Gaia Online VP Talks About The Mix of Marketing and Gaming

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Show Notes:
Interviewer: I’m here at the Game Developers Conference Online in Austin, Texas and with me today is a special guest. How about your introduce yourself?

Chris: Hi everybody, I’m Chris Davis, Senior Vice-President for GAIA Online. We’re a virtual world based in San Jose, California.

Interviewer: And what’s your virtual world targeting? Can you explain your virtual world a little more?

Chris: Sure. So, we’re an avatar based virtual world/social network, and it’s all about creating your avatar, coming onto the site, playing games, tricking your avatar out and actually posting in forums. A lot of people don’t realize we have such a robust forum based community, exchanging in the marketplace, doing all of the things virtually that you can do in the real world.

Interviewer: What was interesting about your site is, I think, you guys were either the No. 1 or No. 2 forum site in the world. Can you talk more about that, and what’s changed since that was announced a few years ago?

Chris: Yeah. There was a statistic that we were No. 2 in popularity for all forums after Yahoo, and the validity of that is I don’t know what source actually quoted it. But the reality is we have nearly a million forum posts on a daily basis. So, it’s a really rich part of GAIA, and users are communicating with one another. Really, if you boil GAIA down at its core it’s a community with gaming components, and certainly some of those components include forums on our site.

Interviewer: Is your community then focused on creating stuff, or is it just a general socialization community? What is the premise of the community?

Chris: Yeah. That’s a good question. So, the real premise is it’s really different for me than it would be for you. It’s kind of different for everybody. There are certain things that do pull it all together, but the basic premise is that you create an avatar, you enter the space, you engage in a number of different worlds, a number of different games, a number of different forums, all ways to express yourself.

It’s really, again, a community with gaming components, but we’re really all about self-expression and creativity, you know, the teen’s willingness and ability to really want to friend and communicate with other people. This is the environment for you to do that and also to create art and to have art showcased. We’ve had our core at our basic foundation. We were basically a manga art creativity based site at which is the premise the founders created GAIA under.

Interviewer: With that said, a few years ago you guys started then developing more Flash based interactive virtual worlds. Can you talk more about that, and how important is that now for your company?

Chris: So, Flash is really important for our company. We create all kinds of Flash environments that are very popular. There’s the rally space. There’s the virtual Hollywood space. There’s towns. There are all kinds of environments that really revolve around members congregating to just hang out or congregating with their avatar to chat with one another.

We do the same thing with our sponsorships, frankly. A lot of them are Flash based environments where users go to simply hang out, interact, get something of value that really adds to their experience, et cetera.

Interviewer: Are these Flash spaces then like real time chat, or is it asynchronous or just more of a place to explore, or is it a place where you just hang out with some other people in real time?

Chris: Yeah, it’s kind of all of those things. You can chat with other avatars. You can just hang out. You can engage in the activities associated with the Flash space. It really is something different for everybody, but the Flash spaces are really a key part of what makes this special and unique.

Interviewer: Now, does that take away then from the creativity that the founders originally envisioned for the community because in this Flash you’re communicating which is awesome but it’s not about creating other work and stuff like that.

Chris: Yeah, well there are areas of the site that are devoted to that, and there are story lines that have existed for years that users pay attention to and interact with. So, I don’t think they would say it’s taking away from the experience. Certainly, the site has evolved and it’s gotten a lot bigger than any of them ever imagined.

So, I think, the site is seven years old now. So, things have changed and the site has evolved. And it’s really evolved to meet the demands of today’s Internet user more than anything.

Interviewer: The stats I was looking at, your site has actually grown recently. Can you talk about, maybe, why your site has grown versus other social games which are now in decline? Some social games were the hottest buzz last year. Why are those declining and what’s different that you guys are doing that’s allowing people to keep…

Chris: That’s a great question. I think overall it’s our commitment and dedication to listening to the users and creating things that they want and actually rolling new content out on a consistent basis. A lot of sites don’t do that on a consistent basis, and I think one of the dangerous things about this space in general is that many sites have had that trajectory in growth a few years. And then all of a sudden they stopped growing, but they didn’t really re-invent themselves.

