Smiley Face Savvy

Posted on Saturday 21 January 2006

{Temporary Note: Harvard Business Report readers surfing here might wish to skip down to the bold text “Okay, so let’s piece things together.”}

For those people in the online gaming community who bitterly complain about companies inserting advertising into their gamespace, I have some bad news. Ad Age is reporting that Wal*Mart has lured the influential director of marketing communications at Chrysler Group, Julie Roehm, over to what some might consider the dark side (or maybe just darker). If you’ve been reading this blog, you know I’ve posted a few entries about Chrysler’s online efforts, including their branding of online avatars. All things considered, Chrysler’s marketing group really does seem to grok the potential in pursuing these new channels; and now apparently Wal*Mart has hopped on the clue train as well by reportedly creating a position especially for their new hire and successfully stocking her in it. From the Ad Age story (Link – free registration required):

She was part of the team that drove the automaker into cool, online lifestyle campaigns and video gaming that led to Advertising Age naming Chrysler Group as its first Interactive Marketer of the Year in 2005.

So does that mean we’ll be seeing virtual retail outlets in Counter-Strike or Everquest? Not necessarily, although anything’s possible. More likely – considering Wal*Mart has licensed some well-known brands – we may be seeing some recognizable products and logos virtually popping up in a greater variety of online spaces than we’ve seen to this point.

For example, those General Electric® appliances you see in Wal*Mart stores aren’t manufactured by GE; those are imported from foreign suppliers specifically and exclusively for Wal*Mart. So for example we might see GE-branded small appliances… like thermo-electric coolers… placed in popular sports videogames or in something seemingly off-the-wall which in fact might be important to them because it ties back to a significant, related product category (e.g they may need to move inventory in their fishing department and plug a branded OPP item in, for example, a fishing videogame).

The Arkansas-based retailer has also licensed the Better Homes and Gardens® brand from Meredith Corporation. So we might see Better Homes and Gardens® furnishings in virtual spaces like The Sims or There or Habbo or any number of more socially-oriented online games or virtual worlds targeting an older, female demographic that seems to prefer those over most first person shooters (e.g. Half-Life). If Coke can find a spot for their brand in these online worlds, you can bet Wal*Mart will find a place for this brand.

Additionally, Wal*Mart also has the exclusive US license to the mary-kateandashley® clothing brand (Reference) and as recently demonstrated by the localized Subway ads placed by upstart ad agency Engage (see previous post – reLink), Wal*Mart could honor the terrestrial limits of that license. I’m not sure what other clothing brands they license which might give them world wide rights, but it’s worth pointing out that some of their own in-store brands do pretty well in spite of their questionable quality (their Faded Glory® line comes to mind). Clothing brands (both licensed and unlicensed) could show up pretty much anywhere – from cell phone avatars to Second Life – and we should expect that they will.

You get the picture, but now let’s take this a bit further. One of the big reasons cited for Wal*Mart’s phenomenal success is their early adoption of computing systems to track and manage inventory not just within their own walls, but within their network of suppliers as well. They’re famous for this aspect of their organization. But to show you just how forward-thinking they are/were, back around ’94 I was contracted to work on a project for Telxon, the wireless, bar code scanner company swallowed by Symbol. You should know Symbol – they’re the company that makes all those ubiquitous check-out counter scanners… including the one’s at Wal*Mart. Symbol is a big chunk of the hardware muscle that powers Wal*Mart’s business system (btw, Symbol just rolled out some interesting products intended to expand their market – Link).

Among the products Telxon was developing when Wal*Mart was just starting to source from China were arm-mounted scanning devices to be used in warehouse operations. These things used their own built-in wireless technology developed by one of their divisions called Aironet (later spun off completely on its own only to be acquired by Cisco). This arm-mounted device was specifically being developed with Wal*Mart in mind, and was one of several interesting programs Telxon was pursuing; common enough now, but cutting-edge stuff at the time (btw, here’s a pretty bad picture of a very quick, blue sky concept model I designed for Telxon after the project was complete and the design firm had some remaining budget to expend – Pic) . Though I don’t know, it’s probably safe to assume some of these programs were being driven by everyone’s favorite growing retail chain.

Okay, so let’s piece things together. We’ve got the ability to inject advertising into online games… and do it locally. We’ve got a major retailer that has its own massive worldwide intranet for tracking products and getting them manufactured “just in time”. And we’ve got companies like Nike linking game content to online purchasing and even product customization (reLink).

