Lack of marketing budget biggest mistake for VWs

According to virtual worlds research firm KZero, the lack of a marketing budget is the single biggest mistake made by virtual world startups.

“Virtual worlds and MMOs with insufficient marketing budgets are floating around in the market and failing to ramp up,” the company said. “This isn’t because their worlds are boring or don’t have great games or quests – worlds are not built to be boring. It’s primarily because when initial funding was raised for the development of the world, insufficient funds were allocated to user acquisition.”

This is because some founders are arrogant enough to think that their worlds would be so great that they will go viral, with no need for marketing, the analysts said. Other founders were too focused on the technical side, budgeting enough for development but forgetting about the commercial aspects of running a company.

KZero tracks virtual worlds with millions of users, but the analysis applies just as well to small startup grids.

Many grid owners seem to have an “if we build it, they will come” approach to starting a company. Many over-estimate the value of their business proposition. In addition, many of the founders have a technical background, but lack marketing, community-building, and sales experience.

KZero advises a starting marketing budget of at least $750,000. This isn’t reasonable for startup grids, which are often founded on a shoestring.

But the analysts also estimate that the cost per new sign-up should be around $0.50 to $0.80 cents.

How should this translate for OpenSim grids?

I just crunched numbers from our database and, taking out the non-profits, education grids, home-based grids, and Kitely, there are between 2 and 7 active users per region, or between 30 and 90 registered users per region, on the main commercial grids.

Let’s say our grid decides to shoot for 1,000 regions in order to break even, and estimates 70 registered users per region to generate enough traffic to spur land sales. This means it needs to register 70,000 users, for a total cost of $35,000.

That money can be spent on staff, in the form of marketing, public relations, community building, and social media outreach employees. Or it could be spent on direct advertising.

Free advertising space available on Hyperica billboards. Submit your ad here.

The best place to buy ads to promote commercial grids is in places where people looking for virtual social activities and virtual land are likely to gather — blogs dedicated to virtual life, or popular in-world locations on other grids. We’re also happy to take ads here at Hypergrid Business, but unless you’re selling grids to companies and educational institutions, you’ll get more bang for your buck elsewhere. For example, check out this directory of around 2000 Second Life blogs.

And if you are buying ads, go beyond just your company name and a logo. Here are ten tried-and-true advertising tactics and some examples of using them for OpenSim grids, and some advice for creating landing pages and a marketing strategy.

 

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maria@hypergridbusiness.com'

Maria Korolov

Maria Korolov is editor and publisher of Hypergrid Business. She has been a journalist for more than twenty years and has worked for the Chicago Tribune, Reuters, and Computerworld and has reported from over a dozen countries, including Russia and China.

  • marketing does not have to be a “heavy lift” if you approach it in a relaxed manner. i do a little consulting in it and can’t tell you how many people make it a miserable task when it certainly does not have to be

    a few years ago Technorati did an analysis of what gets you the most online authority and it was simple – 2 blog posts a day

    don’t freak – this was based on looking at who carries the most authoritative voices online and their blogging habits. this includes blogs like the Huntington Post which puts our scores of posts per day

    blogging is an effective way of getting your name out there and it is vital that you understand that every blog post does not have to be a graduate thesis. most people don’t think they have anything to say and then when they do, they think it has to be the ultimate post. you will never get it done with that mind set

    but . . . blog in a manner that adds valuable information, even as tiny tidbits, to your audience. don’t sell them on your product or service – educate them. don’t only post about your promos, specials, conferences, etc

    it’s not about you, it’s about your customers and how there lives, experiences, etc are enhanced by being affiliated with you

    does your “thing” add to them or to their endeavors?

    my example is Sim-on-a-Stick, i never say that i invented or even created it (because i did not). i never say i am awesome because i make it as easy as possible to share it (even though subQuark thinks i’m awesome and pays me in burritos). Sim-on-a-Stick is about offering you a creative outlet

    it is not a lack of marketing budget that results in failure, it is a lack in passion about sharing what you have with the world

    my marketing budget is under $100 per year, but my passion is genuine =)

    • Ener —

      What would your marketing budget be if you added in the cost of your own time — or had to hire someone to replace yourself?

      Meanwhile, there are some grid managers out there who are actively blogging and posting in their forums, but their communications are all oriented at existing residents. Which is fine — this goes to customer support and community building, and helps create a happy customer base, which, in turn, leads to more referrals.

      But it’s not direct marketing — you’re not actually reaching out to people who aren’t yet customers. Folks need to set aside a certain amount of money — or time, if the founders are volunteering their hours — for marketing to new people.

      A rule of thumb I’ve heard several times is that it takes, on average, six points of contact to make a sale. A referral from one of your existing customers could be one of those points of contact. Other points of contact could be seeing ads for your grid, reading a couple of reviews about it, seeing it mentioned on Twitter and Facebook. Each additional time they hear about the grid, they get more familiar with it, more comfortable with it, and one step closer to heading over and checking it out.

      • WhiteStar Magic

        I agree with you on this Maria. The “cost” of marketing is not just the dollars & cents spent, it’s also the “time cost / value” which translates into dollar value as well.

