ROI on Virtual Worlds, MMOs and Twitter
David Lewis recently played an interesting prank on Jeff Molander. Industry veterans know these type of pranks have been going on since the inception of the affiliate marketing industry and they can even turn into learning experiences.
His prank and post prompted me to revisit Jeff’s Twitter account and his blog. In short- the tweets got my interest. An interesting side debate has been going on as Jeff is “calling bull on twittermania.” I decided to move the debate to the larger ReveNews audience for thoughts.
“Precisely, whatâ€™s ROI anyway?”
I believe this was a rhetorical question, and Jeff was correct. HoweverÂ I still hear many businesses talking about ROI with their typical myopic view.
There can be no precise measurement of ROI until certain criteria are met. Objectives must be defined, a methodical process applied, and results analyzed with logic. I won’t delve into the Heisenberg Uncertainty principle and how it applies.
Thus ROI will be measured differently based on varying goals.
The burning question now is: How does one measure the ROI of “social media”?
Social media is a misnomer. All media is social and always has been. It has been this way since cavemen learned how to etch messages on the wall with buffalo blood or figured out how to play with a sharp chisel without taking off a foot. I think the vast majority of so-called social media experts aren’t and merely riding the wave of popularity. Conversely, we could argue they are savvy marketers and providing services that clients are asking for. Either way, misguided experts can be likened to a motorcycle driver climbing into a train engine and convincing people it is easy to drive. The wrecks will come.
…”engage in more digital fantasy stuff and youâ€™ll stand a chance.â€
How can MMO’s, MMORPGs, virtual worlds and services like Twitter be of any real value?
I have always studied these areas because they are fun, cutting edge, experimental and I feel they have or will offer demonstrable value.Â Business is part execution, but more importantly- thinking ahead. I remember getting some heat about exploring these areas on some podcasts a couple of years ago. Frankly, I deserved it, as I didn’t have concrete answers to provide at the time. I do now.
Let’s look at a few examples of MMORPGs, the much maligned Second Life platform and micro-chunked communications like Twitter to see what they can do.
World of Warcraft
The CDC exploring WoW (World of Warcraft) to virtually map the spread of plagues and to define models to treat plagues and quarantine en masse. This is an experimental use, but when a real plague comes, and given the world’s fascination with antibiotics- it will come, the ROI will become crystal clear.Â Tabulate the cost of a plague in dollars and society in general. Staggering.
Let’s look at another WoW example. China has made the bold move of banning the sale of “digital gold” or trading virtual currencies for goods. I have my own theories why this is going on, butÂ their wordingÂ is pretty important.
“…virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services.”
This is a big deal. More real money is traded on WoW in a year than many direct catalog companies make in three. Hundreds of millions are exchanged for virtual goods (across platforms) and some estimate this number to be as high as one billion USD- a year.
Even the much maligned Second Life offers new glimpses into human behavior and interaction and how trends spread.Â This has direct implications for business.
If you understand how avatars interact you can develop a whole new set of metrics. You can measure physical proximity, influence on how social circles impact buying patterns, interest levels and a lot more. As an aside, for SEO aficionados, SERPS in a virtual world, like Second Life, are fascinating to study and offer some intriguing insight into how Google works (Second Life uses a Google appliance.)
I will note that Second Life has numerous problems from a technical and commerce standpoint, and I imagine if they could get a “do-over” many things would be different. Still it is one of the most robust clients available. It will be replaced when something better comes along.
The value proposition / investigation is not about WoW. It is about the impact of MMO/MMORPGs. It isn’t about Second Life- it is about the emergence of digital worlds, 3D platforms and empowering people to create and interact. In the future these worlds will be ubiquitous.
Nor is it about Twitter. Let’s remove the brand name and look at it as an extensible technology with a robust API. It facilitates communication in a succinct, simplistic fashion. This information can be consumed and refashioned by a large array of networked devices. This information propagates in a number of ways. e.g. HTTP and SMS. I would not be surprised if services like Twitter and Facebook are rapidly driving the adoption of mobile technology and therefore mobile commerce.
