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TV's Alternate Reality: Nets Create Virtual Worlds

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NEW YORK The sun sinks into the ocean beneath an orange and pink sky as a pier fills up with a young, trendy crowd. For Laguna Beach fans, this is a familiar TV backdrop for the scripted reality show's cast of cliquish and catty teenagers. Now, with a few swift strokes of the keyboard, anyone can be a part of it thanks to Virtual Laguna Beach, an online offshoot of the popular MTV series.

With network live ratings down 10 percent this year from fall 2006 and new competition in the form of social media attracting younger demos, the broadcasters have been looking for ways to both retain and grow their audience. Enter entertainment virtual worlds, which nets hope will attract both mainstream audiences and the typically hard-to-reach social networking crowd.

Virtual worlds can attract at least the elusive younger demos, as proven by heavily trafficked worlds like Zwinkitopia, Gaia Online and Habbo Hotel. (In September 2007, the last month numbers were available, they had 4,359,000, 1,344,000 and 627,000 unique visitors respectively, according to comScore Media Matrix.) But with advertisers slow to jump into the virtual versions of TV shows in which they advertise—despite being on the lookout for interactive platforms—it's unclear whether the nets can replicate those success stories.

MTV, which, perhaps not coincidentally, missed out on the social networking phenomenon that is MySpace and Facebook, was the first TV network to delve into the entertainment virtual world space. Virtual Laguna Beach premiered in September 2006 and, since then, the network has launched no less than six additional worlds. Also dipping their toes in with one show each are CBS (CSI: NY Second Life), Showtime (The L Word in Second Life) and the CW (Gossip Girl's Upper East Side).

For the avatar generation, says Matt Bostwick, svp, franchise development at MTV Networks' Music Group, virtual worlds are "as real as anything else in their lives," giving advertisers the ability to establish deep, emotional connections. "You're trying to get people to live this as an extension of their real lives," he says. "If you can get them to do that, the possibilities of integrating brands becomes experiential."

MTV's other worlds are Virtual Hills, Virtual Kaya, Virtual Pimp My Ride, Virtual Real World, Virtual Newport Harbor and parts of the MTV Video Music Awards. But only a handful of advertisers currently have a presence there, including State Farm Insurance, T-Mobile and Universal. When Virtual Laguna Beach—which had 73,000 unique visitors in September, per comScore Media Metrix—launched in 2006, it started out with three, including Pepsi and Secret. Pepsi currently is in talks to renew its virtual world presence; Secret has no plans to reappear.

Pepsi, for its part, had a significant presence with the Laguna Beach property before expanding into the virtual world, including 30-second TV spots, a pre-roll ad on the Laguna Beach DVD and mobile alerts about online content. "The opportunity to take it into the virtual world was attractive to us. It was a natural extension," says John Vail, director of interactive marketing at Pepsi. One of the pluses, he says, was the ability to follow consumers to where they were going: "Laguna Beach consumers consume the show across many different media platforms, and we want to consistently be a part of that experience."

In Virtual Laguna Beach, a user could purchase a Pepsi from Pepsi vending machines. Each can—which consisted of 10 sips—cost 5 MTV dollars. When a can was finished, the user could recycle the can. If he or she did so, they were then offered a Pepsi-branded T-shirt for their avatar.

Pepsi updated its role in Virtual Laguna Beach as its real-world initiatives shifted. For instance, when the brand launched its real-world "Global restyle" campaign, in which can designs change every three weeks, "we were able to go into the 20 Pepsi vending machines populated throughout [MTV's virtual worlds] and graphically change the cans to mirror the ones we have in the marketplace," says Vail.

"What surprised us is how many people have touched the Pepsi brand," notes Tim Rosta, svp of integrated marketing at MTV. "About 85 percent of users in the [virtual] world have actually interacted with that brand. Is it engaging? Yes. Users are interested in replicating what they do in real life."

Bostwick adds that for advertisers, the viral component is another attractive proposition. For instance, he says, MTV research showed that once a user's avatar was wearing a Pepsi-branded T-shirt, others wanted to know how they could obtain one, too. "We didn't make it terribly clear on how people could get these things," he says. "[In that way, it got] them talking with each other about the products."

But without established metrics and no clear sense of what to measure, virtual worlds are still the Wild West. MTV says it can offer advertisers data on the number of interactions users have with a particular brand—according to Bostwick, they even have the technology to measure if an avatar comes within a certain distance of a stationary object—but the value of such interactions remains unclear. At this point, the most value a marketer may get is the immediate P.R. associated with such high-profile deals.

For Secret, according to a Procter & Gamble rep, the decision to participate was akin to going on a reconnaissance mission: "The question for us was, as a deodorant product, what's ... the character and quality of the interaction?"

In Virtual Laguna Beach, the brand leveraged a real-world campaign, "Share your secret," that ran in summer and fall of 2006, for which women posted online videos of their personal secrets. In early November 2006 through December 2006, the brand staged a contest in the virtual world, where avatars "recorded" their own secrets. Users could go to various destinations and view the confessions, then visit the Secret Screening events page, where they could vote on their favorite. The winner won 10,000 MTV dollars.

"We were very pleased with what we learned at the level of engagement we saw," says a rep for the brand, "but we're continuing to try and figure out what [it] means."

The CW, a subsidiary of the Warner Bros. Television Group, recently created its virtual world, Gossip Girl's Upper East Side, for its hit new show, Gossip Girl. (The site had 33,000 unique visitors in September, per comScore Media Metrix.) There are no advertisers attached to Gossip Girl's Upper East Side as of yet, but Lisa Gregorian, evp, worldwide marketing at Warner Bros. Television Group, is gung ho about the possibilities. Advertisers can get "a lot of bang for their buck," she says, admitting that "showing how you have integrated the brand and making the program accessible within an integrated marketing program is critical to the success" of the experience.

In late October, CBS began targeting an older demo when it launched CSI: NY Second Life, after weaving Second Life into two episodes of the TV show. In the first episode, Detective Mack Taylor (Gary Sinise) entered Second Life to pursue the suspect of a murder. (The second episode airs in February.) The CSI virtual world includes forensic games and a murder mystery. Quincy Smith, president of CBS Interactive, says the net has other virtual worlds on the horizon, including more built around the CSI franchise.

CBS' sole virtual world advertiser is Cisco Systems, for its TelePresence technology that allows people to video conference in on HDTV. On CSI: NY, the CSI staff uses it to conference with experts. In the virtual world, it appears as a background prop.

"We view virtual environments as another communications tool like e-mail and instant messaging. ... It's another way to collaborate," says Christian Renaud, chief architect, networked virtual environments, at Cisco Systems. Given the popularity of the CSI franchise in footprint and ratings, Renaud asks, "how could you not be interested?"

While no one at the networks would speak about pricing, Sibley Verbeck, CEO of Electric Sheep Company, which creates virtual worlds for nets including MTV, CBS and Showtime, and which partnered with CBS last February, says entertainment virtual worlds are "clearly having an effect" on the price of an integrated package. "There's no question that the networks have been able to charge more because they offer this experience," he says.

And since it's an experience offered in an environment that has context and meaning to loyal viewers, nets feel it could be their ace in the hole. K.C. Estenson, vp of digital media for the Disney-ABC TV group, which he says is dabbling in the entertainment virtual world space, says, "When you cast a wide net inside a virtual world, you get a lot of people who would never be interested. Here, we know exactly what we are delivering. And we think that there's a high likelihood that when the right advertiser comes in, there's going to be a heavy level of engagement with the brand."