I think at Gaia we’re constantly trying to reinvent ourselves and figure out what our members want next and along those lines we actually listen to our users, to our user base to come up with new ideas for them.

Interviewer: So, it’s pretty much constant reinvention, reinvention maybe of what the core community is doing, reinvention of technology or using new technologies to reach new people and stuff like that.

Chris: Exactly. I think you have to be flexible along those lines in order to really have any site that’s growing in today’s environment, that’s for sure.

Interviewer: And now, your area in GAIA Online is about brands. Can you talk about the relationship with brands?

Chris: Yes, I will. It’s tricky, right, because this is primarily a teen and young adult demo and they hate in your face advertising. So the furthest thing from our minds is creating banner advertisements. It’s just not useful and would annoy our user base. So, really what we’re trying to do is integrate brands into the experience for users so that we really pull them into the experience rather than push a message out to them.

And we give them something valuable that they really like and associate with, like a virtual item or like the currency at the site, GAIA Gold. So it’s really meant to be a very integrated experience as opposed to something that’s just in your face with the larger banner of today.

Interviewer: So, it’s more detail than just, say, oh put on this brand name shirt or something else; hey, do you want to buy this from the virtual store? You’re doing something where you might be doing virtual good giveaway via the brand, or how are you doing more than just virtual good integration?

Chris: I’ll give you an idea; sorry, an example, rather. So, in the case with Disney and Alice in Wonderland, we scattered tens of millions of rabbit holes around the site. Users were intrigued so they clicked on the rabbit hole. Once they were clicking or after they clicked, they were transported into Wonderland from the movie and from the book, of course.

In Wonderland they had the opportunity to actually integrate and play a game, a mini game, with Alice herself, and they had to successfully mimic her expressions ten times in order to get the hat that Johnny Depp wore in the movie, virtually, of course.

So, it’s that kind of brand integration that I’m talking about, and it’s that kind of integration that’s really seen as valuable to the user. It gives them something for participating in the sponsorship, and they really love it.

Interviewer: So, it’s more about… It isn’t like, hey, take this brand. It’s more about designing an experience that users and players want to engage in and some kind of reward for that experience that kind of resonates with the brand and also resonates with the user.

Chris: That’s exactly right. The more contextual you make the message, the more engaging it will be. We know from our forum posts there are literally forums devoted to this sponsorship on the site, and they will talk about their experience with it and how much they’ve liked it. So, that’s very valuable to us. It’s really just meant to be very contextual and something that they’re used to doing on GAIA at large. It works because of that.

Interviewer: Can you talk about the feedback from players. How did they respond to these types of branded events and experiences?

Chris: In our case, very well because, again, we try and make it contextually relevant to their experience, and we again don’t push a message out to them. It’s totally elective for them to participate in, and it’s not some big banner that’s in their face that we’re asking them to click on.

Their feedback has really been positive the majority of the time. There are always those users that don’t like advertising or see something as “site selling out”, but the reality is we give them a lot of very valuable experiences to participate in on site. So, you know, most of them really enjoy engaging with these ads.

Interviewer: Do you feel then that this is going to be the future of brand advertising or brand engaging?

Chris: I really do. If you look out at the space right now and you even look at the casual gaming, social gaming space like what Zynga’s doing with FarmVille, I mean, you have two to five percent of all users who are actually buying items with real cash, right? So that means there are 92, 95, 97 percent of those users who are still susceptible or still willing to receive a brand message and that the data suggests that almost half of all respondents want to participate in some sort of advertising.

They love getting something of value that they don’t have to pull their credit cards out for. So, as long as you can make it part of their experience and it’s not disruptive to their experience on the site, it tends to work quite well.

Interviewer: How do you reconcile this with this concept of video ads, video ads that are playing when you first start a Flash app or something else like that? Is that something you guys are looking into, or is that just not as compelling as what you described with the Alice in Wonderland?

