It's not enough that consumers often purchase products they don't need or will never use - just look at my wardrobe - now, an increasing number of buyers are spending their hard earned cash for products that don't even exist. Followers of the rising and falling trajectory of Second Life are well aware that this is nothing new, but a September 7th article in The New York Times ("Marketing Fanciful Items in the Lands of Make Believe" by Elizabeth Olson) sheds new light on the growing trend for brands to offer pretend merchandise in efforts to boost awareness and hone customer loyalty.  I just wonder how effective these tactics are in endearing consumers to brands that tell them, 'give us your money and we will give you . . . nothing.'

As highlighted in the Times piece, Volvo (N. America), H&M, and MTV Networks are representative of the companies now promoting virtual goods to connected consumers, via social networking games like FarmVille and Mafia Wars (two Zynga creations), smartphone apps, and fantasy Internet sites such as the eponymous Second Life and IMVU.  The logic of this trend was succinctly summed up by NPD Group's chief retail analyst Marshal Cohen:

"It's all about constant connectivity.  People live in real time, and established brands have to find ways to keep in touch.  Brands are beginning to dabble in reaching out, especially to the under-40 crowd--many still can make discretionary spends."

True, people live in real time, but do they live in the real world?  As I watch the multitudes riding the Paris metro, who isn't fully immersed in their portable devices anymore, happily reading or sending text messages, searching their music directories, playing video games, reading pulp fiction - completely devoid of their real world physical surroundings?  So it doesn't surprise me that we are moving in the direction of fake world consuming.  And what are those make-believe discretionary spends Cohen alludes to actually spent on?  Well, hip hop artist Snoop Dogg has been selling items like virtual Dobermans, exploiting the maniacal fancies of teenagers who are drawn to the branded goods of music performers.  For $1 to $3, Zynga offer users of FarmVille and Mafia Wars the opportunity to give a virtual gift (e.g., flowers) or build a virtual collection of items.  Although this might seem like chump change, in fact, in the grand scheme of things it is big business:

  • ThinkEquity estimates that virtual purchases will amount to $2 billion by the end of 2010, rising to $2.6 billion in 2011.
  • Zynga claims to have made $100 million last year, largely from sales of its virtual goods and game currency
  • online fantasy worlds generate nearly $1 billion annually from purchases of virtual items like furniture, homes, clothing, and accessories for their avatars
  • Snoop Dogg has earned $250,000 since mid-2008 selling virtual items (and I still don't want to listen to his music)

MTV and H&M, among other companies, are increasingly active in the virtual game, in different ways and for different reasons.  MTV is striving to capture viewers for its 2010 Video Music Awards broadcast next week by drawing visitors to its site so as to obtain virtual replicas of celebrity accessories and fashion items - Beyonce's diamond ring on Mall World, for example.  H&M, on the other hand, has tried to lure enthusiasts of MyTown (a GPS location-based game that involves buying and owning your favorite local shops, restaurants, and hangouts on your iPhone) to various locations near H&M stores to earn points that could be used to purchase H&M branded products.  Why am I not excited about the prospects of these sorts of campaigns?  In my view, they amount to not much more than putting the company first and dangling the appropriate carrots to lure consumers to their brands. As far as I'm concerned, that's not connecting with consumers, that's capturing sales (or viewership, in the MTV case).

Other companies have begun to offer virtual giveaways, not to chase revenues, but to attract and develop consumer loyalty.  Last December, McDonald's glommed on to the real-world success of James Cameron's Avatar not only by giving out Avatar-themed toys in their Happy Meals, but by developing an augmented reality-based virtual world, enabling kids to interact with the movie's characters.  US purchasers of a Big Mac received packaging with one of 8 different Avatar 'Thrill Cards" attached.  When a card was placed in front of a Web cam, participants were able to use McD Vision augmented reality software to interact with the jungle landscapes created for the movie.

Like H&M, Volvo chose to participate in the virtual marketing arena through MyTown - by having people check into a location such as a garage or auto dealership and opt to receive a virtual sedan, a Volvo steering weel, tire or Volvo iron mark - its logo. According to Emily Garvey, brand manager of Volv's digital media agency Media Contacts, the campaign's objective is to capture the attention of auto enthusiasts for its new midsize sports sedan, the 'All New 2011 Naughty Volvo S60 Sedan,' in order "to get people excited and change brand perception so people think of it as a sporty, fun and good-looking car."

It remains to be seen what the impact of virtual merchandising is on brand awareness, image, and sales.  And there were some important caveats in the Times article that marketers need to strongly consider before engaging in this approach.  Ravi Mehta, from the social gaming platform provider Viximo, offered this key to success:  "Branded virtual goods have to be identifiable and have a real world relevance.  They are driven by the relevance to the purchaser.  Paris Hilton has people who buy her virtual goods because they are fans and want to identify with her, her hair, her place in pop culture." (Poor people.)  And Chris Cunningham, from Appsavvy, reminds us about the importance of fit: "A game that appeals to females isn't the right place for ads aimed at men.  Or a site where people try on clothing, that's not for a car company."

A couple of recent studies indirectly attest to the potential success of these virtual marketing campaigns.  An ExactTarget analysis reported today at eMarketer ('The Thin Line Between Liking a Brand and Liking Its Social Marketing') clearly shows that social brand followers are clearly motivated by promotions, freebies, fun and entertainment, and exclusive content.  But equally important, and a point that shouldn't be ignored, is that there are other more personal motives underlying fans' attractions to brands, such as showing off the brands and products they support to their Facebook friends.  I imagine this won't go unnoticed by virtual brand marketers, and efforts will be made to somehow integrate their virtual goods promotions within Facebook, Twitter, MySpace, and other social networking sites.

Finally, researchers at the University of Barcelona are experimenting with ways of further integrating virtual and real worlds.  Christoph Groenegress and his team have developed a system that enables people to unconsciously relate more intensely with virtual characters, through the use of sensors and wireless devices that convey real-time physiological measures, perspiration, etc.  Groenegress explains, ""We maintain that the linking of subjective corporal states to a virtual reality can improve the sensation of realism that a person has of this reality and, eventually, create a stronger link between humans and this virtual reality."  Read more about this brave new world here.

Back on planet Earth, I think virtual marketing holds some interesting potential for marketers, especially when the attractions from the consumer point of view are added value, brand prestige, and the opportunity to gain further intimacy and connectedness with the brand.  In practical terms, I like this summary statement from the MobileMarketingWatch blog:

"It’s a perfect example of the power of location, mobile and highly relevant offers to engage users on a whole new level.  The monetization models are still very much evolving on LBS apps like MyTown, but the future looks bright if brands and the apps themselves harness the power at hand effectively."

Definitely.  Just keep it free.  If a firm wants me to buy a virtual product, my response is simply, "The check is in the (virtual) mail."