Second Life Lessons

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"The campaigns are part of an ongoing media mix and most clients are looking at their Second Life projects as taking up occupation in a new territory," says Justin Bovington, the company's chief executive. "They think of Second Life as a new region and an emerging market channel. It's an ongoing commitment." Bovington adds that Rivers Run Red has various retainer contracts, but won't discuss the financial details.

Serious Inquiries Only

While Second Life campaigns are only a portion of Rivers Run Red's overall business (the company also works on other new media branding and advertising projects), Bovington says that last year, Second Life-related contracts made up 20% of revenues. Today, it's more like 80%, and the company has expanded to 32 employees, up from eight one year ago.

Seeing a similar boom in business, the Electric Sheep Co. has grown more than twelvefold, to 25 employees, up from only two the same time last year. They now won't take on clients with design budgets of less than $10,000, says Giff Constable, Electric Sheep's director of business development. Currently, they have 30 real-world clients, the most of any major Second Life developer.

An average Second Life presence will run a real-world business between $10,000 and $200,000 via Electric Sheep, whose clients include Starwood Hotels & Resorts Worldwide (HOT) and Reuters (RTRSY) (see BusinessWeek.com, 10/17/06, "Big Media Gets a Second Life"). For a mere $10,000, "we can design an event, create custom architecture that isn't too complicated, and even throw in a virtual, interactive version of a real-life gadget that works in Second Life," says Constable. "But it won't buy a fancy island."

As Individual as Snowflakes

Constable won't say what higher incremental fees will buy for corporations seeking a Second Life store or brand campaign. He says that most companies ask for a one- to three-month launch campaign, although some companies such as Starwood have said that there is no real end date to the project.

"Each Second Life campaign we've done so far is so customized. That's the beauty of it," Constable says. "But it's then difficult to generalize what type of design or development 'package' can be offered."

On the other end of the spectrum is Aimee Weber Studio, which exists only in Second Life and has 15 real-world clients, about half that of Electric Sheep. Last year, the studio didn't exist but today Aimee Weber has five employees.

Weber usually designs a two-month campaign, and her clients have included American Apparel and the U.N. (see BusinessWeek.com, 6/27/06, "American Apparel's Virtual Clothes"). Her fees fluctuate from $5,000 for "small builds with little or no scripted interactivity," she wrote recently via e-mail, to her biggest job so far with a budget of $150,000.

Long-Term Relationships

Like Aimee Weber, Millions of Us has 15 real-world clients and launched less than one year ago. With 27 employees (only five are full-time), its fees are slightly higher than Weber's and Electric Sheep's. Millions of Us charges between $20,000 and $400,000.

"We spend about four to eight weeks developing a campaign," says Reuben Steiger, founder of Millions of Us, whose clients include Toyota and Intel. "Then we usually produce a high-profile launch event and help with 12 weeks of managed campaigns with regular events."

While companies are certainly spending real money to get into Second Life, none has yet been in the world long enough to evaluate how successful their efforts really are. And a Second Life campaign isn't without its dangers. One problem that all four firms—and their clients—must face is hackers who shut Second Life down periodically. Linden Lab, the company that owns Second Life, recently met with federal authorities to address this cybercrime.