Now imagine you’re inside a virtual space and you meet another online entity (could be another real person or it could be an artificial intelligence) and it’s wearing an appealing article of clothing. Let’s imagine how the online conversation might go:

Entity: “Hey, I like your av. What you think of mine? I esp like these {insert brand} jeans.
You: “yea. nice. never seen any like em.
Entity: “Me niether. But I like being a trend setter! hahaha
Entity: “U want a copy? Its free.
You: “sure
Entity: “Can share it w your friends to
You: “ty

Pretty simple. Truth is, this kind of conversation happens online every day in virtual communities. But most important here is that someone has been engaged in a potentially traceable transaction. Your avatar identity can be – and in this example will be – logged in a database along with your IP address and perhaps any key words from the exchange. Also, anything that can be discerned (virtual location, time of day, day of week, the weather in your real world geographic region, etc) will go into that database. This can then be linked to any other information already volunteered perhaps through some “profile” you’ve submitted or game network you’ve joined which already tracks your other online activities (like XBox Live). It might include a link to your homepage or Myspace webpage, mention of your occupation (true or not), or marital status (again, true or not). Anything and everything of interest will be filed away for future use. It’ll also probably be shared with other real world organizations (government, commercial, private, non-profit, whatever) who might then be able to correct any mistakes (intentional or not) and improve the profile accuracy. As I’ve already said in an earlier post (reLink), online anonymity is rapidly becoming a thing of the past

But this isn’t the half of it. Your in-world activities can now potentially be tracked. Let’s say you walk past a virtual billboard advertising those jeans your avatar is now “wearing”. Your presence in front of that 3D object – from your in-world Cartesian coordinates (x,y,z,w) to what you’re seeing on your computer screen (and for how long you’re seeing it) – is information that can be harvested and added to what’s already been collected. I guess I don’t need to say that this is a gold mine for marketing analysts.

Now here’s where it gets really interesting as far as I’m concerned. Let’s say you watch a streaming video commercial on one of those virtual 3D billboards. The billboard senses your attentiveness by checking your directional vector and it’s duration (indicating you’re watching). Having met certain project criteria, the billboard then sends you a personalized message. It might go something like this:

Brand Billboard: “Hi You! Do you like the jeans in that commercial? I notice you’ve got some on.
You: “yea. these are pretty kewl.
Brand Billboard: “You know they’re planning to sell those at the Wal*Mart store near you.
You: “really? i shop there sometimes. didn’t see any
Brand Billboard: “Tell me your size and I can check to see if they have them or something close to them in stock so you can stop in and check them out.
You: “k. thx.
You: “waist – 33
You” “length – 34
{At this point, they’ve just added two more things to the file being kept on you. The virtual object connects to the company’s intranet to update your profile and perhaps check the local outlet’s inventory – assuming there is anything to check.}
Brand Billboard: “Looks like that store doesn’t have any of those in stock at the moment, but they should have a shipment in 3-5 days. Can you wait?
You: “well…
Brand Billboard: “I can send you an email or private message when they get some in. Or text you on your cell. I’ll even give you a full 50% discount if you place an order now since we’re making you wait. And they’ll be held for you so they don’t sell out.
You: “that’d be nice. but if they dont fit, can I return em and get my money back?
Brand Billboard: “Of course! You’ll get a refund on the spot. These are hot right now. We can sell them to someone else pretty easy.
You: “ok
{At this point an in-game monetary transaction takes place.}

Here’s the fun part. Behind the scenes in this example something almost magical gets set in motion. The “Billboard” sends the order to the company’s purchasing department; in this example Wal*Mart. The thing is, Wal*Mart may not actually be selling this item when the order is placed (read the above exchange closely, it doesn’t actually say this is a product that’s already on the market). If they choose their words carefully, they could make it sound like they’re available, but in fact they’re just gathering orders, setting delivery times (“3 to 5 days”, “a week”, “within the next two weeks”, aso) and receiving bids from their vendors during this period.

So the original Entity might only be giving out those particular items within a particular time frame. After they give it to potential consumers, they move on to the next product. Those individuals who received a copy can pass it on to their friends because it’s free to copy and give away; a truly viral product. Only if no one “wears” it, then it’s not worth anything – virtual or real. And Wal*Mart’s investment – and loss – is minimal. If on the other hand people clothe their online avatars in this virtual article of clothing, then it might have real world potential, at which point the Brand Billboards go into action. They might go “live” for a week, and during this time track users who are actually using that particular piece of content. When it interacts with consumers, the artificial intelligence scales the options in its conversation with them to the product’s situation at that moment. Initially it might only offer someone an update via email since no one has actually placed an order. But later, when a pre-determined critical mass of interest is reached it starts offering the item for sale.