In essence it is all about fast moving, micro-chunked information. When you want it and how you want it. It is not social media- it is personal media.
Let’s look at a few merits of Twitter.
Twitter is driving sweeping social change. It is influencing ideas, mores, values, and politics. Even a cursory look at the Iranian election proves this. Twitter users are changing how news outlets cover events and how they take input from users.
News and Information exchanges created on these platforms move FAR faster then search, even faster than news networks like CNN or comedy shows like FOX News. It was almost tragic to watch Wolf Blitzer trying to report on Michael Jackson’s death 30 minutes after the news burned through Twitter- which is probably where they got the news. Granted CNN has to verify news, and user’s must be discerning in what they read and take up as fact, but that skill will and is growing fast.
It empowers users to rapidly exchange ideas and meet like-minded people without making a huge social commitment nor spend alot of time “social grooming“. Twitter empowers people to blow the top off of Dunbar’s Number and the limitations of our neo-cortex. For those new to social network theory, and I am not an expert, let me clip a recent piece I wrote on my personal blog. (Props to Jim Kukral for hosting.)
“as merely a reference, bring up Dunbarâ€™s Number (Dunbar predicted a human â€œmean group sizeâ€ of 148 (rounded to 150) a theoretical cognitive limit to the number of people with whom one can maintain stable social relationships. Dunbar claimed â€œthis a direct function of relative neocortex size, and that this in turn limits group size â€¦ the limit imposed by neocortical processing capacity is simply on the number of individuals with whom a stable inter-personal relationship can be maintained.â€.
We might also look into Bernard-Killworth. These two researchers postulated a mean number of ties at 290. This is roughly double Dunbarâ€™s estimate. (Bernard-Killworth median: 231 lower due to upward straggle in the distribution still higher that Dunbar.). Lastly, Christopher Allen has some interesting studies looking at Ultima Online communities and he actually moves the number of ties down. I donâ€™t have a hard and fast numberâ€¦and Dunbarâ€™s Number is only an interesting reference here. I am more in the camp of Bernard-Killworth with social networks and with Allen on tighter knit groups that require cooperation. e.g. MMORPGs”
I now believe that both of these estimates are low and social ties might be impacted by the “relative density” of social networks. In other words, the more immersive and complex the environment the less the number of social ties developed. Services like Twitter, which require minimal social grooming, will boost the number and immersive environments like Second Life limit the number.
Attention = Revenue
As Brian Clark told me a decade ago- Attention = Revenue. Attention is hard to get these days. People are distracted, and pummeled by numerous distractions.
Therefore compressed communication fits the attention span of already strained attention. It enables the expansion of social networks.
The core takeaways for business. These new technologies may not produce the ROI you are looking for, but it directly impacts buying decisions, word of mouth recommendations, information flow, speed of transmission and CRM (Customer Relationship Management).
It is not all always about engaging, talking or selling- it is about listening.
I will sum it up with a typical “Porterism”: On Twitter you only have 140 characters so it forces people who meander, like me, to be succinct.
“Twitter metrics- Business would be better served to rethink ROI – Not Return on Investment, but Return on Interest. No interest- no return.”
About Wayne Porter
Wayne Porter is one of the original founders of ReveNews.com, and served as the CEO and founder of XBlock Systems a specialized research firm on greynets and malware research before being acquired by unified communications security leader, Factime Security Labs. His work includes serving as a panlist at the Federal Trade Commission to shape legislation on software and the creation of two patent-pending technologies for corporate networks. Wayne is a frequent speaker at e-commerce & business events including CJU, ASW and RSA and frequently cited in the press. He has been designated a Microsoft Security MVP three times and is recognized on Google’s Responsible Security Disclosure page- in addition to receiving the first Summit Legend Award. Wayne currently works as a Security Consultant on Social Media and operates a consultancy on digital worlds. His hobbies include reading science fiction, playing chess, fishing, writing, collecting shiny digital gadgets, playing racquetball and studying memetic engineering. He maintains a personal weblog at WaynePorter.com detailing his explorations in security, web 2.0, and virtual worlds.
You can follow Wayne on Twitter: @wporter.