Leading virtual goods agency Virtual Greats recently announced a partnership with SKECHERS to distribute the footwear brand’s items in many online destinations such as Meez.com and WeeWorld. We also had a chance to catch up with Founder and CEO of Virtual Greats, Dan Jansen, about his thoughts on the new deal. More after the jump.
SKECHERS’ 2011 collection is being digitized and will be available in online branded boutiques. For now the brand will only offer aesthetic virtual goods with plans to release functional goods such as avatar performance enhancing gear in the future. The following is our chat with Dan.
1. What sort of metrics is SKECHERS looking for lifts on?
We can’t talk for SKECHERS, but our brands are traditionally looking for incremental revenue, more authentic engagement with consumers, flash marketing support, trying to drive traffic for real world goods and consumers going into real world stores, as well as to increase brand recall and awareness.
While the revenues are still scaling, and are therefore small relative to current real world product sales, there is minimal effort involved, no inventory concerns, and vast growth ahead.
Virtual goods will help to lift many of the existing brand and retail metrics: revenue, profit, free-cash flow, unaided recall, awareness, traffic, loyalty and life time value. There is also the potential to more accurately target the user base and therefore improve the overall demographic quality of these metrics.
2. How does this partnership impact the bottom line on brand awareness or recall for SKECHERS?
SKECHERS is one of the first shoe companies to enter the space and have just launched in Meez.com and WeeWorld over the past few days and weeks, so it is still too early to speculate on the bottom line impact. However, Virtual Greats is continuing to work with SKECHERS to launch across two additional platforms in the next quarter. We anticipate having a strong brand like SKECHERS in 10-20 platforms relatively soon.
3. What else does SKECHERS hope to get out of being involved in the virtual goods marketplace?
Since the partnership and the virtual goods just recently launched, it is still too early to comment. But, we are hoping for, and expect, SKECHERS to experience growth from being introduced into the virtual goods marketplace.
Our brands look for this growth to occur directly (i.e. new revenue and store traffic driven from social media) and indirectly (i.e. better sales resulting from enhanced brand images and associations). For example, if the shoes measurably improve an avatar’s appearance or performance in the virtual world, maybe the physical product will help the consumer in the real world as well?
The social media space is very attractive for brands like SKECHERS and Virtual Greats helps provide easier and more direct access to those platforms for brands. The virtual goods marketplace is a relevant avenue for brands to explore, especially if they are targeting a younger demographic.
4. What is the value add that Virtual Greats brings to SKECHERS?
The value-add that Virtual Greats provides is an incremental revenue stream (i.e. this is a whole new untapped product category for brands), a promotional opportunity for these brands at zero cost, and a creative expression opportunity (i.e. while we are inspired by the real world, we are not constrained by it…maybe these virtual shoes can make you fly?).
Because social media is very fragmented with thousands of platforms, many of which are not appropriate for brands, Virtual Greats also helps activate brands in the best social media platforms that will protect the brand and help with monetization. Coordination of promotional campaigns, both in world and in the real world, are also an important focus.
The largest player in the social media marketplace for virtual goods still only has a few percent of the market. Virtual Greats provides scale and efficient time to market for brands like SKECHERS.
In general, Virtual Greats offers knowledge of the space, scale, time to market, free promotional opportunities, and creative expression.
5. Where does Virtual Greats see the space heading, in general, for brands?
We see brands accounting for over 30% of the now $4 billion, and what will be a $20 billion, category. It is a huge new revenue opportunity and a great advertising opportunity.
We hope to continue to bring great iconic brands into the social media marketplace. Whether it is through Branded Virtual Goods (BVG) where consumers are buying goods for an avatar/player or by providing a better advertising model for those brands through Integrated Virtual Goods (IVG), where brands can create items in these worlds that are brand reinforcing.
The social media marketplace provides the opportunity to reach new customers, markets and demographics very quickly and inexpensively. We see this market evolving to also become a new product development and or research product testing opportunity, where brands will be able to test and try out different products in a virtual world and test
directly in front of a target demographic very quickly, cheaply, and effectively. And, eventually, virtual goods will be bundled with real world goods and vice versa, so that each marketplace will support and feed into the other.
Virtual Greats connects celebrities, artists, intellectual property owners and brands with a new generation of fans and consumers, unlocking value through digital representations of real world content in online communities. The company’s current clients include Snoop Dogg, Paris Hilton, Domo, Garfield, Warner Bros. Television, Universal Pictures, the NBA, Skechers, Rocawear, as well as many others. Check out the site here.