Are virtual worlds too good to be true?

A few brave pioneers have begun advertising in corners of this world,
and certain parts of it are showing explosive commercial growth. Major
business figures, such as Amazon founder Jeff Bezos, are investing
millions of dollars in it.

If this sounds exciting, there's a catch: strictly speaking, this new
world doesn't really exist. Welcome to the strange world of massively
multiplayer online games, or MMOGs for short: huge collaborative
internet-based games in which thousands of players socialise and carry
out tasks together in realistic 3D worlds. MMOGs were once the realm
only of computer nerds, but are now rapidly becoming too big to
ignore.

The most recent figures suggest 13 million people worldwide are paying
monthly subscriptions of around £10 to spend time in worlds that
exist only in the form of data flickering between internet servers, and
that figure is growing fast. At the Millennium they were played by only
a handful of people, but three years ago MMOG subscriptions passed the
five million-mark. And of course, it's not just size that counts. These
players are often early adopters and the people advertisers want to
meet.

Mainstream activity

But it's not just the population that's significant. Jupiter Research
estimates the value of the MMOG market at a staggering $350bn and
even within the games themselves there are virtual economies estimated
to be worth as much as $1.5bn - equivalent to five months' worth
of British TV advertising. Players trade clothes, attributes, weapons,
skills, land, vehicles - even sex.

Jean-Paul Edwards, head of media futures at Manning Gottlieb OMD,
believes MMOGs are now approaching the tipping point into becoming a
mainstream commercial activity. "It's only been in the last year that
it's been something worth considering, but what was once the preserve of
the ultra-hardcore gamer is now turning into something that ordinary
people can dip in and out of, and that's heading towards being a
mass-market concept," he says.

Major companies are taking notice. Software giant Sun Microsystems
recently compared its financial trading platforms to MMOGs - a
comparison that would have attracted ridicule just a few years ago - and
David Gardner, chief operating officer of computer games developer
Electronic Arts, last week predicted in-game advertising was the future
of gaming. But despite this enthusiasm, many of the most popular MMOGs
present major hurdles to advertisers. Roughly 98% of them are massively
multiplayer online role-playing games (MMORPGs), in which players engage
in Dungeons and Dragons-style quests battling orcs and goblins in
pseudo-mediaeval worlds.

Justin Bovington, founder of London-based MMOG brand consultancy Rivers
Run Red, believes the opportunities in MMORPGs, such as the 6.5
million-subscriber World of Warcraft, are slight. "They're what we call
the magic circle," he says. "World of Warcraft is incredibly
spectacular, but for marketers it's very difficult because it depends on
a suspension of disbelief that brand messages might interfere with."

There is also the problem that most MMORPGs involve users paying a
subscription. One of the oldest rules of media is that people accept
advertising if it lets them get something for free, but often lose their
patience when it starts to intrude on paid-for arenas. Examples of media
shown within MMORPGs are rare as hen's teeth.

Nonetheless, there are opportunities: one of the promotions admired by
media experts was Pizza Hut's partnership with EverQuest last year,
which enabled gamers to use one of the MMORPG's online commands to order
pizza.

In any case, the area really starting to excite marketers is massively
multiplayer online social games (MMOSGs), which present worlds more like
our own, real one. The emphasis is more on hanging out and socialising
than on defeating goblin armies. Most also offer free access, although
users can pay for more functionality.

One game above all gets media figures excited: Second Life. Opened to
gamers in 2003, it has generated a world as complex as real life. There
is a virtual currency, the Linden dollar, which can be legally traded
with the real US dollar, and players have intellectual property rights
over objects they create inside the game.

The result has been an online industrial revolution, comparable to the
business boom that has grown up around eBay. A counter on the front page
of Second Life's website shows the amount of money spent in-game over
the past 24 hours: US$226,458 at time of writing.

There are entrepreneurs selling programs to make your in-game character,
or avatar, wink; a virtual property company employing half-a-dozen
real-world employees in China; an in-game business magazine to help
develop your ideas. At the seedier end of town, you can visit a strip
club and pay to watch a Lycra-clad werewolf poledancing.

By its competitors' standards, Second Life is small fry - only 250,000
users visited in the past 60 days, roughly 2% of the overall MMOG
market. But it is growing at up to 30% a month, and its developer,
Linden Labs, predicts it will have 3.5 million users by next July. More
importantly, media experts believe the way it is wholeheartedly
embracing the commercial world provides an opportunity advertisers would
be mad to miss out on.

"When I first started telling people about Second Life, a lot of them
just couldn't understand what the attraction was," says Richard Eyre,
former ITV chief executive, IAB chairman and Media Week columnist. He
signed on to Second Life under the avatar (online alias) Crimson
Goodnight after reading an article about it earlier this year.

"A lot of people think you would only spend time in this completely
made-up environment if you can't deal with reality. But there's all
sorts of things that we do to escape from reality: we watch fake people
in Coronation Street or EastEnders to escape from reality."

