ROI 101 & Stickiness of Second Life?

I have blogged long and hard about the future of the metaverse and particularly how key sectors can make use of them as a functional tool. Education are already motoring, social activity is still the key driver, artists use it for music, video and performance and buying/selling ‘user to user’ businesses are still strong. One area that has received most contraversy is of course ‘real brands’, a so called exodus and ‘really’ what is the ROI. I published over at my MUVEDesign VW development site, a first stab at where I think we are on the Gartner Hype Curve for social virtual worlds (not game worlds!). Here it is again (linked from my flickr account).

I do believe we are probably at the lowest ebb for brands in second life. This is bourne out by the SL brand stats I founded over at The Project Factory – you can see the dwell traffic for most brands outside the top 10 are exceedingly low. That doesn’t mean its game over. Far from it, as the lessons are learned and now it is time for companies to get it right, by avoiding developers that focus on build it and run (yes they are still here) and deliver experience, social interaction and relevance. I cover this in a lot more detail in posts back in 06-08!

Andy Mallon over at the Social Research Foundation has published a nice Annual Surver PDF report which is an inworld survey of Second Life users who ‘know’ second life – vs the tourist reports we often get from fly-by-night journalists or Gen Y social marketeers who don’t get it! Heres the blurb on the report (seeing I use the nice charts below!) Gotta earn my keep 🙂

The First Opinions Panel is the largest consumer research panel in Second Life with 10,000 members from newbies to the most active and involved “residents” who, Own the most virtual land, Spend and earn the most money there, Spend the most time there, an average of over two hours a DAY!, Run the most groups. Over 1,000 of our members own one or more groups in SL, many with hundreds to thousands of members. These are the leaders in Second Life. They are studied by over 33 demographic and psychographic attributes from both their real and Second life.

Firstly the longevity for users in Second Life. Remember that at the moment there are between 60-75 thousand users inworld at any moment and 31% spend an average of TWO HOURS a day in Second Life – 2/3 spend at least ONE hour a day! The next question is what is the churn rate, how long do people actually hang around using the service?

So Second Life is perhaps not ‘for life’. It seems many folk do tire of it at around 18 months with only around 20% going for longer than two years. Again this isn’t a real issue for brands as the culmulative user hours across the board puts Facebook, YouTube and other social spaces to shame.

This culmulative dwell is also on the increase. Get a user loyal to your brand and you may have them for longer than a year. Which seques nicely onto how do those inworld for these long periods actually want to interact with brands…

The item that stands out for me is ‘product development’. This has been consistently under utilized so far and there is still a big gap in the virtual marketplace for a big brand to really go beyond designing a hotel layout or fantasy coke machine. I know one brand will be stepping up to the mark this year and demonstrate how powerful this aspect can be. One item that is missing for me is brands ‘presenting’ to inworld inhabitants and facilitating ‘Ted talks’ like events rather than that being the domain of academia only. The SRF published a few choice statements from savvy inworld folk that reinforces several of the key points I and others have been bleating about for years.

• “Don’t advertise to me – give me something that does not waste my time – make me want to learn more about by entertaining me, informing me or educating me. And make it cool.”
• “Don’t just expect to do normal marketing – you have to hold events and interact with people”
• “Bringing real world products inworld is the next inevitable evolution.”
• “SL is a great way to reach those whom may need services that you may not reach otherwise. ”
• “Real life companies tend to create great places but just leave them behind. They should assign some people to stay online and accommodate those people who visits their places in Second Life.”
• “You have to engage people in SL, not simply put up marketing messages and expect residents to flock to you.”

The survey goes beyond well trodden areas too by asking about their Real Life Primary Job and how Second Life has been an enabling tool for it. It is no surprise that learning, collaboration and meetings are high on the list but what will become more and more significant will be real world recruitment – gauging a persons abilities and/or personality inworld. Kelly, Accenture and others are already versed in this space.

With the level of doom about brands in second life this question goes to the heart of what activities are on the decline. So looking at this chart the shorter the bar the better and running RL businesses in Second Life is the least in decline. (It is not clear from this chart if surveyed folk actually answered all questions so will leave it a little to your imagination as regards a true split here)

As a finale and related to the above, Clever Zebra’s Virtual Worlds for Business 2009 is now out as a free publication looking at VW for business applications. Unsure of the ‘enterprise readiness’ of all ten worlds author Nick Wilson highlights companies that are already sold on VW for meetings at least – which is slightly contradictory to him saying, expect to be logged out of meetings regularly? Anyway in the free report here are a few quotes from the document:

Dell “Employees report that they are more engaged in the 3D environment than on a conference call and that they feel more involved and apt to participate. An added side benefit is that this pilot project affords Dell the opportunity to experiment with moving toward a greener future where more and more employees work from home, not the office.”

IBM “IBM estimates that they saved approximately $250,000 by taking the conscious decision not to hold the Virtual Worlds for Business conference (normally a 2.5 day in person meeting) physically this year, and more for the Annual General meeting (normally a 3 day event for 400 Academy members and affiliates).”

Sun “Sun were able to transform an otherwise exclusive, expensive event into an inclusive inexpensive one open to a much wider audience of junior engineers who would benefit from the real learning experiences provided in a virtual setting. They were even able to get Hal Stern, Snr VP Systems Engineering to come in and do 2 full chat sessions exclusive to the virtual component of the 2008 CEC.”