Chris: We’re looking more at video, but we’re really looking at it very carefully because we don’t want it to disrupt the user experience. So we’re going to experiment with it, but currently for most of our sponsorships we will have custom theatre executions where you can go into a theatre environment that’s completely branded but very cool, just like you were entering any theatre that you literally see a real movie in. Users then chat before the trailer starts.

They laser tag each other. They throw popcorn at the screen. It’s a very engaging experience. It’s really interactive. So they tend to like that kind of environment. That’s how we tend to do it. We generate tons of trailer views, hundreds of thousands of them, if not millions of trailer views for partners as a result of that kind of execution.

Interviewer: One concern, though, about this deep integration with brands is that it takes relatively a lot of time to integrate that experience within your game. How are you going to allow it and make it self-service so that the platform you provide is just as compelling and, obviously, way more engaging than something like Google AdWords or the Facebook platform or stuff like that?

Where do you see this going so that literally it’s just a self-service type of thing where people just go to your site? And just be like, OK, I want to target this audience, and here’s my little interactive experience. Is that analogy or metaphor even applicable here?

Chris: Well, I don’t think it’s applicable because really we’re so beyond Google AdWords and that’s effective, right? It’s an effective form of advertising on certain sites. That would never work on GAIA, but that is the issue. You bring up a good point. How scalable is it because everything we do is truly customized?

But I would also argue that really is what we should be doing for brands, and I feel like if we have executions like this that are completely customizable and that really perform well as a result and you have views like in the case of Alice users spending over five minutes in the Flash environment that we built for them.

That’s pretty powerful, and that means that basically there’s a positive message associated with that campaign. And users from an engagement standpoint are spending a ton of time there. So as a result, preference, purchase, intent, awareness all rise which is ultimately what we should be doing for our clients anyway.

Interviewer: You mentioned the five minute thing. Can you talk more about the most effective way people should measure their traffic now before there’s this concept of monthly visitors. What do you feel is more important now for these social sites?

Chris: I certainly hope we get beyond the click. I think that in this case the last click or just the click in general is antiquated and way out of date, so I think we do need new metrics to assess it. Frankly, that applies to social gaming and casual gaming, too.

If I put a vending machine in my zoo for Coca-Cola, I’m not necessarily sure what that means, but if I have a user spending minutes on end within an environment that I built for Disney or any of our other clients, I kind of know what that means. And I also put research behind it which we’ve done with other third parties to assess what impact I have on the brand favorability.

I think we need to continue doing measurement like that, but certainly time spent is a good place to start. How many trailers were viewed is an excellent place to start. What’s my click through rate on custom units not standard units because, again, I think that’s very antiquated and out of date. New measurement results will arise, but on the other hand we don’t want to make it too measurable because we will go the way of the click in the end if we do.

Interviewer: So you’re saying it’s even more than just daily active users because that’s the metric that some of these social games are using. It’s more about minutes spent, maybe.

Chris: Yeah. It really comes down to an argument for reach versus frequency, and I think most marketers would want a combination of both. They want the massive reach that you would get on a Farmville or Facebook. We’re not that. We have eight million unique users a month. We definitely are more frequency oriented play, but eight million uniques is a fair amount of reach, also.

Interviewer: Yeah.

Chris: If you can blend the two and really provide that engagement that is so powerful, then I think at the end of the day the marketer wins and everybody wins more as a result.

Interviewer: Now, you guys started out way before this social gaming trend came in. Can you talk about… And then, they just came out of nowhere. They have all of these astronomical numbers. Can you talk about what does that mean? Does that mean that you guys actually now go to where the teens are hanging out, or do you just try to double down and make yours a different teen hang out place? How are you dealing with these emerging platforms?

Chris: That’s a great question. We know we have a lot of crossover with Facebook. We know that three quarters or more of our users are on Facebook, too. We can’t be all things to all people, and frankly the level of community associated with GAIA, I would certainly argue is more powerful than what you experience on Facebook.

We’re going to continue doing what we do. We’re going to look at other things that make sense because we realize, obviously, that we have an obligation to those members we do have. But for us, it’s not about getting 30, 40 million unique users a month. We really do focus on the community elements of this site, and we try and listen to our users. From that standpoint we’re really servicing them as well as we possibly can.

