Wednesday, May 21, 2008

The Benefits and Pitfalls of Social Media: Lessons from Disney's Virtual Magic Kingdom

My friend, Erik Hauser, shared a great article over on the Experiential Marketing Forum. Disney is closing a virtual community it created in 2005 to promote the 50th anniversary of Disneyland. According to the Wall Street Journal, this news is being met with some disappointment and anger by those fans who have come to use and love the Virtual Magic Kingdom (VMK).

The challenge Disney faced is one created by the success of this marketing tactic. According to the WSJ, "Disney says it never intended the 50th-anniversary promotion to run this long." This 18-month endeavor was extended by two years, but given VMK was not launched to be a permanent online community, and considering Disney has fee-based virtual communities such as Club Penguin and Toontown, the company had to make a tough decision.

I have no personal experience with the VMK or any information other than was shared in articles and blogs, but I have learned a great deal about experiential marketing by observing Disney's actions over the years. I believe this situation provides some great lessons from which experiential and interactive marketers can learn.

If You're Going to Make Something a Campaign, Do So From the Start
If you're going to do something cool, interactive, and most importantly functional on the Web and you intend it to be short-term (i.e., a "campaign"), make sure that is communicated from the start. It sounds as if Disney did this and VMK members are upset anyway, so clear and obvious deadlines won't necessarily avoid the potential problems but may help minimize them.

The important thing about taking a campaign approach is that this requires special care for experiential marketers. If all you're doing is launching a traditional ad campaign, no consumer will care when it ends. But if your campaign brings consumers something of value that they'll use regularly (and if the whole point of the campaign is to provide a tool that people will want to use time and again), this requires deliberate planning, communication, and transparency from the very beginning. For example, perhaps Disney did this, but they might have launched VMK with a prominent banner counting down the number of days until the end of the program so that everyone had their expectations set (and could thus manage their own level of engagement) from their very first VMK experience.

Proceed Cautiously With Temporary Social Network Strategies
We understand a whole lot more about social networks today than back in 2005 when the VMK launched. Today, in the era of Facebook and MySpace, the concept of a temporary social network seems difficult to understand. I think we can all sympathize with VMK users when we read lines in the WSJ article such as, "Disney plans to throw everyone out of VMK and lock the gates -- erasing their online profiles, lives and collections of virtual trinkets and real estate." (I know how I'd feel I lost my Twitter account name, my email address, and/or my Facebook profile.)

In 2008, it's easy to see something that not even Disney might've suspected in 2005 when VMK launched: A place where people create their online selves and form real human connections is not a place that should be temporary. It's one thing to create a social campaign that borrows some aspects from social media--such as product ratings or profiles--but it's quite another to build and then destruct a living, breathing community. We experiential marketers can get excited about the opportunities social media offer us, but we need to proceed cautiously and respectfully of our audience, since true success creating a community can become it's own problem.

Monetization Comes in All Shapes and Sizes
I have no idea what Disney did or didn't try with respect to monetizing the VMK. In his EMF post, Erik says that Disney tried several ways to monetize the community and failed. I'd be interested to learn more.

Obviously, charging a monthly fee is one way to monetize a social network, but it's the sledgehammer approach--easy but crude. If it works, the community can become financially self-sustaining, but if it doesn't work, you'll kill the community.

Some social networks are beginning to find ways to generate revenue through the sale of virtual items. China's QQ made an operating profit of $224M last year; in contrast, the hottest site of 2007, Facebook, lost $50M last year. The vast majority of QQ's profit comes from the sale of digital goods, games, and mobile services.

We cannot know what Disney tested or explored, but it seems unlikely they proceeded without first considering how to turn this active community into a revenue-generating service.

Measure, Measure, Measure
Even though we may sympathize with disappointed VMK users, we all understand that Disney has an obligation to stockholders to ensure value was being created continuing to operate VMK. Knowing the care Disney takes with measurement and with its brand and marketing decisions, I strongly suspect Disney wouldn't have decided to shutter VMK without testing the ROI it was generating.

The question is, while VMK clearly had raving fans, was the fan base large enough (the site had only "a few thousand daily users" according to the WSJ) and the impact wide enough to produce either hard results (increased Disney resort visits or purchases) or soft results (positive impact to brand perception)? We can't know the answer to these questions, but I'll bet Disney knows--and this is probably why VMK is closing.

