NEW YORK South Korea is only a half day ahead of U.S. time zones, but it's light years beyond in certain technologies.
Tapping into some of that country's know-how, San Francisco-based Double Fusion, which places dynamic advertising in video games, has entered into a partnership with the American version of the Cyworld social network (which is headquartered in Seoul).
As part of the deal, Double Fusion will serve the 11-week-old Cyworld USA community with permission-based brand messages from blue-chip and upstart companies.
A combination of MySpace, Flickr, Second Life and AIM, the online service lets users create a virtual 3-D mini room where they can connect with others and settle in with branded furnishings, decor and digital gizmos.
For example, users might deck their pixilated walls with a flat-screen TV from a consumer electronics manufacturer, or their avatars might sport a pair of skinny jeans with a not-so-skinny logo.
Yet, unlike free-for-alls like MySpace, Cyworld is a closed, secure platform where adornments come with a price tag.
For customers, this can mean spending "acorns" (the internal currency that can be purchased with real money) or participating in incentive programs that subsidize branded merchandise.
For example, if users opt to display an ad on that flat screen when friends visit their mini room, they may find themselves stashing acorns and balancing their e-commerce budget.
"We're trying to tie the virtual economy to advertising by not only giving users the opportunity to buy branded products but by paying them acorns to see other brand messages," said Jonathan Epstein, president and CEO of Double Fusion.
"Virtual economies are a new world, so we'll be testing what are the right levels to set," he acknowledged.
The partners plan to take stock of the site's performance next summer, before the start of the media planning season in September and months until the May 2008 upfront, said Michael Streefland, vp of marketing and sales at Cyworld USA.
So far, the business model for Cyworld's Asian sites—serving China, Korea, Japan and Taiwan—has been overwhelmingly transactional, with 85 percent of revenue derived from sales of digital items and the balance from advertising, Streefland said.
He expects to see nearly the reverse in Cyworld's stateside venture, given this ad-weaned nation's preference for free entertainment.
In both regions, however, Cyworld's core audience of 14-24-year-old females is receiving products with open arms, according to Streefland.
"Brands are very much part of a teen's life these days," said Epstein. "They invest a certain amount of their identity with the brands."
Epstein noted that allowing "the audience to choose to have [products] as part of their persona and part of their mini room is a more powerful and innovative way to engage them than just through an ad."
The in-game ad company has placed advertising in such titles as sports-themed PowerFootball and ManagerZone since debuting in Israel in July 2004. (It rolled out in the U.S. in November 2005.)
Game publishers served by Double Fusion's ad technology include THQ, Midway Games, Ubisoft Entertainment and Enlight Software, among 13 others.
Cyworld USA is Double Fusion's first social networking client.
Social networking is a thriving affair, with the top 10 U.S. sites (which include MySpace, YouTube and Blogger, but not Cyworld) growing by 47 percent annually, per Nielsen/NetRatings. The research firm tallied the nation's social network users at nearly 70 million as of April.
Double Fusion, wearing its agency hat, will also seek to attract new sponsors for the social networking site. According to Epstein, it is roughly a month into "deep discussions" with marketers from the entertainment, wireless communications and retail sectors, and he expects to clinch a number of deals by January.
The fact that Cyworld is "known for its effectiveness in protecting privacy makes it a more marketable environment for promotions," said Epstein.
Streefland agreed. "It's very appealing—advertisers can present channels that are protected," he said, adding that content is vetted by overseers who also help establish rules of community conduct.
"Every item on the site has a capacity for being vetoed," Streefland noted.
Cyworld USA chose Double Fusion over rival Microsoft shop Massive, because, as Streefland noted, "it was the right size" and "a smart marketer."
More compelling still was Double Fusion's ability to change advertising on the fly, said Streefland. "If you're hard coded into something, and if something doesn't work, [you] lose."
He further explained that Double Fusion's tools to target customers by demography, geography, browser type and other searchable criteria complemented Cyworld USA's agenda to customize both online and offline marketing programs, including regional launches.
The partners first met in August through the auspices of Cyworld's United Talent Agency representative, Brent Weinstein. Epstein had formerly worked at the Hollywood agency.
Cyworld is owned by SK Communications, a subsidiary of South Korean wireless carrier SK Telecom. Since launching in 1999, Cyworld has allegedly attracted more than 20 million members.