

                           To understand emergence, consider an ant colony. Individually, an
                           ant can achieve very little. As part of a colony, they can join forces,
                           divide tasks, create and survive. The human brain is another example.
                           Individual neurons are largely useless but linked up they are capable
                           of almost anything.

                           Brands, products and services have traditionally been created by a
                           small group and then made available to many people. This is a one-
                           way mechanism that runs contrary to other human endeavours, such
                           as politics and capitalism, where two-way communication is the norm
                           and bottom-up governance prevails.

                           Now brand owners have the ability to transcend the cost, complexity
                           and constraints of traditional product and service development by
                           turning ideas loose inside a virtual world and letting the strongest
                           survive. After all, what is market research and concept testing but
                           virtual reality on a small scale?

                           Emergence also has the potential to turn the Internet into the truly
                           level playing field it has always threatened to be. Imagine amateur
                           architects bidding for jobs alongside professional firms or amateur




Think ahead. Stay ahead.   www.futurebrand.com
                            pART ONE OF A THREE pART SERIES                                               6




creative directors pitching for advertising assignments alongside         Gavin Coombes
Madison Avenue’s finest.                                                  CEO
                                                                          FutureBrand Asia Pacific
For once, the possibilities literally are endless. And commercial         Gavin Coombes is the Asia
businesses need not feel threatened, as emergence can be good for         Pacific CEO of FutureBrand.
business. For an example, one need only look as far as Second Life        Previously, he worked in
and the way in which its creators work hand in hand with residents to     journalism, public relations,
develop the environment.                                                  advertising and Internet
                                                                          marketing and has contributed
Early on, Second Life programmers worked night and day to keep            to the development of brands
the virtual world full of new ideas. However, it quickly became clear     such as Visa, Chevron, Intel
that residents would much rather create their own stuff. The value of     and Microsoft.
programming contributed free by Second Life residents is estimated at
US$400 million each year according to BusinessWeek online.                Cover art:
                                                                          DESERT
The owners of Second Life discovered that people will perform the         Chris Siarkiewicz
most mundane and repetitive tasks if they are in the context of a game.   Designer
Now, Silicon Valley start-ups such as Seriosity are trying to find ways   FutureBrand New York
of commercializing this trend and extending the benefits to other
sectors.

If that puts you in mind of ‘The Matrix’, where human beings are
wired to provide the energy for machines, you are not the only one.
But ultimately I take a more optimistic view on the future of virtual
worlds. As ‘Dilbert’ creator Scott Adams said, in possibly the truest
phrase ever uttered on this topic, “the Internet is just us”.

				
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