I have been analyzing Second Life for months, but a great article in Brandweek titled “are marketers dying on Second Life?” prompted me to write this post.

Second Life is the Internet-based virtual world, which has been a center of attention for mainstream media after IBM, Dell, American Apparel, Adidas, Starwood Hotels, Nissan and many others developed a presence or bought islands. Developed by Linden Lab, a downloadable client program enables its users, "Residents", to interact with each other through avatars in a virtual society. Residents can explore, socialize, participate in group activities, create and trade items (virtual property) and services from one another. Second Life has roughly 3M subscribers.

I really believe that Second Life is another example of a web 2.0 property that marketers should explore and understand. It opens up a window into the future of 3D web, but I still need to be convinced about broader marketing activities and here is why:

#1. The technology is still too complex – it takes an average user too long to feel comfortable navigating, teleporting or flying. See Steve Rubel’s take on the need for PC horsepower.

#2. The model is not yet scaleable – Second Life can only accommodate less than 100 people in one place at any point of time, not a very exciting statistic for a large brand

#3. The subscriber statistics are misleading - my colleague Scott Berg has an interesting statistic: if you take subscribers online at any given point of time and Second Life square mileage, Second Life’s density is 23,000 per square mile compared to 143,000 for Manhattan. Except for a few places, you will meet few people on a Second Life tour. Check out these pix on Valleywag.

#4. The model’s scaleability is further threatened by a corporate IT backlash. According to a recent survey by Sophos, 90.4 percent of IT pros want to block users from accessing Second Life and other similar sites; and 62 percent find it essential to block users from accessing from their corporate PCs. The reasons include increased IT security risks; burden to company bandwidth, and wasting valuable business time.

#5. The content is primarily adult oriented – None of the top 20 destinations is adult oriented in the web; most of them are on Second Life. Are you ready to take the risk of having one of your press events attacked by animated flying genitals?

#6. Brands are underestimating the investments required. Most brands have focused on the upfront cost (i.e buying land, web design and creative fees), but most have not taken into account the on-going investment into Second Life. Most indigenous businesses will have hosts and even the owner welcoming you to the island or store – most branded islands do not have any employees and operate on self service. Furthermore many indigenous businesses pay other residents to dance on their properties (a tradition in Second Life to boost your ranking) and I have not seen any brand operate that way.

#7. Brands are not staying true to the Second Life values. Second Life is about realizing your fantasies and being something different than you are in real life. Many avatars have a different gender than the subscriber or take animal forms. However most brands mimic their real life experiences and value proposition in Second Life. Brands have also disrupted the local economy by offering some of their goods and services, prompting a backlash by residents. 70% of Second Life residents are disappointed by the branded experiences.

#8. Second Life experiences are not integrated with the overall brand experience. New Second Life ventures by leading brands still feel too much to me like PR coups vs. being truly integrated into the broader set of the brand promise and experience. How many brands have a link from their online branded presence to their Second Life presence and seamlessly connect both?

#9. Potential revenues and profits are limited. If you combine the first 7 points, I cannot imagine that the revenue potential is anything by minimal. Valleywag has an interesting take on this, by sharing the example of Amsterdam - one of the most popular (adult) destinations - which is auctioned off for a mere $50,000.

#10. I barely have time for my first life……

I am happy to be proven wrong and would love to get your take on it.