Electric Sheep Co.'s Valerie Williamson refers to virtual worlds as Web 3.0, since they represent the next wave of the Internet in which marketers can market not only to early adopters but also to a younger demographic that favors multiuser experiences. This combination helps marketers gain real-world-like experiences and results. A virtual world is a computer-based, simulated environment in which users inhabit and interact via avatars. While virtual worlds have been around since the early days of computing, Second Life was the first Web-enabled virtual world to catch on.

Since virtual worlds require users to substantial invest time upfront to participate, they might not have the same level of growth or reach as Web 2.0 interactive formats. For some younger demographics, this barrier is less of a hurdle. In September 2007, eMarketer projected that the amount of virtual world users ages 3 to17 would increase to 20.0 million by 2011.

Some marketers may view the highly publicized departures of major brands from Second Life as signaling the failure of yet another fleeting online experiment. Yet a broader group of virtual environments continues to evolve and thrive, particularly those targeted at children and teens, such as Club Penguin and Habbo. During Q1 2008, over $184 million were invested in 23 virtual-world-related companies, according to a Virtual Worlds Management study.

In this current phase of virtual worlds' evolution, companies are utilizing virtual worlds to get tangible results from collaboration across their organizations that allows employees to work together, regardless of silo or functional group. The results of these efforts tend to stay below the radar, says Rivers Run Red CEO Justin Bovington, who's currently working with major consumer-packaged goods brands and other enterprise-focused implementations.

Seven Marketing Uses for Virtual Worlds

By creating a simulated space for interpersonal interaction, virtual worlds enable marketers to engage a wide range of users. These users may be in diverse locations or difficult to target with more conventional marketing approaches. Here are seven methods marketers are currently using:

• Allow trend-spotting. For style- and image-oriented companies that need to be on top of the latest developments to source new ideas, especially those targeting early adopters and hip teens, virtual worlds provide a great testing ground.
  
  
• Collect improved brand insights. Marketers can use a virtual space to gather information about their brand and related behaviors that they might not be able to with traditional research methods.
  
  
• Gather consumer research, especially related to design concepts. While traditional focus groups enable marketers to get feedback from a small representative group of users, a virtual world test area taps into a self-selecting base of geographically dispersed subjects, yielding broader input at a lower cost than would be possible in the real world. For example, Pontiac created Motorati Island in Second Life to learn more about the muscle car culture.
  
  
• Provide educational forums. Companies and organizations such as NASA use virtual worlds to provide an enhanced educational experience that a traditional classroom might not be able to deliver. This can translate to expanding an organization's reach beyond its physical location, as the Louvre does with its virtual tours.
  
  
• Expand live events. A wide range of celebrities and organizations use virtual worlds to extend their events. This can be done by providing a means to stream the event for those who can't attend in person or providing some other form of added engagement, such as a game. Book publishers have discovered that virtual book readings enable authors, particularly those who don't do book tours (like Dean Koontz), to connect with their readers.
  
  
• Extend brands, in particular experiential brands. For these brands, virtual worlds present a means to extend their reach in terms of another media format and time-shifting. As viewers spend less time watching television and more time online consuming content, this becomes important for entertainment brands and enables them to extend their audience in another medium, as "CSI: NY" did with Second Life version.
  
  
• Leverage new advertising formats. Virtual worlds provide brands with new forms of advertising, from virtual billboards to product placements that mimic real-life experiences. This advertising reaches early adopters (a younger demographic) and produces measurable brand interactions, such as Altoids' sponsorships of the "L Word."

The ways to use virtual worlds for enhancing brands has grown beyond the initial quest for buzz. Like any other form of interactive marketing, it's important to consider how to leverage the strength of your virtual world marketing campaign in the real world.

Next: seven tactics to bear in mind when using virtual worlds and seven metrics to measure your success.

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