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Wednesday, 7 January 2015

virtual reality + marketing from rw

by: James Wagner Au

Tuesday, January 06, 2015

Virtual Reality Advertisers Seem Hellbent on Repeating Second Life Marketing Mistakes

Virtual Reality Advertising Second Life
AdWeek, the advertising industry's main publication, has a cover story on virtual reality as a new marketing platform, and my first thought when glancing at it was, "Welp, here we go again." I groaned further after I read the first two paragraph:
Nancy Bennett is a virtual-reality marketing veteran. (Yes, such people actually exist and are about to become hot commodities among talent recruiters.) In the mid-2000s, Bennett had her avatar boots on the Internet-code-built ground of Second Life, constructing cyber experiences for her employer at the time, MTV Networks. Of course, Second Life never really took off. So with her been there, done that perspective several years later as chief content officer at Two Bit Circus, she does not deal in hyperbole when it comes to the impact the much-hyped virtual reality headset Oculus Rift will have on marketing. Rather, Bennett leans on data. One-third of her agency's new business in 2014 was powered by the Oculus Rift developer's kit, helping grow her 2-year-old Los Angeles digital shop from 15 to 35 employees.

At least two things wrong here:
  • Second Life "never really took off", in great part, because major marketing campaigns that companies created for Second Life met with extremely low levels of engagement. As a result, the entire platform was largely written off by most people in tech, not to mention all the major organizations who wasted their money on that outreach. This failure was largely not the fault of Second Life, as I explained at length at the time, but when esteemed companies conspicuously blow tens of millions of dollars on a platform, people tend to stop listening.
  • Before the SL hype wave ended, Second Life-oriented marketing companies also grew at a rapid pace -- particularly the Metavese Big Three, The Electric Sheep Company, Millions of Us, and the UK studio Rivers Run Red. (As I recall, Millions of US, founded by a colleague and fellow ex-Linden, grew from just him to a staff of dozens in under a year.) But sad to say, that growth soon retracted when advertisers saw poor returns on their SL investment.
What's wrong with virtual reality as a marketing platform? I could go through the AdWeek article line by line to explain how misguided it (mostly) is, but let's just skip right to the TL;DR version:
Virtual reality is not yet a truly mass market phenomenon, won't be for at least 10-20 years, and without that massive audience, marketing ROI will be extremely weak. And for the next few years, VR will mainly be the province of hardcore gamers -- who are historically hostile to outside marketing campaigns.
Yes, Philip Rosedale thinks we'll have a billion VR users by 2021, but that's a forecast on the extremely generous side. For an upcoming article, I recently talked with Michael Pachter, a very well-regarded Wedbush Securities analyst, who had a much less bullish estimate: Under 10 million in 5 years and under 30 million in ten years. In the short term of the next few years, at any rate, early adopters of VR are likely to be hostile or indifferent to external marketing campaigns when they'd rather just play an immersive game. And when those campaigns fail, advertisers will pull their money. And virtual reality, as Second Life was before it, will be in danger of being dismissed as a niche platform.

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