Virtually Influential

How Marketing Works Now

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Don’t Freak Out, Grandpa, It’s Just Like Elvis Back In The Day.

The Metaverse Investor is brought to you by a very boring set of people here at Cestrian Capital Research, Inc. Down with the kids we most certainly are not. We don’t use Facebook or Roblox, never played Pokemon Go, don’t own any AR or VR hardware and the only thing we would rather do less than real shopping is Metaverse shopping. Don’t care for any of it personally. But that’s not the point of the newsletter here. We think that the Metaverse is a generational investment opportunity. Not because of any one pair of virtual sneakers or indeed real sneakers bought with virtual money, or whatever. But because the vast array of immersive video content consumed at line speed by so many gabillions of users through so many different endpoint devices is in and of itself going to require a complete technology refresh cycle at all points in the value chain. Last year’s datacenter just isn’t going to cut it, and neither is a 50Mbps DSL line. The whole kit and caboodle is going to need an upgrade, and that means big ol spending and that means earnings up and that means, insofar as stock prices have anything to do with earnings, some upward pressure on tech stonks. Huzzah!

Now, whilst we may not want to actually use the Metaverse, because, you know, we aren’t 12 or 25 anymore, we do want to understand it, and as we learn we’ll share our more interesting findings here.

Marketing as you know has changed a lot since the Internet grew up. Like, a lot lot. If Mad Men was industrialized marketing 1.0, banner ads 2.0, and inbound marketing (when in essence sales and marketing merged as corporate activities) was 3.0, then it must be about time for a new iteration of how to convince people to do stuff they didn’t previously know they wanted to do.

In that light we were very interested in hearing all about the notion of virtual influencers, which are a thing. (A virtual thing. If you see what we mean). You don’t think they’re a thing? LVMH thinks they’re a thing. They have one. Here. Others have them too. Hugo Boss, for instance.

We talked to a fellow Substack’r, VirtualHumans.org, said to be the leading industry publication dedicated to virtual influencers.

First up, a word from them so you know what they do.

“We strive to document, cultivate, and empower the virtual influencer industry. You can find a list of active virtual beings on our site directory, read interviews with them, and stay up to date on the latest projects and campaigns on our website. Our substack newsletter delivers each week’s articles and our exclusive industry insights right to your inbox every Thursday”. 

And next … some questions we had for them, together with their responses.

Q1.  What is a virtual influencer?

At VirtualHumans.org, we define a virtual influencer as “a digital character created in computer graphics software, then given a personality defined by a first-person view of the world, and made accessible on media platforms for the sake of influence.” 

That means virtual influencers are just like your favorite character from a book or movie. Except you can follow them on social media and form a more intimate connection with them. Imagine seeing what Spiderman ate for breakfast while scrolling through your Instagram feed. That’s the appeal of following a virtual influencer. 

Q2. Why do consumers respond to virtual influencers?

Followers of virtual influencers tend to be early media users ages 13-17. These young people inherently understand the value of a digital avatar because they use them in games where they connect to their peers like Fortnite or Minecraft. They see virtual influencers as any other character on a screen, except they can directly interact with them and form an authentic connection while being invested in that virtual’s storyline. 

Virtual influencers also create inherently unique and eye-catching content that stands out on a feed filled with human faces. Whether it’s a funny video or a stunning realistic photograph, their content makes people pause scrolling— an invaluable trait on social media. 

Q3.  Which corporates are using virtual influencers today and is it still experimental marketing or do they have proven success yet?

We have seen major corporations use virtual influencers in their campaigns across various industries. Samsung was one of the first major brands to make the leap in 2016, and they still do virtual influencer campaigns to this day. Of course, fashion and beauty brands such as Prada, Dior, and Hugo Boss have partnered with or created their own virtual influencer. 

Celebrity endorsements and brand mascots have been used for ages (think of how much car insurance the GEICO Gecko sells despite having never driven a car.) Virtual influencers combine the appeal of those two strategies and re-package them for digital natives like Gen Z. 

As more brands are looking to stand out online and leave an impact on their audience, virtual influencers will be at the forefront of innovation in advertising. 

Q4. – What controls are applied in the sphere of virtual influencers to prevent spillover into the worst excesses of the Metaverse – including child protection matters, etc.

Virtual influencers have a strong following of Gen Z users aged 13-17 so there's definitely a reasonable concern over child protection matters. Ultimately, the platforms these virtual influencers use such as Instagram and TikTok have a duty to protect their younger audiences. However, I have seen protective measures put in places that the virtual creator has direct control over, such as a Discord community where users aren't allowed to discuss their age or full name for safety purposes. I thought that was a great idea to allow young people to participate in the virtual's fandom safely. 

Our Take

We’re old folks here at Cestrian and not the target audience for any virtual influencer, yet, though no doubt an inspirational retiree will soon loom large advertising golf shoes, or something. But we don’t think this virtual influencer thing is a fad. What really is different about a bunch of kids following a fictional digital character versus a bunch of kids following a movie star or rock star? The Elvis public persona was nothing like actual Elvis; Elton John, nothing like Reg Dwight; and famously Cary Grant, on being asked what it was like to be like Cary Grant, replied, “Everybody wants to be Cary Grant. I want to be like Cary Grant”. Marketing is at its core about the creation of idols that one can respond to, engage with, emulate and so forth, and along the way, brands use that strange aspect of human psychology to sell us stuff that we did not previously realize we wanted. So, we expect more to come from virtual influencers; if LVMH, run by very old folks indeed, have embraced the trend, so will others we think.

Now, where are our beat-up old golf shoes that we refuse to replace?

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Cestrian Capital Research, Inc - 15 April 2022.