Marketing Fanciful Items in the Lands of Make Believe

Marketing Fanciful Items in the Lands of Make Believe
By ELIZABETH OLSON
INTRIGUED by the willingness of millions of consumers to pay real money for things that do not exist, some large companies are testing whether they can raise awareness of their brands — and sell more actual goods — by creating and offering their own pretend merchandise.
Volvo Cars of North America, the clothing retailer H&M and MTV Networks are among the diverse brands entering the market for virtual goods — the make-believe items offered on social-networking games, smartphone apps or fantasy Internet sites.
“It’s all about constant connectivity. People live in real time, and established brands have to find ways to keep in touch,” said Marshal Cohen, chief retail analyst for the NPD Group, a market research company.
“Brands are beginning to dabble in reaching out, especially to the under-40 crowd — many still can make discretionary spends,” Mr. Cohen said, referring to the consumer.
So far, the virtual goods market largely consists of micro-purchases. Consumers typically pay $1 to $3 while playing games like FarmVille or Mafia Wars, both created by the social-gaming company Zynga, to get a jump on game rivals. Users also can give a gift, like flowers, or build a collection of items — just as collectors do in real life.
Those impulses will be worth nearly $2 billion in revenue or more this year, according to ThinkEquity, a financial research firm in San Francisco. Its analyst for new media and games, Atul Bagga, said his research found that the market could reach $2.6 billion next year.
Social game creators like Zynga, which said it made some $100 million last year, mostly from purchases of its virtual goods and game currency, are cashing in on a phenomenon that has flourished in Asia and is growing in South America and the Middle East.
Initially, virtual goods buyers in the United States were typically playing in online fantasy worlds like Second Life and IMVU, which generate nearly $1 billion annually from player purchases of furniture, homes, clothing and accessories for their online avatars.
In addition, teenagers are avid buyers of branded goods offered by music performers like the hip-hop artist Snoop Dogg, who has made about $250,000 since mid-2008 selling items like virtual Dobermans, according to a spokesman for his virtual goods business.
But Volvo, which is based in Sweden, and other corporations are not chasing revenue. Some companies are giving away virtual items, in exchange — they hope — for attracting and developing loyal customers.
In Volvo’s campaign, which began Sept. 1, the carmaker will try to revamp its reliable but staid image by offering virtual goods on MyTown, the popular iPhone app whose players buy real estate and collect rent on properties. This location-based game attracts more than two million players, according to its creator, the Silicon Valley company Booyah.
•
MTV has a different goal. The network wants to drum up viewership for its 2010 Video Music Awards, on Sept. 12, by giving away virtual replicas of celebrity accessories and fashion items, like the singer Beyonce’s diamond ring on Mall World, a style and fashion-oriented Facebook application for women. Some 400,000 people visit the site monthly.
The clothing retailer Hennes & Mauritz, better known as H&M, is planning a virtual goods campaign to follow its foray in March on MyTown. That campaign showcased its collection of denim and blue garments, called the Blues, and encouraged users to visit an H&M store to buy pieces they liked.
The company declined to talk about its new campaign, but during its first effort, some 700,000 MyTown players checked into game locations like hair salons and spas near H&M stores and earned points they could use to acquire branded items.
To succeed, “branded virtual goods have to be identifiable and have a real world relevance,” said Ravi Mehta, vice president for products at Viximo, a social gaming platform provider. “They are driven by the relevance to the purchaser. Paris Hilton has people who buy her virtual goods because they are fans and want to identify with her, her hair, her place in pop culture.”
Companies have to make sure that the site or game has a social activity that fits, said Chris Cunningham, chief executive of Appssavvy, a company in New York that connects brands and advertising agencies to social media applications on Facebook, MySpace, the iPhone and other outlets.
“A game that appeals to females isn’t the right place for ads aimed at men,” Mr. Cunningham said. “Or a site where people try on clothing, that’s not for a car company.”
Volvo chose MyTown, said Emily Garvey, brand manager at Media Contacts, the digital media agency for Volvo, because “it is a location-based game, where people check into a location such as a garage or auto dealership and opt to receive a virtual sedan, a Volvo steering wheel, tire or Volvo iron mark — its logo.”
The carmaker wants to garner attention, and buyers, for its new midsize sports sedan, which it calls the “All New 2011 Naughty Volvo S60 Sedan.” Volvo is trying to “attract auto enthusiasts — who are about 60 percent men — to get people excited and to change brand perception so people think of it as a sporty, fun and good-looking car,” Ms. Garvey said.
Volvo declined to disclose the amount of its spending on the 30-day campaign using virtual goods. Last year, the United States branch of the carmaker spent almost $47 million on advertising, according to Kantar Media, which tracks such spending. As of the first quarter in 2010, Volvo’s spending slowed to almost $5 million, compared with nearly $8 million in the same period last year, Kantar found.
•
Since virtual merchandise is in its infancy, there are few solid measures to pinpoint how much campaigns offering the pretend items build awareness, enthusiasm or loyalty to a company and generate real-life purchases.
Appssavvy tried to gauge such outcomes by studying the campaign of one of its clients, Powermat, a company that sells wireless chargers for mobile phones, e-book readers and GPS devices. The company, with offices in Michigan and Israel, conducted a 10-day campaign in May and June on MyTown to build familiarity with its product. Participants could receive points to use on MyTown, and also enter to win a wireless charger.
In a study of 2,900 MyTown players, some recruited before the Powermat campaign was started and others who received its game points, Appssavvy found 25 percent knew about Powermat before the campaign and afterward 70 percent said they were aware of it.
And the study found the consumers’ intent to buy a Powermat charger rose by about one-third, to about 60 percent, compared with the period before the campaign.
“MyTown provided a compelling experience, an online network and a fun and engaging experience,” said Beth Harrison Meyer, Powermat’s vice president for global marketing.