In my work as creative director, I do a fair amount of projects in Second Life, so I know where the hype ends and ROI begins. It took only a few minutes to determine that Lively had a very limited shelf life. Their first crime was that Lively only worked on Windows platforms – this is a multiplatform world, keeping spiritual resonance with Redmond these days is the kiss of death. If some under-funded start-up was bringing us Lively, I could understand the Windows Only mentality, but this was a Google product. So the thousands of art directors in the ad agencies of America, who were slaving away on the next big campaign, were ignored by the Lively roll-out because most of them are on Macs.

To say that Second Life is a failure is to say the web was a failure in 1996. Remember back then when every company knew they needed a website but had no clue what to do with it? Just how many of those horrible 90s era websites have we blocked out? Oodles probably. But the web didn’t fail, the web sites failed because the developers didn’t know how to make the sites generate ROI.

Virtual worlds are in the same boat. Very few companies out there have a clue about how to generate ROI for their clients with virtual world campaigns. I recently met with a San Francisco Bay Area ad agency who had a client who wanted to invest in Second Life and the ad agency talked them out of it, mostly because they didn’t know how to generate ROI for that medium. Inexcusable. There are plenty of ways to get your clients product into Second Life and have it be a success. It is done everyday.

But there is another reason why Lively failed and it is a problem through out their product line. Google became number one without advertising. Not one ad campaign was ever developed or deployed for Google. Last week, ClickStream published the results of a study showing Google Docs having difficulty finding a foothold against Microsoft products. Well, duh. Guess who has an ad budget?

If no one knows about your product, it is impossible for them to buy it. The process of buying denotes a previous familiarity, even if it is just brand recognition, that is sometimes enough to make the sale. But if you choose to keep quiet about a product, there is not going to be a lot of urgency to buy.

So why did Lively fail? Plenty of reasons, none of which are related to virtual worlds or the marketability of virtual worlds.

And if you still think virtual worlds are never going to take off, check out this little product.

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