Virtual Reality Advertisers Seem Hellbent on Repeating Second Life Marketing Mistakes

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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Comments

[melponeme_k]

Pump and Dump. That is what this is all over again. Since everything was deregulated, nothing in finance is reliant on building reliable cash flow and steady growth. Everyone wants the bubble. They want to pump it and dump it.

They did it for the web in late nineties/early 00's, they did it for VR, they did it for games etc. Now we have come full circle and they are doing it with those ridiculous boxes they expect fools to put on their heads.

I, personally, will wear nothing that cuts me off from my surroundings and puts myself and my family in danger. In danger of accidents, in danger of physical vulnerability to others, most importantly real danger of psychosis.

But I'm sure the pump and dump will work as it has done before. All we'll be left with is the detritus to sift through to find something worthwhile.

Plus they are still trying to falsely sell the story that SL is almost dead. Which they have to do in order to create the illusion of any kind of market for themselves. Second Life, like WOW in games, pretty much has the whole market to itself. And I'm now almost certain that anyone who has the ability and the desire to play VR is already in SL. Any contenders would have to be damn good to kill SL. And so far, none of the past contenders have been able to dent it.

[OU812]

@ melponeme
"I, personally, will wear nothing that cuts me off from my surroundings and puts myself and my family in danger. In danger of accidents, in danger of physical vulnerability to others, most importantly real danger of psychosis."

You nailed it! That is so true.

"Any contenders would have to be damn good to kill SL. And so far, none of the past contenders have been able to dent it"

Facebook creates a world to take on linden lab it will fail just over privacy rights alone as Faceflop.

[Iggy]

VR Hype? New shiny. Of course Philip is excited. That's his job.

I was excited in 2007. I should have known better, being older that Philip.

In '68 I was convinced that a Howard Johnsons would be in orbit. I was convinced that I'd have a flying car by 2001 and in the meantime, I was convinced that by the time I got my license in 1976, I'd be driving a 600-horsepower 1976 Pontiac GTO burning 10-cent-per-gallon hi-test.

Yeah. Could be wrong this time! But I doubt it...

[Shockwave Yareach]

I personally don't mind headsets that isolate you. When you go to the movies, do you complain about the darkness? The same "danger" is present in a movie theater that's present wearing an HMD.

My biggest gripe has been the terrible performance up till recently. It is getting better at last. But my beef has been that you couldn't immerse yourself into the VR world because of poor picture and head tracking. I could not care less I have a thing on my head. And seeing the crazy stuff American sports fans put on their heads, I doubt most people won't care either - especially when an entire world that can be just what you want it to be is the prize. Sick of living in a congested city? Log into your own 400 acre plot in the mountains every day after work...

But first the quality of almost being there has to exist.