The New York Times


February 26, 2004 Thursday
Late Edition - Final


SECTION: Section G; Column 1; Circuits; Pg. 5
LENGTH: 1223 words
HEADLINE: Care and Feeding of Cyberpets Rivets Tag-Along Marketers
BYLINE: By WILL WADE
BODY:
PAT-TRICKS is getting hungry, and Nadya Kronis is becoming frustrated. She tries to buy a bottle of water for her pet, but the store is sold out. A plate of nachos looks tasty, but again, the store is out.
''That happens a lot,'' says Nadya, a New York City third-grader. Hundreds of shops are scattered throughout Neopia, the online world at neopets.com, a Web site that allows visitors to create, nurture and care for cyberpets. But there are also players from all over the world who need to feed their digital charges, and the stores are frequently out of stock. But if Nadya tires of clicking on elusive food items for Pat-tricks at markets that are perpetually understocked, there is another option: she can always try going to McDonald's.
Just as in any busy real-world neighborhood, the virtual golden arches are easy to spot at Neopets, squeezed in near the Neopian hospital, which sells sporkle syrup as a cure for the dreaded ugga-ugga disease, and the post office, which issues commemorative stamps featuring such notable figures as the Archmagus of Roo.
After dining at McDonald's, Neopets members can stop at the Disney theater for a look at the latest Disney releases, or check out the General Mills Cereal Adventure and play a few video games with Trix Rabbit.
With more than 22 million members, and 27,000 new ones joining every day, Neopets is one of the most popular children's sites on the Internet. It is free to play and supports itself with a unique form of interactive product placement, which turns commercial items into part of the Neopets environment, generally by using real products as components of video games. In Reese's Puffs Mini-Golf, for example, players try to roll a peanut butter ball into a hole.
Not only does the site deliver advertising to its visitors, it can also create detailed reports about the behavior and preferences of its members, allowing advertisers to evaluate the effectiveness of their campaigns and plan new ways to aim their next ads. With 39 percent of its members under 13 years old and another 40 percent ages 13 to 17, the Neopets user base offers a trove of information about the habits of young people.
''We live and breathe market research,'' said Rik Kinney, executive vice president of Neopets, based in Glendale, Calif. ''I don't know of any other medium that uses research to the degree that we do.''
Mr. Kinney said that Neopets was a strong advocate of online privacy. Despite building a business around selling information about its users, the company wins praise from privacy advocates because it releases data about its user base as a whole, or about certain large chunks, rather than revealing facts about individuals.
Thus General Mills might learn that teenage boys are less interested than preteenage girls in the misadventures of Lucky the Leprechaun, the spokescartoon for Lucky Charms cereal, but it won't be able to send free samples to any of the girls who say they like the product, because Neopets offers no way to determine individual mailing addresses. ''Privacy is extremely important to us,'' Mr. Kinney said. ''If we are not asking for personal information, surveying people is not an issue.''
John Soma, the executive director of the Privacy Foundation at the University of Denver College of Law, agrees. ''If they were keeping individual data then they would have some privacy issues, but as long as they are grabbing the data and aggregating it, they are O.K.,'' he said. While the abuse of personal information gathered on the Internet has a long history, the Neopets site represents a relatively new and unintrusive way to use information about individuals for marketing purposes. ''In my opinion, this is a responsible way of dealing with private data,'' Mr. Soma said.
Neopets first hit the Internet in 1999, the brainchild of two British college students. It was soon noticed by a California market research firm, the Dohring Company, and in 2000 the firm's founder, Doug Dohring, purchased the site. He restarted it three months later with himself as the chief executive. Neopets now has almost 100 employees, nearly half of whom create content.
Players start by creating a pet, choosing from 46 species developed by the Neopets design team. Once the pets are ready, they spend their time playing games, solving puzzles or going on quests through various imaginary worlds, all to earn Neopoints, the coin of the realm. Pet owners can then spend those points on food, toys and other luxuries for their charges.
Taking care of these virtual companions can be addictive. Leslie Marable, a senior analyst with Nielsen/NetRatings, said the average user spends nearly five hours a month earning and spending Neopoints, and it is the top community site on the Internet aimed at a young audience.
That appeals to advertisers, who want to market to -- and learn about -- the core Neopets audience. Mr. Kinney calls the product-placement style of promotions ''immersive advertising.'' Games and activities built around specific products are more interactive than television commercials, and therefore more entertaining, he said.
''As kids are online more, it makes sense for us to have a presence there,'' Eric Lucas, the vice president for marketing at General Mills's Big G cereals group, said by e-mail. ''It's a different, more interactive medium.''
Nadya Kronis's habits back that up. ''When commercials come on TV, that's when it's time to go to the bathroom or something like that,'' she said. Playing a branded game is more fun than seeing a commercial for the same thing ''because that just advertises stuff,'' she said. ''At home you get to play.''
Young Neopets users like Nadya may realize they are the targets of marketers, but their parents may not be so aware. ''I had no idea there were ads; I never really looked,'' said Inna Rozenblit, Nadya's mother. ''The whole idea of selling, and pushing something on you, is unpleasant. Kids are constantly bombarded with ads, and here's another venue for that.''
Nonetheless, she has no problem with her daughter's being used to generate market research on what children like. ''What's wrong with that?'' she said. ''They need to know.''
The primary research mechanism at Neopets is a link to an online survey, prominently displayed on the home page. Members are rewarded with hundreds of Neopoints for answering questions about their shopping habits, and users complete 6,000 to 8,000 surveys every day. One current survey, for example, asks for members' age and sex, and whether they have been in a Wal-Mart store in the last two months.
Neopets also compares its users' survey answers with their behavior at the site, asking, for example, whether members have seen a specific movie and then determining whether they played the games promoting that film, like one this month for the 20th Century Fox release ''Catch That Kid.''
''Without exception, awareness goes up and viewership is much higher among those who played the activities,'' Mr. Kinney said.
Back at her computer, Nadya is struggling with the ''Catch That Kid'' game. Her character is waylaid by a green laser bolt, then falls down an elevator shaft twice. ''This game's not that fun,'' she said. ''I don't really get good scores.''
Does she plan to see the film? ''Maybe,'' she replied, ''if it gets good reviews.''