Free but not real

'Virtual rewards' could be the next big thing in premiums and incentives

Proponents of online role-playing games have their eccentricities but chief among them is the tendency to spend money on ‘virtual accessories’ – including everything from three-dimensional weapons to pixilated handbags – for their digital avatars.

Paying real money for virtual anything might strike many people as odd (and go some way towards explaining the popularity of digital piracy) but the younger, more tuned-in generations don’t see anything strange about it. Marketers who rely on premiums and incentives to drive sales are cautiously studying such online phenomena, and crafting their rewards programs to appeal to just this set.

‘As the world becomes more connected and the audiences become more accustomed to living and communicating in a technical environment, the growth of virtual rewards will be more common than premium items,’ says Duncan McCready, executive VP for IC Group, a Winnipeg-based company that provides online game development, prize insurance and other promotions services.

General Mills took its first step in this direction in October 2002. Instead of sticking a toy in every box of Honey Nut Cheerios, the company joined a number of major American brands that have partnered with L.A.-based NeoPets.com – an outrageously popular Web site where kids (or adults) can design, play with and look after animated pets. The site is full of games, most of which offer some kind of incentive in the form of Neopoints, which kids can accumulate and then ‘spend’ in a variety of virtual stores.

Television, online and on-pack advertising drove kids to the Web site, and a special ‘rare item code’ in the box also offered special access to Honey Nut’s own game. Overall, the game generated over a million plays – that’s 30% higher than other games on the site – and increased awareness among the targeted eight- to 12-year-olds.

More recently, Ferrero Canada has launched a virtual component with its popular Kinder Surprise eggs. In addition to the ready-to-assemble toy inside each egg, buyers receive a passcode entitling them to 20 minutes of free online gaming at www.magi-kinder.com. Thirty-second spots on Teletoon and YTV promoted the virtual treat with the tagline, ‘Where will your next egg take you?’

The program is not a cheap alternative to the classic Kinder toys, says Gabriella Schiavoni, Toronto-based Kinder Surprise senior brand manager. The Italian candymaker made a significant up-front investment to design its own games featuring ‘Kinder characters.’ Rather, the program was strategically designed to broaden the appeal of the product to a slightly older and very tuned-in target market.

‘The toys appeal to three- to five-year-olds, maximum six years old,’ says Schiavoni. ‘With the virtual surprise we can stretch the target up to 10 years old, maybe 12. Kinder Internet Surprise definitely cannot compete with the Xbox or Playstation but it offers great value – with one dollar you get a chocolate, you get your toy and you get 20 minutes of free online gaming, and every time it’s a different game.’ Schiavoni has already seen positive results from the promotion but will wait to see if the idea has a long-term effect.

If participation and brand recognition are the goals, then free online gaming seems like a natural draw for a generation that grew up with video games. Even Kraft Canada has done it. For the last two years, the rather traditional Shoot to Win sweepstakes has been augmented by an online component (created by IC Group, along with Toronto’s Capital C Communications), where consumers with a unique access code from specially marked products can take a shot on a virtual net for a chance at instant prizes. Of course, the prizes came in the form of actual NHL merchandise.

Other companies have used the Web to offer unique access to a different sort of reward. Starting in mid-December, Toronto’s Teletoon offered visitors to its Web site the chance to submit a joke that would run on the Yakkity Yak Comedy Corner show. The best 20 jokes will be made into 15-second animated cartoons. A further 250 jokes will be posted online. According to director of online media Steve Szigeti, the contest ‘creates incentives to come to the site and the payoff is that your joke might appear on our network,’ adding that the target market is aspiring teenage standup comedians.

This March, Toronto’s Corus Entertainment will take online incentives to a new level. YTV.com already has a members section called Yap, which offers special features to kids who register, such as higher levels in games, insider info, or live chats with TV show hosts. As of March, regular users will get access to a loyalty program starring a cartoon character called ‘Sitekick.’

Sitekick is ‘essentially an online robot,’ says Frank Duyvelshoff, Corus’ director of business online, though he could just as easily call him a virtual friend. The character is similar in concept to Microsoft Office’s notorious Paperclip helper, only in this case, kids can customize it, play with it, and share elements of the Sitekick with other members.

‘It really provides a more in-depth interaction with other members and allows us to have greater interaction with our members. The idea is that you have to be a member to access your Sitekick character.’ Corus plans to develop the program over the next year, adding more virtual rewards, such as a certificate that shows up in your e-mail when you achieve a high score in a game. ‘Obviously something more physical is more tangible but we believe this idea of a virtual reward or special achievement by being involved with this character will generate interest.’

YTV.com already has a membership some 250,000 strong. Duyvelshoff hopes to grow that number significantly – expect to see the program promoted heavily in the next two months.

As with any premium offer, the ‘perceived value’ is more important than the actual value of the offer, says IC Group’s McCready, and according to Max Lenderman, youth marketing expert and partner/CD of Montreal-based Gearwerx, the perceived value can be quite high.

‘I’ve heard of people selling online characters on eBay,’ Lenderman says, alluding again to the strange world of online gaming. But Lenderman thinks there are other virtual rewards that could have mass youth appeal.

‘A major reason [companies] give away notepads and T-shirts is that they’re hoping people will use them or wear them when the campaign is over. On that note, I’ve always thought companies should give away cool e-mail addresses.’

Lenderman notes that some bands already do give away e-mail addresses featuring their names, as in max@queensofthestoneage.com. ‘Stuff like that with kids really works, but marketers have not really taken advantage of it. There are 60 million Hotmail accounts out there. The moment you give kids something cooler, they’re gonna jump on it.’

Virtual rewards can also offer significant cost benefits to the marketer. Once a game or online program is developed, the administrative processes and costs associated with fulfilment are virtually eliminated. Ferrero Canada will boost it ROI by using the same games worldwide.

Online rewards also lend themselves to sophisticated tracking and reporting options. The simple ability to track repeat users allows Ferrero Canada to determine which games are the most popular, and which appeal more to boys or girls.

Of course, virtual rewards aren’t always the right option. ‘Premium items tied to entertainment properties work very well in a QSR environment when the goal is to reward kids for purchasing a specific meal combination,’ says IC Group’s McCready. ‘Yet virtual rewards may work well in a QSR environment when the goal is to get Millennials into a restaurant that offers a WIFI environment.’