During rough economic times, conferences are often hit particularly hard. People don’t have the funds to travel, vendors cut back on their displays, yet the information at conferences remain as valuable as ever, if not more so. Engage! Expo is no different. I’ve run into some old friends at the conference and I’ve established new relationships. I’ve picked up my small amount of swag and taken copious notes.

The first keynote was a talk by David Luner, SVP of Interactive and Consumer Products for FreemantleMedia Enterprises and Teemu Huuhtanen, EVP of marketing and business development for Sulake. They talked about the deal between their companies to bring American Idol into Habbo. There was the standard discussions about other co-marketing efforts, such as American Idol’s deals with Barbie, Dreyer’s Ice Cream, McDonalds, iTunes and Disney. There were discussions of the demographics of Habbo; heavily teen, with a strong influence in Europe and Latin America.

Yet for me, the most interesting part, and one that brought a question was about why American Idol chose to co-brand with an existing virtual world instead of building their own. There were comments about American Idol wanting best in class for virtual worlds and their belief that they were unlikely to do a better job than Habbo had already done, and the risk to the brand of a failed virtual world launch was greater than any upside opportunity that having their own virtual world might have produced. They noted that by using an existing platform, they could launch more quickly.

I view this as a good sign in the movement away from siloed virtual worlds towards a more common virtual space. At the end of the session, Ted Tagami, VP of Business Development for SmallWorlds spoke briefly about their world. They are moving even further towards better interoperability as they connect with Facebook and Bebo and prepare to support OpenID authentication.

The first panel that I attended was Virtual Worlds By The Numbers: A Look at the Market Research. Barry Gilbert, VP and Research Director for Strategy Analytics and Michael Cai, VP of Research in Video Games for Interpret also focused on the move towards interoperability. WeeMee’s integration with Skype and AIM were noted. Mr. Gilbert said they were expecting continued interaction with social networks, some consolidation in the virtual world space as venture capital is reduced during the recession, increased avatar portability, and the emergence of standardized metrics. He noted that the typical user that he was studying was in around four virtual worlds, but they are typically only active in one or two as virtual worlds seek stickiness. The number of virtual worlds the average user is in is trending down, a trend he expects to see continue.

Michael Cai’s presentation provided other interesting information. He spoke about the virtual world space as still being dominated by early adopters, whereas the gaming space has spread across much of the technology adoption curve. He spoke about research into brand preferences of virtual world participants. As I think about the current financial problems, I was struck by a screen about views on automobiles. Virtual world residents currently own cars made by Ford, Toyota and Honda, in that order. Dodge came in fourth. GM barely made the list. For cars that virtual world residents hope to own in the future, Toyota and Honda both remained in the top three, and Ford, the top American brand dropped to fifth.

Another interesting tidbit about virtual world residents is that they have a tendency to be more physically active, exercising at home or at the gym and participating in cycling, basketball, track, football and soccer. They also tended to be more socially active than the population of general Internet users.

After lunch, a different panel took up the metrics issue talking about Virtual World Metric = Measuring Engagement. This area is still emerging and most frequently people look at this in terms of time spent on a site and number of click-throughs. One person suggested that the average time on the typical website is around fifteen seconds, whereas the average time spent in a virtual world was more like ten minutes. He claimed that click-throughs averaged 1-5% in virtual worlds and only fractions of a percent on traditional websites.

Yet Dr. James M. Bower, Founder, Chairman and CVO of Numedeon, which runs Whyville, had a very different perspective. He spoke about how virtual worlds makes marketing about the product and no longer just about the brand. He spoke about information that he could provide to companies about how people interacted on a product by product basis. He had an interesting comment about twelve year-olds interacting with a product in Whyville and ending up knowing more about the product than the salespeople selling the product. He suggested that the metrics used for education are probably going to be the best metrics for virtual worlds. He noted the old adage, “All marketing is really education.”

Here, he wasn’t talking about the sort of metrics that are too often looked at in education, scores on standardized tests about material learned. Instead he was talking about metrics measuring student retention, engagement, contextualization and related ways of measuring how involved the students really are.

He suggested that as we move away from a focus on eyeballs, to a focus on eyeballs connected to brains, everything changes and that it will put more pressure on companies to produce better products. He also spoke about how whenever a new technology comes along, people tend to try and do things they knew how to do with older technology with the new technology, instead of rethinking the way the approach the underlying issues.

The final panel I attended was Parallel Virtual Worlds and the Transformation of Browsing the Web. This discussion was moderated by Benjamin Duranske of Pillsbury, and included Steven Hoffman, CEO of RocketOn. Jan Andressen, CEO of Weblin was also supposed to participate but did not make it. Keith McCurdy of Vivaty also joined the panel.

I asked about interoperability at this panel, and one of the panelists really went off on how we won’t see interoperability for a long time and how it is a bad thing for all of the virtual world providers. It turns out that by interoperability, he was thinking about seamlessly moving avatars and assets from one world to another. Instead, he suggested that we might see ‘interchangability’, the ability to import and export some information from one virtual world to another. Interchangability, he suggested, seemed much more reasonable and likely, but still not in the near term. This led to some confusion, since no one had heard the term interchangability before and it sure sounded a lot like what I meant, and I suspect many others mean by interoperability. One of the other panelists spoke about his project already supporting some sorts of interoperability, by, for example, basing text communications on Jabber. This is a topic that deserves much more discussion, and I hope to write a longer blog post about this when the dust settles.

As I wrapped up the first day at Engage Expo, I had the opportunity to speak with Thom Kidrin, President and CEO of Worlds.com. Worlds.com is about to DMC World as a hip-hop and music lovers virtual world. Like the discussion of interoperability, this is a topic that deserves a blog post of its own.

After the conference, people gathered at various bars around town. I went down to the Half King Pub and chatted with folks there. One discussion that needs follow up is one that I had with Carol Altarescu of Privo. How does their effort fit with portable contacts and other issues of ‘privacy, permission and trust’? I don’t know the answer yet, so that will have to wait for another day as well.

So, while Engage Expo seemed smaller this year in terms of participants, at least the first day seemed very full of important information. Now, on to day two.