PR will lose Social Media to Advertising Because of Sex

On Friday, I attended the Virtual Goods Summit, and the impact that they are having on the online worlds. As noted by Eric Rice, it appears that I was the only PR person there, that I could see - and that says quite a lot - that PR, advertising and marketing might just not get what is happening online, and only wants things that they can control.

That, in itself, is a big discussion on whether or not the marketing disciplines - which includes PR - are really ready to take the step forward and embrace what is happening out there, or is it still a control issue. This was part of a Twitter conversation yesterday with Vaspers - where I noted that "yes, communities are hostile to marketing, but that's bc marketing has been unable to change. The paradigm needs to shift." That's one of the key points - the market is changing, but the marketing is not changing nor do they seem to want to change.

But, my thoughts on the VGSummit need to start with this - virtual goods do not necessarily mean virtual worlds; in fact, there are more opportunities in social networks and virtual gifting – think Facebook, MySpace, HotorNot, LiveJournal V-gifts – more so than Second Life. Yes, Second Life and other worlds are where virtual goods and commerce became big, but this has moved way beyond that.

The other thing to note is that there are massive opportunities in game networks – think Habbo Hotel, QQ.com in China – that allow people to sponsor karts, or other products. Habbo Hotel noted that they sell more furniture than IKEA, and Nexon has sold more Mini Coopers than BMW – granted, price has a lot to do with both, but there is the opportunity for branding.

What does this mean for companies? Easy – it means there are a lot of branding opportunities with gifting. Right now, you can buy a virtual rose on HotorNot for $10, and the recipient sees the flower for two weeks before it dies. On Dogster, you can buy a virtual dog bone, and the recipient will also get a real dog treat in the mail (Perry would appreciate that). CherryTap has a ton of virtual gifts you pay for in cash that hits its target adult audience. You also have to wonder how much someone is willing to pay for exclusive gifts. Could HotOrNot get away with that $100,000 ring or flower? If the price is disclosed, someone might fork it over to impress someone (a little bit too much, maybe). But, there is the value and perceived value.

Prior to the event, one of the organizers of the conference, Susan Wu, wrote up about the market for virtual goods in TechCrunch. In it, she noted how she is a gamer involved in some of the game communities that rely on virtual goods, but that the market is huge for this type of opportunity.

And, well, who is going to work in these communities? It is a branding exercise - a la Second Life - but one that has greater potential for upside, as well as greater potential for backfiring.

And, it's about becoming part of a community, and adding value to the community - something that is oft forgotten. Think of what could be done, and how it could be done in a smart and transparent way - but, remember that: smart and transparent.

Just looking at Facebook, imagine:

• A cookie company works with Facebook to make a premium gift - $2 or $3 – that is in the shape of a chocolate chip (or other type) of cookie. As a friend, you gift that cookie to another, and they also get a virtual coupon for a free real-world cookie goodness.
• You see a friend is sick on Facebook because they have updated their profile. You purchase a Warhol-esque can of chicken noodle soup, and also are able to download a coupon for an actual serving of the same soup to take to your friend (or send it to them, if it’s separate campuses).

Yes, these ideas are based on the fact that the majority of users on Facebook are still college students, and those are the audiences that many companies are trying to reach. But, those are just some of the possibilities that extend into social networks and communities without being overly obtrusive and are done in such a way that you are not alienating people in those networks that are also making gifts.

Outside of the virtual worlds, there are many opportunities for virtual gifts that fit the audience of the products and clients, and will be a good fit for the social networks.

And, for other great coverage of the conference, check out:

• The Deal's VC Ratings: 1, 2, 3, 4
• Jessica Mah
• Virtual World News: 1, 2, 3, 4, 5
• Futuristic Play: 1, 2

Tags: facebook, habbo hotel, susan wu, vgsummit2007, virtual goods summit, virtual goods, social networks, game networks, public relations, PR, marcom, marketing communications, communications, marketing, advertising, branding, Second Life, Linden Lab, HotorNot, LiveJournal, Habbo Hotel, QQ.com, Nexon, Ikea, BMW, Twitter, Eric Rice, Vaspers, Nexon.net, Dogster, CherryTap