73 Chapter 4 Advertising in Virtual Worlds: Facilitating a Hierarchy of Engagement Paul R. Messinger University of Alberta, Canada Xin Ge University of Northern British Columbia, Canada AbstrAct This chapter describes how virtual worlds can be used for advertising and other communications to consumers. To help conceptualize how virtual worlds enable enhanced forms of communications to consumers, the authors introduce a conceptual framework which they call a hierarchy of engagement in advertising communications. They argue that virtual worlds facilitate deeper levels of engagement in this hierarchy. The authors then describe, from a practical standpoint, how to manage the traditional elements of advertising campaigns—message, media, timing, intensity, and budget—in the context of virtual worlds to help achieve deeper levels of engagement, which they argue lead to greater brand recall and loyalty. To put these points in context, they begin with a short history of gaming and social computing. To assist with selection of virtual worlds in which to conduct communication campaigns, the authors present a typology of virtual worlds and provide a description of some extant virtual worlds using this typology. The chapter concludes with a description of needed future work to harness virtual worlds for customer engagement. IntroductIon tions. According to one estimate, 20 to 30 million people regularly participated in virtual worlds in Virtual worlds constitute an increasingly promi- 2006, spending an average of almost twenty-two nent communications and entertainment medium hours per week within these spaces (Balkin & in the lives of many adults, teens, and children. As Noveck, 2006). For those who participate in them, such, virtual worlds constitute an important new the names of these worlds are household words, vehicle for advertising and customer communica- including adult worlds, such as Second Life, World of Warcraft, Kaneva, and Entropia Universe; DOI: 10.4018/978-1-60566-792-8.ch004 children’s worlds, such as Webkinz, Neopets, Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. Advertising in Virtual Worlds Club Penguin, Habbo, Whyville, TyGirlz, and Cola, Starwood Hotels, and the NBA. In fact, RuneScape; community-specific worlds, such some authors even suggest that virtual worlds as Cyworld and HiPiHi; media-focused worlds, and the 3D Internet will become as important to such as vSide; and educational worlds, such as companies in five years as the Web is now (Driver ActiveWorlds, there.com, and Forterra Systems. et al., 2008). The challenge for businesses and other organiza- tions is to learn to harness this new communica- Purpose of this chapter tions medium. A key distinguishing feature of virtual worlds Given the rapid development and significant po- is that people interact with each other through tential of virtual worlds as a venue for targeted, digital 3D anthropomorphic characters called interactive marketing communications, companies avatars. In any given virtual world, thousands of need to learn to avail themselves of the new commu- people can interact simultaneously within the same nication opportunities that virtual worlds offer. Yet, three-dimensional environment. Through their because of their newness, the study and application avatars, people can play, explore, communicate, of the medium of virtual worlds for advertising and join group activities, design objects, write code communications is still in its infancy. The purpose to animate objects, trade things, make money, and of this chapter is to inform media professionals and take classes. Indeed, virtual worlds are believed to scholars of the potentialities of virtual worlds to have implications that go beyond how we play, to disseminate communications to a target audience, also include how we buy, work, and learn (Bartle, to glean consumer feedback, to enhance audience 2006; Balkin & Noveck, 2006). According to a engagement, and to create consumer value and research firm Gartner, Inc., “by the end of 2011, experiences. In particular, we discuss how com- 80 percent of active Internet users (and Fortune panies can use virtual worlds to better achieve the 500 enterprises) will have a ‘second life’” (i.e., following communications objectives: an avatar or presence in a virtual community like Second Life; Gartner, 2007). And generally, since • Advertising–pertaining to disseminating participation is inherently characterized by rich, traditional communications to customer multifaceted interaction (through avatars) with segments about products or services. other people and organizations, virtual worlds • Customer feedback–pertaining to receiv- afford the possibility of communicating with ing communications from customers (this consumers by interacting with them. Consum- includes formal market research). ers can learn about a company and its products • Customer engagement with a company’s through a process of learning-by-doing and services–pertaining to consumers utilizing relationship building, rather than through mere a company’s products or services in-world exposure to traditional advertising messages in (typically on an on-going basis). non-interactive media. • Creation of customer communities–per- Sensing the emergence of a new interactive taining to fostering rich interactions among medium, companies have started to harness virtual groups of customers around particular lei- worlds for various marketing activities includ- sure, learning, or work activities through ing running in-world virtual stores, promoting avatar interaction. virtual and real products, and fostering customer communities. Examples of the early corporate Along these lines, this chapter contains two entrants in virtual worlds include Honda, Coca- intended contributions. 74 Advertising in Virtual Worlds First, at a strategic conceptual level, this chapter tion Campaign Elements”). Third, we describe helps media professionals and academics to bet- the proposed hierarchy of engagement and how ter understand and realize the potential of virtual companies can use virtual worlds to facilitate each worlds to expand the scope of communications. In level of engagement described in the hierarchy. particular, we argue that there are various stages Fourth, we describe new considerations brought of engagement of consumers associated with a into play when managing communications in the communication campaign. Successively greater realm of virtual worlds. Finally, we conclude and levels of engagement include consumers (1) re- suggest open questions for future consideration. ceiving company communications, (2) receiving and sending communications, (3) participating with a company in service co-creation, and (4) HIstorIcAL ProGrEssIon interacting with a community of consumers to oF VIrtuAL WorLds enhance service co-creation. Unlike traditional mass media, which are most suited to one-way Open or unstructured virtual worlds represent a communications, the Internet constituted an im- blending of the elements of immersive 3D gaming proved vehicle for consumer engagement. The environments, developed in the gaming industry thesis of this chapter is that 3D virtual worlds over the last 25 years, together with elements of go a step further by promoting a synchronous online social networking. This conclusion can avatar-based social computing context for deeper be seen by tracing the development of electronic consumer engagement. That is, virtual worlds gaming since the 1970s. (For a historical treat- constitute a space in which a company can further ment including periods prior to the 1970s, see interact with consumers at all four levels of the Castronova, 2002.) proposed “hierarchy of engagement.” Second, at a tactical implementation level, we Arcade Games describe how to manage the traditional elements of a communication campaign—message, media, The video game industry is widely believed to timing, intensity, and budget—and how these are have been launched when Pong was released by aligned with key features of virtual worlds. To do Atari Interactive in November 29, 1972 (Wiki/ this, we first introduce a five-element typology pong, 2008). While not the first entrant into that describes key features of virtual worlds; these this emerging market, it became the first highly elements consist of purpose, population, platform, successful coin-operated arcade video games place, and profit model. We then discuss how the (Herman et al., 2008), and was soon followed by traditional elements of a communication campaign Tank, Indy 500, Space Invaders, and Pac-Man are influenced by considerations associated with (Winter, 2008). These games added the element these five typology elements. of real-time video interactivity, which enhanced The remainder of this chapter is organized reflexes and provided the excitement of real in five main parts. First, we trace the history of activity, to the key elements of earlier games virtual worlds back to its antecedents in electronic which involved (a) strategic and tactical objective- gaming and on-line social networking. Second, oriented problem-solving (e.g., chess, go, bridge, we describe a typology of worlds with implica- and poker; see Castronova, 2002, Figure 1) or (b) tions for advertising and communications (we will thematic and fantasy role-playing (e.g., Parker later discuss this typology in relation to traditional Brothers Co.’s Monopoly), or some combination elements of a communication campaign