As we speak, Crimson Goodnight is wandering into a virtual car yard and
notices a couple of vending machines standing against the wall - one for
Red Bull, the other for Coke. Walking over to them, he is offered a free
virtual can of drink. The detail that will get businesses salivating is
that these vending machines don't even appear to have been installed by
media agencies - a game player has simply added some iconic brands to
the landscape to make it more realistic.

Although he doubts MMOGs will ever overtake the giants of traditional
media, such as soap operas, Eyre believes the change will be inevitable.
"When a new thing comes along the advertisers have to go where the
audience goes," he says. "If there's a significant number of people
spending their time in MMOGs rather than engaging in other media, then
anyone who wants to reach that audience has no choice."

Of course, there are risks, as there are with any new platform. Media
agencies have to bear in mind they're entering a world with its own
rules, meaning they lose any control over their brand's promotion.

Protests, including graffiti, "subvertising" and sit-in strikes, are a
relatively common occurrence. In the social world There, users have
erected blank billboards to block out existing ads if they feel they are
destroying the virtual view or "spamming" the community with unwanted
messages. Some companies have even attempted to use this perceived
anti-commercial bias to their own ends: Disney's Toontown Online MMOG
sets its characters to fight against "Cogs", grey corporate figures with
names like "Spin Doctor" and "Red Tape" who want to turn Toontown's
colourful world into a grim world of offices and business. The battle
smartly puts Disney - which is often characterised as a paranoid,
control-obsessed company - firmly on the side of fun.

According to Universal McCann's director of strategic marketing
technologies, Damian Blackden, this proves successful MMOG advertising
can enhance players' experience of the game rather than intrude on it.
"People in these worlds often use brands as a way to define themselves,
so brands that can provide things in the game that would be useful to
players are likely to find a receptive audience," he says.

The point is echoed by Rivers Run Red's Bovington, who refuses to run
billboard-style promotions within Second Life because he believes
customers will only respond to creative messages they can interact
with.

Virtual versions

Along with US consultancy Electric Sheep, the agency has created an
astonishing array of campaigns within Second Life. Suzanne Vega and
Duran Duran have performed concerts there, while Radio 1 broadcast its
Big Weekend festival this summer in front of a virtual crowd. Hip US
clothing store American Apparel has built a virtual shop on a virtual
island where players can buy virtual versions of its real-life clothes.
For the launch of X-Men 3 this year, Bovington organised a red carpet
premiere that attracted avatars for up to four hours.

"We're still only looking at hundreds of thousands of users in the UK,
but the people who play these games can be opinion formers," says MG
OMD's Edwards. When Rivers Run Red promoted the BBC Big Weekend in
Second Life, only 6,000 avatars turned up but more than 50 real-world
publications ran stories referring to the event.

The trick is to take advantage of the "shadow consumer" - the in-game
avatar - and its relationship with the real-world consumer playing the
game. Someone who visits a Starwood hotel or Amazon bookshop within
Second Life, or uses a McDonald's outlet or Intel computer within the
Sims Online, might be more likely to visit their real-world equivalents.
The approach won't suit every company - although the demographic of MMOG
players is rapidly broadening, the vast majority are still young men and
women who would be unlikely to show much interest in, say, investment
advice. But for any brand wanting exposure among difficult-to-reach 18
to 34-year-olds spending hours at a time in these virtual worlds, the
attractions are obvious.

Virginia Featherston, trend analyst at Publicis, says companies should
start staking out their presences in the virtual world sooner rather
than later. "This is still a fledgling market and it's still quite
affordable," she says. "If you want to get involved it's going to be
best to do it now before all the possibilities have been explored. In a
year or two everyone else will be there driving up the prices."

GLOSSARY OF TERMS

MMOG: Massively multiplayer online games

MMORPG: Massively multiplayer online role-playing games, involving
sword-and-sorcery-style quests, such as World of Warcraft and
EverQuest

MMOSG: Massively multiplayer online social games, in which users
interact in the manner of MySpace, such as Second Life and There

PVW: Persistent virtual worlds. Often used to refer to more basic
virtual worlds, such as Habbo Hotel and Dubit, popular with
teenagers

Avatar: A player's online persona, which can be customised and
accessorised to reflect their own self-image

Shadow consumer: the in-game avatar

Contextual advertising: in MMOGs, refers to the practice of letting
avatars try out virtual products in the hope that they will invest in
the real thing

RL: Short for "Real Life": acronym used within Second Life to refer to
the real world, as opposed to in-game "SL"

TOP VIRTUAL WORLDS

Habbo Hotel: the biggest PVW, claims 40 million avatars since it was
established in 2000, although this is likely to overstate the number of
individual users. Mainly popular with teenagers

World of Warcraft: the biggest MMORPG, with 6.5 million paying
subscribers

EverQuest: until the advent of World of Warcraft, the most popular
MMORPG in the West. Subscribers have now shrunk to 200,000

Second Life: the biggest MMOSG with a total of 560,000 users, although
only 250,000 have visited in the past 60 days

The Sims Online: a MMOSG which pioneered some of the first examples of
in-game media, and now has around 35,000 users

There: a smaller MMOSG with around 20,000 users, regarded as the most
promising world for media after Second Life.