After they receive sufficient orders, the retail chain can then go out to suppliers and request bids. As the orders come in, bid requests and the bids themselves are updated. And when a predetermined deadline arrives, the automated system alerts Wal*Mart’s purchasing people who then approve a vendor, a price and all the rest. At that point, the data is dumped to the winning vendor, product is manufactured and shipped to the user’s location.

It’s coming folks. And it looks like it’s going to be the scariest smiley face gamers have seen since Stephen King’s Pennywise.

  1.  
    1/26/2006 | 10:05 pm
     

    [...This link popped up in a comment on the OGLE stuff, and it's worth reading for the mercantile future it envisions for virtual spaces. ...]

  2.  
    blaze
    1/30/2006 | 5:05 am
     

    Uhh… This would be good. Not bad!

  3.  
    1/30/2006 | 8:51 am
     

    I’m not taking a position on whether it’s good or bad, Blaze. This entire entry is prefaced with the comment, “For those people in the online gaming community who bitterly complain about companies inserting advertising into their gamespace…” and ends with the comment “And it looks like it’s going to be the scariest smiley face gamers have seen…“. I’m being specific as to who I generally believe will consider this bad (as a gamer myself, I realize not all gamers are concerned). Many people – especially in the gaming community – do consider this bad. The comments I’ve seen following the referrals to their source have generally not been made by happy campers.

    On the other hand I see this as inevitable (which is why I’m doing some of the things I’ve documented). It’ll be good or bad depending on how people react. I posted this not as a lament, but in hopes people would start to see how their behavior regarding IP might come back to affect them personally. See my comments on Raph Koster’s site – Link

  4.  
    8/21/2006 | 9:18 am
     

    I believe in-game advertising can be extremely beneficial when done correctly and effectively. In-game ads should only appear where the game has a realistic environment and it makes sense to the gamer. Overall, I do not see what the issues are with what you’ve said above and have just responded to it on my blog at http://www.darrenherman.com.

  5.  
    8/21/2006 | 9:37 am
     

    I don’t say there are any issues. You should have read the comment just above yours where I say that. If anyone is anticipating and planning for it, it’s me.

  6.  
    9/12/2006 | 6:15 pm
     

    Movies have been passively inserting product placement for Lord only knows how long. If I pay for an experience, I want the experience — and I don’t wish to be re-directed from it.. What if J.L. Picard was forced to carry a Nokia smart phone and a Lenovo Tablet PC on the ST Next Generation set? At the point it becomes a distraction from the story and the (as is flavor of the month) “experience”.

    If you subscribe to WoW or Dark Age of Camelot Subscriber, should you be forced to watch a Vivendi Universal advertisement for a romantic comedy or a trailer for Madden’s latest EA Sports title when your MMORPG client starts? Should you be able to opt-in to these advertisements if you want a reduced monthly rate?

    I think Raph Koster got it right. Focus on that long tail, and we can keep some degree of artistic independence alive while allowing the SOE dinosaur behemoths of the world to cater to mass market and least common denominator products.

    I hold out hope for user created content such as the successes we have seen in Neverwinter Nights.

  7.  
    9/12/2006 | 7:17 pm
     

    You’ll find I’m a supporter of the Long Tail; so much so I’ve taken it a bit further – ecoToroid over Time (explained here – reLink).

    When it comes to this stuff, I try to remain neutral. But I most definitely hope for and promote the independents… because I’m one of them.

  8.  
    DT
    6/4/2007 | 10:48 pm
     

    Nice article sven. I laugh out loud at the mini-database moment on the sizing and reminded me of the Minority report movie, though filled with bad acting, the environmental picture painted was inspiring. I’m sure you might feel otherwise.

  9.  
    6/5/2007 | 9:08 am
     

    I bought the “Minority Report” DVD for one reason: the extras discussing the development and the design work.

  10.  
    11/18/2007 | 7:01 pm
     

    When Retail Goes Virtual…

    I caught a whiff of this piece on the Guardian earlier this month, and having finally read it, all I can say is, thank the Flying Spaghetti Monster someone else is starting to talk about the impact virtual worlds will almost certainly have on real worl…

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