But the other platforms definitely are, I feel, added to our experience because they lend credibility to the space and they’ve helped expand the space in a positive manner. There was a time that we would go into agencies, and they would say, “What’s a virtual world?” Now, those lines are clearly established, and they understand the space a lot more than they used to as a result of all of the casual games and social networks that are in existence.

Interviewer: Where do you see mobile in relation to your audience? Do you feel teens are picking this stuff up way more, or is it… Is that where everyone’s going to be hanging out now next?

Chris: Yeah, great question. Certainly, we know we’ve got very active teens and they’re on mobile devices. There’s no doubt about that. I feel certainly we don’t have a good site offering right now for mobile, but we do have our virtual item based businesses funded through mobile devices all the time with partners that we work with.

We know they’re there, and that’s a really great source of revenue and a great payment option for them to have. Mobile social networking is really in its infancy, and it will definitely be exploding in the future.

Interviewer: Well, with the teen audience they’re relatively poor. Obviously, their parents might be rich or something else, but they’re relatively poor. Do you see Smart Phones penetrating that demographic sooner or later than when it’s supposedly going to become ubiquitous?

Chris: That’s a great question. I think that’s probably going to be one of the limiting factors. The iPhone has certainly changed that to some extent, but it’s still an expensive device to purchase. We’re actually looking at all of that, like, what percentage of our users actually have an iPhone, a Blackberry, an Android-based device.

Right now, I don’t think that penetration is there for teens at large, but certainly any Web-enabled phone can serve up a website that we know of, and certainly you can fund your purchase of virtual items through it. So whether it’s a Smart Phone or just a standard text-based phone, we’re happy to, frankly, accommodate the teener.

As far as app development, obviously, we’d create something for the iPhone platform right now most likely because of its popularity, but again I’m not sure that the majority of our users actually have an iPhone. We’ll take all of that into consideration.

Interviewer: Teens are usually at the forefront of these emerging trends on the Web, it seems. What other surprises or what other things are you seeing for teens that you feel might actually penetrate the rest of the world?

Chris: That’s a great question. I think that there’s certainly a lot, like you can’t throw anything at them from a technology standpoint that they don’t understand or don’t get, and they often help us create content and give us ideas for story lines and things that exist on the Web. We will definitely follow their lead and listen to them.

It never ceases to amaze me how technologically adept they are, and it’s just part of their generation. Obviously, they’ve grown up with this technology. I don’t think I’m surprised, but at the same time it’s nice to know that we have very little that we can throw at them which we developed that they wouldn’t be able to grasp or get their heads around.

Interviewer: Where do you see these social spaces going in the next two to three years?

Chris: Definitely more toward the mobile device. I feel like that’s just again in its infancy right now. I think you’ll see a continuation, a continuing blurring of the line, if you will, between what MMO play on a mobile device, for instance, versus a Web-based browser. There will be a further blurring of the line between virtual worlds, social networks, casual games, social games, MMOs. I think they will all kind of be seen as one thing ultimately.

The only thing that’s a bit different is the platform that they’re going to be available on, and so I feel like any company in this space in this century needs to really take that into consideration and tailor their platforms accordingly.

Interviewer: Is there anything else I guess… Where do you see the advertising going then because that’s something you’re definitely focused on at GAIA? Where do you see the future of advertising? Is it Google AdWords? It’s not gonna go away, but how important is it going to be relative to demand generation?

Chris: Yeah, great question. Google AdWords is here to stay. Display media, display advertising is here to stay. Unfortunately, it’s not here to stay on our site. I feel like just from my experience talking to agencies and talking to marketers they’re really looking for the integrated solutions that we offer. And they’re asking for more and more, and they’re asking for more measurability, and they’re asking for every kind of analysis associated with the campaign that you could possibly imagine. So, they’re getting spoiled.

