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.

Jeff asks:

“Precisely, what’s ROI anyway?”

I believe this was a rhetorical question, and Jeff was correct. However  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.

Jeff says:

…”engage in more digital fantasy stuff and you’ll stand a chance.”

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.  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.  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, but  their wording  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.

Second Life

Even the much maligned Second Life offers new glimpses into human behavior and interaction and how trends spread.  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.

Being Agnostic

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.

Twitter

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.)

On Social Ties

“as merely a reference, bring up Dunbar’s Number (Dunbar predicted a human “mean group size” of 148 (rounded to 150) a theoretical cognitive limit to the number of people with whom one can maintain stable social relationships. Dunbar claimed “this a direct function of relative neocortex size, and that this in turn limits group size … the limit imposed by neocortical processing capacity is simply on the number of individuals with whom a stable inter-personal relationship can be maintained.”.

We might also look into Bernard-Killworth. These two researchers postulated a mean number of ties at 290. This is roughly double Dunbar’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 don’t have a hard and fast number…and Dunbar’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.

Tweet:

“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.

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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.

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19 Responses to ROI on Virtual Worlds, MMOs and Twitter

  1. Twitter said it best ( http://bit.ly/2KpP2A ):

    Biz [Stone]: "Twitter is an economy of information."

    Game. Set. Match.

    Sam

  2. Wayne Porter says:

    Yes. That TechCrunch piece on the documents blew me away…especially the user projections.

  3. Isn't that why so many people who sign up send one tweet and thats it, no interest = no return?

  4. Wayne Porter says:

    Jimmy,

    Perhaps they don't understand what it is…I think there is a "Eureka" moment for many new Twitter users. Indoctrination helps too…I mean it works for religion so why not tech?

  5. @Jimmy also what happened when "civilians" started using email in the mid 90's (http://www.dns.net/andras/stats.html#users) and less than a million emails were sent per year.

    I've been saying all along that Twitter is not just another web service but a developing new standard. Email helped us get POP and IMAP standardized and whatever comes about to compete with Twitter will work with that company to develop whatever we call this new form of micro-status-nerve-center communication.

    Can you "market" to it? Who cares. Let's figure it out first or otherwise, you'll look like these clowns in '94: http://bit.ly/vFALm

    The marketing and advertising aspects will eventually come, but let's all wrap our heads around what we can do with this developing standard and think long-term first.

    Sam

  6. Wayne Porter says:

    BTW Sam- as usual I meandered, but the theory I am floating out is that extensible, portable and lightweight services like Twitter might enable humans a "technological work-around" to get past the limitations of our neocortex…

  7. Wayne Porter says:

    @sam

    Yes I could see that happening- depends on how their cards are played…Actually I recall you making that statement. It was around the time Twitter did their experimental Google ad thing…(That didn't last)

    "and whatever comes about to compete with Twitter"

    I do wonder why Jaiku (which Google basically let rot) and Pownce died so fast. Perhaps because Twitter has always let users guide the creation of the product.

  8. @Wayne tools have been helping us (and our simian cousins along with the various members of the insect/animal kingdoms that are also tool-users) get around our biological limitations since we started chipping rocks.

    I see no reason why the web, Twitter, 2L, etc don't function in much the same way for our little sack of neurons as a piece of obsidian compensated for our lack of claws.

    The trick is to realize that these are tools. I'm sure there was some entrepreneurial homo erectus who realized he could make a few sea shells by marketing his obsidian blades, but I'm also willing to bet that his genetic material didn't make it very far down the evolutionary circuit.

    The same danger exists for folks who are eager to hop on the "LET'S USE TWITTER or FACEBOOK FOR MARKETING!!" purposes only and aren't busy making sure their genetic material is desirable enough for whatever is next in the evolution of ourselves and these tools that we use so bluntly yet with so much promise.

    2001, baby :)

  9. Well, I'm playing with marketing on twitter now and letting it grow all by itself, kinda like I did when I first started on the web. In a few years, if it turns out the same, I will let you know. ;)

  10. I'm not saying you can't market whatever on Twitter. Of course you should play with marketing on Twitter or 2L or whatever. I do.

    I'm saying that marketing, like everything else, changes and morphs a great deal and we need to be very careful about applying tried-and-trusted views/definitions from one medium onto another (since I still think Twitter is a different form of communication than anything else out there now).

    Sam

  11. Wayne Porter says:

    @Jimmy In short- Don't urinate into the drinking water.

    @sam If only more marketers played. Play is the one of the best teachers and how I often get my Eureka moments.

  12. "little sack of neurons as a piece of obsidian compensated for our lack of claws" is my favorite quote of the day.

    I simply think it is about expanding communication, evolving social semiotics. How communication hubs like Twitter are used is almost irrelevant interest wise to me; far more fascinating is observing how they evolve.

  13. jgoode says:

    tring to come up with some witty comment but all that keeps filling my mind is the lasted Sonic commercial (summarizing) "my RIO is definitely better"… "no I don't know about return on investment, but my Raspberry Orange intact is great!"

    Thinking on that level however, I agree with Sam, they are only tools…

    however, how we use them, how we intend others to see our use and how others intend to react in response is all so variable. there is no right nor wrong answer.. In my opinion, I think that's what ultimately makes it all validly "social"… as opposed to programmed.

    As far as the compressed communication fitting our distracted attention spans. I feel more like we're in a virtual room with megaphones and blindfolds. I think the micro communication is a "easy way out" for standard relationship building – these tools are a magnificent means of opening doors that would otherwise not be visible…

    as for playing.. I think too many of us are too serious too much of the time – and that just gets us ignored when others are in play mode. I think we need to follow the casual users sometimes and definitely just get out and play. – how many today pros got their start just playing? I think we need to remember that history.

    :D

  14. Romang says:

    If attention is indeed revenue then, I fear I have Revenue Deficit Disorder.

    There is a great deal of value in the conversations on Twitter. Ask many of the folks out on the roof tops of Teheran. The R in ROI is "Return" not "Revenue"

  15. [...] ROI on Virtual Worlds, MMOs and Twitter | ReveNews [...]

  16. Larissa says:

    I always liked what Jeremiah Owyang had to say about the ROI of Twitter (from this post: http://www.web-strategist.com/blog/2008/08/13/why….

    "What's the ROI from Twitter? A very difficult question to answer, yet you'll find the solution if you can also measure: 'What's the ROI of a conversation in real life.'…"

  17. Bev Barnett says:

    Measurement, especially in the less tangible marketing practices of PR, has always been a bit of a crap shoot. Do you measure volume? But how much was positive? What IS positive? Only your target messages?

    Katie Paine has done an excellent job of sorting all this out for years. I used to do freelance work for her back in the early 1990s, reading through volumes of printed press clippings to determine if the client's true messages had been communicated, and calculating percentages of positive message deliver against overall coverage.

    She's evolved this to social media.
    http://kdpaine.blogs.com/

    Yes, its as much about listening now as communicating messages… more in fact.

  18. I think determining ROI coincides somewhat with a brands goals and missions. In this way, it will be difficult to develop one process and each company will have to develop a system that works best for them.

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