If Your Fans Are Raving Fans, You Can't Make Everyone Happy All the Time
One thing my time studying Disney has taught me is that successful brands walk a fine line. The more successful you are, the more strongly your customers feel about your brand, and the more they take ownership of that brand, becoming not just "customers" but "brand ambassadors". You can see this not only with Disney, but also with Harley-Davidson, Apple, and other great brands.

When your consumers take personal ownership of your brand, it yields incredible results. It also means you cannot please all the people all the time. Almost any change a successful brand makes will initially be greeted with some level of consternation from the consumer "owners." The key isn't to avoid making anyone unhappy--since that is the road to paralysis and ruin--but to make sure you make the right "big decisions" and manage as best you can the "small decisions."

A Disney example of this was the closing of the 20,000 Leagues Under the Sea ride in Disney World in the mid 90s. Every attraction in Disney parks has its fans but this ride was being underutilized by guests, and with EPCOT offering a view of real sea life, it must have seemed silly to continue maintaining this faux submarine ride through a lake of plastic fish. When Disney closed the attraction, some people were upset, angry letters were sent, petitions were launched, and Disney fans complained and consoled each other on the precursors to today's social networks (such as Prodigy's Disney Fans Bulletin Board, of which I was a member.) But people got over it; they didn't stop loving Disney; and they didn't stop visiting the resorts.

I don't know the care that was taken launching or closing the VMK, but I trust Disney to be careful marketers, to be considerate of their guests, and to make smart decisions when it comes to these sorts of actions. While there is some implied criticism of Disney's actions in the WSJ article and on some blogs, it seems to me that given the strength of its brand, the company may have done everything right and still ended up disappointing some passionate Disney fans.

In fact, this may be the scariest lesson of all: Big success with experiential marketing can come with its own set of problems, so its important not just to envision huge success but to plan for it. Whether it's the viral campaign that goes so viral you find yourself hosting expensive terrabytes of data and bandwidth, the widget consumers add to their site that shuts down once the campaign ends, or the social site that becomes more social than anticipated, success is great, but it can come with its own set of issues.


Anonymous said...

Disney did not make it clear that it was a promotional game. My daughter and I joined VMK about a year after it opened. I read the front page and newsletter frequently and never saw anything about it being a temporary game. It should have been clearly stated on the front page at all times. This may have not prevented sadness at it's closing, but it would have been honest and open about it's intentions and many players would not be as upset as they are now.

Augie Ray said...

Thanks Anonymous. Not being as familiar with the specifics, this is good info to have. Obviously, it would've been better to be very upfront from the beginning.

Anonymous said...

Hello again - it's me from May 2008. I declined to say this earlier as I thought you were, well rather bent on, a particular point of view. That is, that you thought Disney was always considerate of children's feelings and adult's feelings too. I would like to make something clear. Many people went to Disney parks (meaning they spent money) to obtain virtual items that they could use in VMK. They obtained these items through quests that took up their time while they were in the parks and cost them money to get in. Many people went to the parks just to do these quests which was the purpose of the "promotion". Another way that real money was spent on the 'virtual' VMK was through the Disney Rewards site, where, if one bought a large amount of videos you could get exclusive VMK items. In summary, lots of people spent lots of money on their virtual VMK items.
If it (VMK) didn't exist in the first place, how can anyone be angry when it ends? Because it did exist. Take a look at the plastic around your screen, which exists more to you - the plastic or the screen? OK, easy point made.

Augie Ray said...

Thanks for posting again. It gives me an opportunity to apologize if you feel I was "bent on a particular point of view." I am VERY open to your insights since you were part of the VMK and I was not.

I do believe Disney tries to act in good faith with the interests of its guests in mind, but that doesn't mean your experiences as part of the VMK shutdown weren't frustrating, upsetting, or disappointing. After all, perception is reality.

In a virtual world, our virtual "selves" are important; I know how I'd feel if I suddenly lost my Facebook, Twitter, or blog identity. The fact you took as much time and spent money to acquire your virtual objects and then lost them is understandably upsetting.

My original post wasn't intended to address the VMK situation (since I had no direct knowledge other than what I read), but was intended to help other community and social marketers to take some lessons from the VMK experience. People take their virtual identities very serious--they should!--and those of us who nurture and manage communities must keep this in mind. We must understand the expectations we will set before we invite consumers to be part of an online community.