I think you’ll continue to see the space evolve from that standpoint, and you’ll continue to see brands that’s created more within content. Just today I read about FarmVille and McDonald’s integrating together for only one full 24 hour period, which is rather interesting. You’ll continue to see brand integrations such as that.

Again, I think it comes down to what does that mean, and how does it favorably affect the brand, and what do users actually think about it? Does it interrupt their experience?

Interviewer: :Do you see you guys going in and doing physical partnerships where it’s like OK, GAIA Online and say, vegetables in the fruit aisle or something else like that.

Chris: I don’t. I think we’ve got a pretty… It doesn’t mean we can’t change. It doesn’t mean we can’t integrate into other things, and we certainly will, and we are looking to do so as we speak. But the reality is we have something that’s quite special and quite unique. It’s very customizable, and I feel, again, if you really look at the…

From what I hear, brands are looking for these kinds of solutions. It’s just a matter of us getting out there and making sure they understand them and making sure they can communicate them effectively to their marketers. So, I feel like we’re in a pretty good spot as far as that goes.

Interviewer: Since it seems like this thing is going to be growing, do you feel that all these events and these special branding opportunities are going to have to be custom designed then?

Chris: That’s a great question.

Interviewer: That’s kind of like the TV model. I’m trying to distinguish between the TV model, and then you have the Web model where almost everything is self-service to an extent, at least, at a base line.

Chris: Yeah, no, it’s a great question. I think we are always looking for frameworks from a Flash development standpoint, that we can repurpose. We’re not necessarily there yet in many instances because, frankly, a lot of the time the objectives of a campaign or a new product launch or a new theatrical launch depend on the very custom executions that we design for them.

But we do have things that we can repurpose which makes it more scalable and a little bit more efficient, but the production costs associated with creating these campaigns are definitely something that need to be taken into consideration. You can get pretty efficient at it and repurpose things, where possible. But there will always be some level of customization.

Interviewer: How do you communicate to the brands that you guys are just as valuable as TV time? There’s still a disconnect in the price that people are paying for TV advertising versus Web advertising. When do you feel like that’s going to flip because once it flips we’re talking about huge increases in revenue and profits for these businesses?

Chris: Now, that’s a great point. What is there, something like, I believe, $160 billion spent on advertising?

Interviewer: That’s pretty crazy.

Chris: Only three percent of that is online, so that a great point. I think we’ll get there when No. 1, we start speaking the same language. Nielsen just announced a new tool that enables us to really communicate on GRPs which is how television is actually bought today. So, that’s a start, right?

I feel there are positives and negatives associated with that, but, at least, that’s a start. We need to communicate and talk similarly and speak the language of the media buyers that you’re sitting across from who had bought television in the past.

And secondly, I think we just need to communicate engagement. The fact is you could watch a 30 second commercial which is, no doubt, effective and it reaches millions of homes and gets those GRPs that the advertisers want, or you can interact with an environment that you spend five minutes in. Really, which is more valuable? Which is more powerful?

And I think the third piece is definitely one of inventory, right? There’s so much inventory available digitally that until there’s more of a scarcity of inventory, you’re probably going to see those differences in terms of CPMs that TV gets as opposed to what digital gets.

Interviewer: OK, great. And finally, what’s next in store for GAIA Online, stuff that you can talk about, either in terms of how you’re going to attract brands or how you’re going to engage the community?

Chris: Well, not too much I can talk about, but I can tell you that we’re working on a lot of exciting things, and you will see some announcements in the near future rather not too distant future regarding a whole host of things. But we’re really excited about a number of spaces.

You could probably guess what those spaces would be, but at this point we’re really focused on building the user base, growing the user base, both domestically and internationally and continuing to create great content for our members who are such a vital part of the community that we really serve them. Lots of exciting things in store for GAIA.

Interviewer: And for the teen listeners out there, where can they go
to get involved and start playing your games?

Chris: Visit gaiaonline.com. Well, you’ll probably see a big red button if you’re not registered that will encourage you to sign up. So, go ahead and sign up, create your avatar and then start exploring the site. I’m sure we’ll appeal to a lot of you.

Interviewer: Thank you very much.