Brands love nothing more than being seen as cutting-edge and right now it doesn’t get any cooler than having your own store, hotel or car dealership in a virtual world. 

What began as the realm of geeks has become one of the hottest branding arenas around with the likes of Vodafone, Toyota, Adidas and Reuters all falling over themselves to get involved.

Even charities are finding virtual value. In 2006 Ogilvy launched an electronic yak sale for the UK’s Save the Children to help boost fundraising. 

And last year the daddy of virtual worlds, Second Life, spawned its very first real-life millionaire. Anshe Chung is a virtual land baroness who makes her  Linden millions – the Linden is the currency of Second Life – designing islands and hiring space to companies who want to hold events in the virtual world. She then exchanges her virtual money for real world cash. 

The mass publicity that surrounded the announcement of the first lifer millionaire is a good example of the main benefit that brands are seeking. The world’s press has fallen in love with a “game” that only has 1.7 million “residents” at time of writing, fewer people than watch Ready, Steady, Cook on TV on a regular basis in the UK. 

However, those 1.7 million are valuable to brands as they are perceived to be the cutting-edge, early adopting influencers that can make their product or service desirable to others. 

Fashion chain American Apparel was the first retailer to set up shop in Second Life in June this year, commissioning a showroom store from the creator of in-game fashion brand, Preen. “When you are looking to connect with people online you can either choose to plaster banner ads all over the internet, or you can do something that connects with them in a far more intimate way,” explains Raz Schionning, web director at American Apparel. 

The fashion brand now retails its own clothing inside the virtual world and even offers those who purchase in  Linden dollars a 15% discount for the real-world stores. American Apparel sees Second Life as a good environment in which to interact with its customers as the business itself is differentiated from other fashion retailers due to its ethical sourcing and the fact it pays high wages to its workers, a good fit with those people inside Second Life. 

However, there are still big differences between real world and Second Life brands. “Preen products and other Second Life clothing brands have been generated directly from the desires of users and so are generally much more fantastic than anything we sell,” says Schionning. 

This probably explains why, despite all the publicity surrounding the launch of its store in Second Life, American Apparel has only sold around 6,000 items of virtual clothing since launch. 

Car companies are also perennial coolness cravers and so it was no surprise to see a major car brand making a move into Second Life, although maybe it was a bit unexpected that it was Toyota rather than a cooler sports car brand. 

Toyota commissioned Millions of Us, a company set up to help brands get into virtual worlds, to come up with a way of getting its Toyota Scion brand involved in Second Life. The result was  Scion City, a virtual showroom where Second Lifers can get their hands on the three Scion models and can customise them for their personal use.

“ Scion City is devoted to two things, coolness and customisation,” says chief executive Reuben Steiger. “Coolness is being associated with non-mainstream entertainment, culture and music so we offer things like drive in movies. And since Second Life people are influencers, your effort explodes out onto the blogosphere and generates even more coverage in the media.” 

Both American Apparel and Toyota are offering their real life products in the virtual world, but other brands are doing the reverse, using virtual worlds as a test bed to develop real life products. 

Aloft, the new brand from hotel group Starwood, has an island in Second Life that carries a replica of a real world hotel that will open in 2008. It is using Second Life to both promote itself as a cutting-edge brand, but also to refine the design of the rooms in advance of the building of the hotel. 

“We built a guest room and lobby in a warehouse and we consider that our lab, but at the same time we launched in Second Life,” says Brian McGuinness, vice-president of Aloft. “People in Second Life are early adopters and next generation travellers and it is important for us to be top of mind with them.” 

The hotel has received mainly positive feedback so far – although there were some complaints that the bathroom doors were missing, but then avatars don’t need to go to the toilet – and is considering implementing suggestions made by Second Lifers such as inlaying a map into the floor or running a news ticker around the lobby into the final build. 

Pop groups are also latching onto the virtual world craze. Ben Folds DJed at the opening of the virtual Aloft hotel and bands including Gorillaz, Akon, Faithless, McFly and U2 have made their virtual world debuts by meeting fans in popular virtual world Habbo Hotel. “Typically the bands spend 15 minutes in a public room answering questions from their fans through their avatars. 

“Stacie Orrico asked users to make a room to symbolise her latest album Beautiful Awakening and then toured the winning rooms and chatted to the winners one-to-one, and McFly had dinner with 50 fans as part of a competition. It allows them to interact on a more intimate level,” says Alistair Williams, marketing manager at Habbo  Hotel UK. 

The value for a pop group in reaching its core youth audience in an environment with which they are familiar is obvious, but a number of advertising agencies have also launched offices in Second Life. This initially seems strange as Second Lifers are not particularly receptive to advertising. Putting up a poster in Second Life will probably generate you more problems than praise. 

Ad agency BBH is using Second Life to learn more about digital as a medium by holding regular agency meetings inside Second Life, recruiting people for the agency through the virtual office and even nominating reallife account directors to act as virtual bosses for a day. 

“For us it is a business development issue and about involving clients,” says Mark Boyd, content director at BBH. “We tell clients to be bold all the time, so this is us doing it. It’s also a very accessible testing bed for clients to get involved in. Second lifers are leading digital evangelists and if we can involve them in developing our communications work, then it has great value.” 

The Second Life population is currently growing at around 22% month on month, but whether it is a fad or a phenomenon is as yet unclear. However, there are a myriad of other virtual worlds, which would seem to suggest that there is a consumer demand. The challenge for brands is to find a way to communicate without offending the residents. 

“Brands have to add value and in the future in order to be successful there has to be a way to link together the different virtual worlds,” says Linden Labs marketing director Catherine Smith. “Crafting your identity is really important, but what if you could take your identity to different places. It will be really interesting and will happen sooner rather than later.” 

VIRTUAL WORLDS REVIEW LISTS MORE THAN 28 MAJOR ONLINE DESTINATIONS AND THERE ARE MANY NICHE WORLDS