Interview: There.com Announces Virtual Goods Partnership with NaCo, Lation Focused Fashion Line

There.com announced today a deal with NaCo USA, a Lation-focused clothing brand, to distribute branded virtual goods.   "The NaCo deal is pretty interesting," Ben Richardson, Director of Business Development for Makena Technologies/There.com, told Virtual Worlds News. "It's consistent with everything we've been seeing in terms of the drum beat growing for virtual merchandise. Makena is finding lots of partners from clothing to media who want to open up a new channel to market and sell their brand in the virtual space. So we find ourselves doing a lot of virtual merchandise deals featuring characters, logos, or brands. Some is based on real world products and some is purely virtual."

"NaCo has had really good success by carving out a niche for themselves," Richardson continued. "They're targeting the Hispanic marketplace, and it's very sort of urban, edgy, up-and-coming Hispanic consumers. They've been selling it in music outlets, storefronts in Mexico City, and in other retailers around the city. This is the first  virtual merchandise they've done."

Now NaCo will sell nine unique pieces of virtual clothing to There.com users  with direct options to purchase the real clothing as well.  There.com will support an entire end-to-end transaction, from browsing to purchasing. It's a promotion to drive sales of real-world clothing, but NaCo is looking at the whole enterprise as a revenue source.

"This is a source of revenue for our partners," said Richardson. "I think that, really, this is virtual merchandise as a source of revenue, but the power in virtual merchandise is in the marketing impact. Virtual merchandise is all about social branding. For a member to make a brand or a character or piece of content a part of their in-world identity by acquiring a shirt with that content, it's powerful because it says something about who they are. People like to be recognized for specific ideas. That's really the impact for brands looking at  virtual merchandise, the social branding. Making it a part of your identity, it becomes something you talk about and that other people talk about. That's much more powerful, I think, than a banner or text ad."

What's particularly interesting is how focused this campaign is. The press release cites 19.5 million US Hispanics online as well as non-US Latin Americans, but There.com declined to share specific numbers about its Hispanic/Latino population. As a measure, though, Richardson cited 15-20 groups, clubs, or neighborhoods in There.com aimed at a Latino audience. Those may have a fair amount of members, but it's still only looking at a small segment of the overall user base. Compared to the Scion campaigns in There.com, which aimed at the broader youth audience, this seems smaller.

"Smaller is probably the wrong term, but this is a much more dialed-in partnership," said Richardson. "It's all about virtual clothing specifically. Scion was a marketing campaign. We created a whole new environment where people could hang out while immersed in the Scion brand. It's just a completely different campaign."

The vertical focus may begin to pop up more, though. Richardson explains that just as fashion companies are beginning to target more niche and specific demographics, more brands will likely do the same in virtual worlds.

At the same time, more and more companies are warming to the idea of virtual goods as both promotional items and a source of revenue. The biggest example is the recent launch of Virtual Greats, but that will likely bring similar thinking across the board.

"Virtual goods as a category is in the early stages of happening," said Richardson. "If you look at companies right now, they are still working out the  legalities of who owns digital rights to real-world content. Sometimes that's a very, very convoluted line of IP ownership. When it comes to virtual worlds, we're the catalyst for a lot of companies to figure that out through their own internal channels. At least that's my experience. I've run into lots of companies who see it as a revenue opportunity, but haven't addressed ownership rights.  And it is happening. We have some partners."