Strategy Analytics recently released a new study titled, “Defining the Total Economic Return from Virtual Worlds Applications”.  This guide is mean to serve as a better informed roadmap for companies planning their virtual world investments in order to receive larger returns.

“Virtual Worlds have witnessed considerable growth among consumers, but companies have lacked the economic justification, metrics, and process to guide investments,” said Harvey Cohen, President of Strategy Analytics and chief architect of the study, while adding, “Virtual worlds can serve as a strategic catalyst for penetrating youthful markets as well as a checkpoint for demonstrating a company’s focus on innovation.”

Strategy Analytics estimates that there were 46m virtual world users in 2006, 90m in 2007, and projects 137m this year.  Keeping this growth rate in mind, that would place over 1 Billion virtual world users in 10 years time.  Granted, 10 year out projections can be a bit tricky, the general industry wide consensus shows now sign of hindering this explosive growth.  With the average consumer website engagement lasting only a few minutes, the average virtual world experience tend to be 45-50 minutes in duration.

“Companies will require more specific measurement tools in order to continue their investments in virtual worlds,” commented Barry Gilbert, Vice President and Research Director of the Strategy Analytics Virtual World Strategies program. “Multi-billion dollar global brand companies looking to target the global youth market should be investing a minimum of one percent of their advertising and promotional budget in virtual worlds.”

The downside of the report finds:

This report finds that many companies have found that investments in virtual worlds have not met expectations. Their problems begin with poorly implemented media strategies that do not include virtual worlds as part of an integrated PR and promotional effort, and end with a lack of understanding of the appropriate metrics for assessing economic impact. [...]

While companies can access virtual worlds with a small development investment, they often find that building and sustaining consumer momentum requires an on-going budget of at least 60% of their initial investment.

Strategy Analytics is quick to point out that the traditional ‘build it and they will come’ approach has been many top brands downfall.  Unfortunately, the virtual world landscape is littered with grandiose building (marketing) projects that have simply been set up, with little to no engagement and/or follow through from these brands.