        The promotion of product-X via all the media forms you mentioned are what get’s people to “look” at product-X but that is only the first & toughest part. Once you get Jane & John Q Public to look, you have to draw them in and get them to explore your offering in more detail and increase their interest to where they want to try it.

        As a “Techie type” if I am exploring a new product, service or even a new grid, I always look at the ancillary materials related to the site/service etc… I would consider these as closing points (buying in to try it) which would make me look. I look at forums, wiki’s, blogs, trouble reporting system (Jira/Mantis) etc… to see what the activity is, what level of support is being given, how much client developer/support is shown publicly. I find these are a good “snapshot” which 99% of the time will tell how active and how responsive the support to client is and tells the bigger story.

        When I see an active community within forums, blogs etc and based on what clients/users are saying & how the general support is (be it from product-X support or the client community itself) then I will investigate if the feedback is positive and things are progressive. If there is little to no activity / interaction that I lose interest at that point and don’t bother to look any further… First Impressions are so critical to drawing people in. There are many key points which people look at, read or watch which make that first impression and leads to second impressions resulting from their continuing to investigate Product-X.

      • well how about we forget that corporations are people and realise that people are the ones that start new things. those same people can evangelise for themselves until big enough

        for Hypergrid Business, do you have $750k for marketing?

        that statement was so silly and for someone like Nike after they are established, yes $750K would be nothing but Blue Ribbon did not need to have $750k to create what we now know as Nike

        Dr. Bose did not start with $750K – just his first product (a really dumpy 22 4-inch speaker quarter cube) and passion

        if you can’t launch your product without $750K then you won’t have many new things coming to market

        • Well, I’m not shooting for a million readers — there really aren’t that many people using OpenSim yet. (As far as I know.)

          HB gets between 10,000 and 20,000 unique readers month, or about a quarter million unique readers since the site launched. Half only visited once (maybe by mistake).. leaving about 125,000 readers who come back over the past three years.

          If I was paying for this traffic at KZero’s virtual world rates, that would come out to $62,500. But I’d guess that virtual world traffic is more expensive than blog traffic — creating a virtual world user account takes a LOT more work than just reading an article. Let’s say that it would cost me 25 cents per reader. That’s around $30,000. Have I put in $30,000 worth of work into Hypergrid Business over the past three years? God, yes. Did I make a budget and plan this out ahead of time? No.

          I figured there was an opportunity here for news coverage, a need that wasn’t being met, and that I could do it, kind of as a hobby, until I came up with some profitable business ideas in this space.

          But my day job pays me enough, and doing HB has been fun, and I haven’t really had time to take on any other projects anyway, so there hasn’t been any real motivation to get organized, put a business plan together, etc…

          Then again, if I’d done the business plan on day one, I might never have launched Hypergrid Business. There’s really no revenue model there.

          • “25 cents per reader” doh! =p

            my readers are priceless (or at least one million dollars each) and i love them all! =D

  • Time is definitely the must have for marketing. Even if its just
    self-promotion, it still takes time. Add blogging and then commentaries
    on other sites and that’s more time. Forums, FaceBorg, Twitter, G+, etc
    …. more time.

    AD ::: Excelsior Station will have rentals ::: AD

    Taking those few extra moments to market your world whenever you can, it all adds up

    😀

  • And a comment for those folks who don’t like to do marketing:

    There are people out there who need your grid or product, and would like to have it very much. (Otherwise, you wouldn’t be making it.)

    But, chances are, they don’t know about it. By marketing, you are helping them discover something that will make their lives better.

    By nor marketing, you are forcing them to settle for something that’s not as good a fit for them, decreasing their happiness.

    The saddest case is when the customer either doesn’t know they need your product, or don’t know that the product exists, so they can’t go out looking for it.

    But, for many grids, you can’t find them even if you DO look for them. They’re not clear on the unique advantages they offer, or haven’t publicized them, so that a customer looking for those unique advantages won’t see them when they search.

    Not to pick on anyone, but… if you Google “brazilian opensim grid” the first links are Hypergrid Business articles, from which you can get to Meet3D (the big Brazilian OpenSim grid) but the grid needs to work on its in-bound links to make sure that the grid comes up first when anyone searches for it. The same holds true for searches for “french opensim grid” and “german opensim grid” — both of those should result in FrancoGrid and GermanGrid right up top.

    For example, when you search for “bdsm opensim grid” Littlefield comes right up — nice SEO, guys!

  • Araxie

    I’m going to go with Ener (for the most part) on this concept. The idea of all this dough people spend on marketing baffles me to no end. I’d take an Ener approach if this was a biz to me, at least for getting traffic. But to me though, raw traffic is not always a good thing. It is really about BSing someone with dough into sharing some with you. Traffic without that concept, just means paying more for resources to handle it. but on a related note: this avatar would HG out of a sim that was loaded with banners and hype, yuck!

  • Hi Maria,
    I just wanted to add some clarification to our recent blog post about marketing budgets for virtual worlds. It seems some people are attempting to correlate our post recommendations towards OpenSim grids. The post is intended 100% to be for standalone kids, tween and teen virtual world start-ups as opposed to grids targeting older users. The recommendations made in our series of posts on ‘mistakes made by virtual words’ are in no way intended for OpenSim grids.
    Hope this helps,
    Nic