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Geek revival. (Connection).

A Chilean online marketing site plugs along, although new investors are needed.

It's all been done online, to no avail: chat rooms, games, clubs, shopping. All the bells and whistles meant to drive traffic and build an online community. The list of dead dot-coms that aimed to re-invent marketing online is long indeed.

But what if you did it all at once? And what if your advertisers were also your investors?

That would be, the Chilean consumer site launched in April 2001 and funded by an all-star cast of Chilean investors, including Corp Banca's Alvaro Saieh, TV personality Mario "Don Francisco" Kreutzberger and Enrique and Ignacio Cueto of Lanchile. More than a year later, the outfit is still spinning along, although its general manager admits that time could be finally running out.

Within the first three months of operation, Virtualia had 50,000 registered users, complete with personal data. More than a year later, the site has 175,000 active members. It aims to create a virtual world where entertainment comes together with marketing to make a place worthwhile to its users--chatty, Internet-crazy Chilean teens--and to executives interested in plumbing their wallets.

The layout of Virtualia mixes content and ads. Users take part in daily polls, chat rooms and free-form interest clubs in cyberspace, as well as win games and prizes--all in exchange for their consumer profiles. With this information, managers say, Virutalia skips the legwork of traditional marketing and uses the accessibility and efficiency of the Internet to bring companies and their products closer to their consumers, plugged-in kids.

In return for clicks, users earn fanimanis (a pun on "funny money"), a virtual online currency that can be exchanged for real-world products and services from affiliated companies like video rental chain Blockbuster, LanChile, Pizza Hut and hardware and home supplies store Sodimac Homecenter. Users can manage their fanimanis through deposits or stocks or they can bankroll charitable causes.

"Super" banner ads, meanwhile, collect information on registered users each time they click on an ad, instantly sending feedback to advertising execs about their interest in new products and services. "[Virtualia] earns the confidence of young, skeptical consumers by giving something back in return: responsibility," says Virtualia general manager Alfonso Gomez. "It is more fun to spend fanimanis online than to spend real money at the local mall."

Influencers. Some go so far as to enlist surfers as salespeople. Cable company VTR, for example, offers fanimanis for getting parents and friends to sign up for telephone, cable or Internet service. Department store Falabella rewards cybernauts for purchases. Buying a mountain bike at the department store, for example, brings a Virtualia user 800 fanimani units. Likewise, 400 of the units, marked as FM$, will bring a discount of about US$4 on another purchase.

"We are interested in youth in terms of their financial capacity, their influence as potential market researchers, while providing us with consumer profiles and a great capacity for recruiting other young people," says Gomez.

Ad agency McCann Erickson in Chile says Virtualia's super-banners are 20% more effective than traditional banners. Since companies spend about 3% of their marketing budgets on online advertising, the benefits are linked to that other 97% spent on TV and print ads, McCann reported in a market study.

Feedback is powerful. Sodimac, for example, tested a new logo for its Homecenter stores on the Virtualia site. Within 48 hours, 3,500 Virtualia users had rejected the logo. Sodimac changed the design.

Virtualia's model has great potential, as long as site managers keep viewers interested, says Scott Meadow, a retail analyst at Foote, Cone and Belding. Once novelty wears off, however, members tend to disappear, too. "Designing a long-term publicity campaign for the Internet takes the high costs out of traditional campaigns,". Meadows says. "As long as the program is centered on local brands and a local mentality and keeps viewers involved actively, the combination should prove successful."

Expansion could be tricky. Virtualia has home pages listed for several regional countries, but the community continues to operate solely in Chile. There is talk of repeating the process in Mexico, with local brands and staff, but the investment is still slated for the future.

Virtualia's earnings, meanwhile, once predicted to hit $1 million annually on the original $3 million investment, have fallen short of expectations. The company is looking for partners. "Currently we are in negotiations with an established media company, one with resources and know-how in a related field. Once the association is complete, then Virtualia will be able to offer new services such as become an ISP provider and expand to other countries," Gomez says.

Dot-coin dreams die hard. But even staying alive this long means the backers--the very markets whose banners dot the site--are in for a bit longer, at least.
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Title Annotation:Chilean online marketing site
Author:Alexander, Jessica
Publication:Latin Trade
Geographic Code:3CHIL
Date:Nov 1, 2002
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