The world’s hottest emerging market may not even be real

The boundaries between the real and virtual worlds are fast blurring. Nowhere is this more evident than in the rapid corporate colonization of Second Life. No self-respecting CEO went to Davos without an “avatar” or online alter-ego, a sure sign that Second Life has entered the mainstream. The likes of Reuters, Nissan and Adidas are buying up virtual real-estate and setting up store fronts. Alan Court at the Financial Times reports that IBM has 1,000 of its employees spending time in Second Life. American Apparel hires cyber sales clerks to test new merchandise before it hits stores in the real world. And there’s even a conference coming up next month for Fortune 500 companies who need helping devising a virtual worlds strategy.

Why the rush to a place that isn’t even real? It’s a chance to test new products and strategies (Starwood runs a virtual hotel), get marketing buzz, even find new talent. Fortune reports that people have already found real life work based on their performance in Second Life. The virtual “Linden Dollars” can also be converted to real cash, so the chance to make money is already there. Above all, this represents a fast growing market and a young demographic. There are already nearly 2 million users in Second Life, and while the virtual world is still way behind more traditional social networking sites like MySpace (see FP‘s related piece on YouTube, Second Life, and other hot Web 2.0 properties), that number is rising fast.

Most coverage of Second Life has focused on Western brands, but it cannot be long before firms from India or China join them. Like with any emerging market, there will be rising competition and new risks.

And firms won’t be immune from criticism for their actions on Second Life (such as running
virtual sweatshops)
. How long before there are calls for codes of conduct for virtual activities? Some firms are jumping ahead and aligning cyber ventures with a responsible image, which is why you can visit Mokitown, where every kid learns to cross the road safely—thanks to the good folks at Daimler Chrysler.

Michael Jarvis is a corporate responsibility specialist for the Business, Competitiveness & Development Program at the World Bank Institute. He is a regular contributor to the Private Sector Development Blog. Writers from the PSDBlog contribute a regular series of posts for Passport entitled “Fighting Poverty With Markets.”

For the latest news about Second Life, visit Reuters’ virtual bureau.