But there is a new medium in town that is capable of side-stepping this supply phenomenon. This is good news for those who buy advertising. Remember back to Econ 101…if supply is no longer fixed, then you don’t get squeezed on pricing. This is also good for those who consume the media that is supported by advertising.

What is this new medium? Virtual worlds. This new medium is uniquely capable of integrating an advertiser’s message into their product, and in so doing, avoid the issue related to supply and inventory.

Consider Whyville.net, the “edu-tainment” virtual world for tweens. Unless you are 8-15 years old, you probably haven’t spent much time visiting this virtual world. But think of it as a virtual theme park. Every advertiser is essentially a new roller coaster or attraction for the virtual world. The site is actually enriched with each advertiser.

Scion opened up a virtual dealership and finance center. Getty put its name on a new museum. Even NASA got into the act by sponsoring the Whyville Aeronautics and Space Administration (that’s right, WASA). Sponsors ranging from Disney and Adobe to the Center for Disease Control and the Woods Hole Oceanographic Institution have sponsored destinations, activities, events, and the like inside Whyville.

Going back to our economic theory, with a virtual world such as Whyville, every advertiser produces incremental inventory (in this case, in the form of new page views). It’s like a new roller coaster opening up in our theme park example. The incremental advertiser creates incremental advertising inventory.

This is great news for the advertiser…but it’s also great news for the consumer of the media.

If every advertiser is a roller coaster, then the relationship between the advertiser and those that consume the media has fundamentally changed. Instead of being a necessary evil that subsidizes the consumer’s out-of-pocket cost, the advertisements enrich the site. Who wouldn’t want one more roller coaster in their favorite theme park?

As stated above, this is good news for the consumer. And at the same time, this is wise approach for advertisers. They side-step a seller’s market situation, and simultaneously put themselves in front of their consumers in a non-intrusive manner.

Could this be the fulfillment of the original promise made by the Internet?

Now, as we find ourselves living in a convergence culture, a “new kid on the block” has emerged (translation: new medium) that is gently challenging this model. Virtual worlds — as a medium — are capable of accommodating a form of advertising where the M in CPM becomes multi-variate. In other words, a single “ad campaign” can produce a number of different types of impressions and consumer touchpoints, both primary and secondary. Let me explain:

For example inn Whyville — a virtual world that edu-tains boys and girls ages 8-15, Toyota’s Scion brand was engaged as an automotive sponsor.. This campaign includes a 3D dealership (way cooler that what you see in the real world), a museum, a finance office, a car configurator, actively mobile cars, owners’ events and much more. The net result is the advertiser becomes immersed within the context of avatar activity, and the delivery of impressions becomes multi-varied. For example:

• A kid or (“citizen” as they are often called) in Whyville can hang out with his friends inside and outside Club Scion. That’s two different types of impressions.
• A kid can take a tour of the Scion museum, seeing virtual and real-world Scions behind velvet rope. That’s an impression (actually many, because the museum’s exhibit is rather large).
• A kid can get ambitious and check out the Scion Configurator, and custom design their own virtual Scion xB. That’s an extremely valuable impression.
• If the kid chooses to buy the Scion xB, he/she can take a ride around Whyville (and even pick up their friends). Because it is a virtual world (think video game), every place they drive, all other kids hanging out at that place see the Scion zoom across the screen. That’s an impression; actually many impressions depending on the number of kids that see the “carvatar” zoom by.
• Kids will chat about the Scions they see. Ever time a kid “chats” Scion that is an impression. And every time another kid “overhears” kids chatting about a Scion, that is an impression.
• And so on.

All told, everyday Scion gets hundreds of thousands of obvious (primary) and not-so-obvious (secondary) impressions inside Whyville. Each of these impressions is authentic, solicited, and significantly more valuable than a traditional banner ad.

This next generation, bottom-line CPM is superior because the quality and quantity of impressions exceeds what is possible with any other medium. A traditional ad (whether it is a tv commercial spot, a radio spot, a print ad, or a banner ad) is capable of making an impression, but that impression starts and stops with the ad itself. There is no echo, there are no aftershocks, no multiple consumer touch points — there is no CPM(2).

Of the brave few who have embraced this new and exciting realm, there is one example that truly exemplifies all the possibilities that await in these virtual spaces. A name that has already become synonymous with edgy and innovative, Scion has embraced the marketing to avatars concept with their ground-breaking campaign in Whyville, the virtual community for the elusive tweens segment — kids age 8-15. Right off the bat, we see that Scion is taking an unusual step — the kids they are marketing to in Whyville are not even old enough to drive. So why bother trying to reach an audience that is legally barred from using your product? It’s called vision.

First, a little background. On April 21st, Whyville rolled out a new and exciting feature for the kids in the Whyville community. In a virtual world that depended completely upon users walking around or taking the Whyville bus to meet up with each other, a new kind of virtual transportation was introduced — driving. And just like that, a whole new paradigm of virtual movement was introduced, and the Scion brand was right at the center of it. Besides the new freedom of movement, this was a big deal for the kids since none of them had ever owned or driven a car before.

Now, in the confines of their favorite virtual meeting place, a facsimile of this experience was being offered. Though the dangers and sense of speed that comes with driving a car are absent, the social and status aspect of driving a car remain intact. In many important ways, the kids of Whyville were experiencing for the first time that seminal American experience — owning their first car. And they were all Scions.

The consumer engagement that this introduction has offered Scion is in many ways beyond measure, but in other ways it is extremely measurable. For example, during the first week of its rollout, the Whyville team was able to count the number of times the word “Scion” had been typed in a chat window by a member of the community. In one week, the number of utterances of the word Scion went from 0 to 78,000! In practically an instant, Scion became an integral part of the Whyville cultural lexicon. Under the best of conditions, a banner or commercial placed in the world could never hope to have such a dramatic effect. And remember that Whyville as a “place” represents the most concentrated collection of Tweens in the entire country.

Inhabiting the lexicon of the community was just one aspect of the engagement however. In barely an instant, Scion was also able to position itself as the ultimate status symbol in the community. Already in the midst of an ever expanding battle of avatar one-upmanship, the Scion became the ultimate “face-part” to customize your digital self in the virtual world. The Scion part itself was even customizable, furthering Scion’s established message as a brand that caters to the individual.

The sense of status for a virtual Scion owner is further enhanced by the fact that the owner can drive their friends around town, just like in real life. The sense of cool that comes with being the first kid on the block to own a car actually translates rather nicely into the virtual realm. Because the Scions fetch a hefty price in the in-game currency, clams, there is a natural scarcity effect within the virtual marketplace. A minority of Whyville users are devoted enough to have earned the 15,000 clams required to “purchase” a Scion, and customizing can push the price up to 20,000 (sound familiar?).

Besides the increased value this gives the Scion brand within the world, it also has the side effect of rewarding those members of the community that are most invested and engaged in the virtual world. Applying this method of natural selection is a great way to capture the all important social “connectors” that Malcolm Gladwell speaks of in “The Tipping Point”. As Gladwell puts it, connectors are the kinds of people that “know everyone”. They act as the central hubs of a social network, connecting scores of people to each other that would otherwise not be connected at all. In terms of a viral campaign, connectors are the most active agents and the primary force behind a message that manages to spread far and wide.