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January 12, 2004 - Strategy Magazine
Special Report: Premiums & Incentives

Free but not real
'Virtual rewards' could be the next big thing in premiums and incentives

by Sara Minogue
page 15

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.

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