When the online virtual world Second Life first got hot a couple of years ago, Dell was among the companies that joined the craze. The computer giant built four islands: a factory where users could build custom PCs, a theater, a model of Michael Dell’s dorm room, and a nursery promoting a plant-a-tree program. “We learned right away that maintaining these areas requires a lot of resources,” says Laura Thomas, an e-business consultant at Dell who headed the efforts. Of course, if customers had followed, there would have been no problem, but “there wasn’t enough usage of the space to justify the resources needed to keep it dynamic.” Dell dismantled the factory last year, right alongside dozens of other companies that scrambled to stanch their bleeding Second Life budget line items. Second Life was over before it had begun.

Linden Labs, its creator, was surprisingly sanguine about companies fleeing. “Our focus has been to build technology that enables users and then stand back and watch what people do, instead of supporting a particular use of Second Life,” says Glenn Fisher, Linden’s director of business programs.

At the sametime, Joni West, a feisty San Francisco-based fine artist and business-development consultant, stepped into the breach. “I saw all these huge virtual spaces — Adidas, Starwood Hotels, Dell — and they were all empty,” says West, 47. “It was ridiculous.”

In just two years, West has rewritten the rules of corporate marketing on Second Life. An avid user of the site, she realized that billboards, commercials, and streaming video — the all-too-common troika populating most corporate islands — fell flat among hypercreative users who wanted to interact. Instead, she concluded, companies should try to spark user-to-user discussion — a surprisingly cost-effective option on Second Life. This insight has produced successful initiatives for clients such as Sun Microsystems, Overstock.com, and Nestlé, and made West’s firm, This Second Marketing, the leader in shepherding name-brand companies back to the virtual world.

West stumbled into the business potential of Second Life while pursuing her passion for fineart. “I thought it would be fabulous to create a virtual art gallery where I could bring people from all around the world,” she says. One day, she was sitting a Second Life art gallery couch, doing just that — talking to people from various countries — and she had their rapt attention. “At that point, I realized how powerful one-on-one engagement could be in Second Life.”

West used techniques gleaned from 25 years of marketing experience, including digital and email campaigns, to woo potential clients. She calmly explained that the previous failures of Second Life were a result of not harnessing the medium appropriately to reach its 14 million users, up to 66,000 of whom are present at any time. “I describe the mistake companies made like this: Imagine you’ve never been to Manhattan. You cross the George Washington Bridge, and someone hands you a guidebook. The first place you’re going is not the Reebok store.”

Translation: Second Life is not a place to make sales. It’s also a venue where large companies don’t have to spend $3 million to build an elaborate island when $10,000 to $100,000, usedjudiciously, can have a much larger impact. Linden Labs concurs. “New marketers often try to imitate another medium,” says Ginsu Yoon, Linden’s VP of business affairs. “Second Life isn’t TV or radio or even the Internet, all of which push information out one way.”