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Advertise in the Metaverse? It’s Complicated.
If the metaverse becomes a place where billions of real people interact and have expendable currencies, brands will leverage experiences to drive consumers down a purchase funnel, just as they do in the physical world. But how that ecosystem of brand/advertiser, media and consumer take shape is still in flux. Our SVP of Marketing Christian Jones has some things to consider when jumping in. If you’re confused about the metaverse — what it is, how it’s changing the way people interact with each other and brands, whether marketers can create value from metaverse ads, etc. — you’re not alone. The metaverse is still taking shape, and the long-term implications of ephemeral or persistent virtual worlds that can be accessed via augmented reality (AR), virtual reality (VR), mixed reality (MR) or even a humble browser (via platforms like Decentraland or Roblox) are as yet unknown. A recent article in Wired compared today’s discussions about the metaverse to people talking about the internet in the 1970s. The pieces of a new way to interact are coming together, and it has massive implications for society and enormous commercial potential, but we’re not sure what final form it will take. Personally, I think of the metaverse as “XR”, not as a catchall for AR, VR or MR but instead as “extended reality”. In the metaverse, we’ll interact as virtual extensions of ourselves in some form, human or otherwise. Marketers are curious about the potential of the metaverse, and some are frantically trying to get up to speed due to fear of missing out. Since the metaverse is still taking shape, it makes sense for marketers to watch closely and understand the factors that may influence its direction. How might the metaverse emerge and what could it mean for brand building and marketing now and in the future? Driving Virtual Consumers Down a Real Purchase Funnel If the metaverse becomes a place where extensions of billions of real people interact and have expendable currency — whether via in-world crypto, tokens or offline official government currency accessible via digital wallets — brands will have an opportunity to use advertising and/or curated experiences to drive consumers down a purchase funnel, just as they do in the physical world. But how that ecosystem of brand/advertiser, media and consumer take shape in the metaverse is still in flux. In the physical world, the mechanics of advertising are well known. We’re familiar with ad units by channel, and we can calculate how much those units or impressions will cost and factor in the value of an impression in terms of meeting critical KPIs. That’s not to suggest it’s simple — the real world ecosystem is fractured and constantly in flux, but it’s knowable, manageable and familiar too. But in an entirely new world, how do we value a new set of ad units or XR engagements? Audiences are often anonymous, and demographics are potentially inscrutable. Is the person behind the avatar a 63-year-old professor or a high school sophomore? We don’t know, so how can a brand or advertiser measure value? Non-fungible tokens (NFTs), which provide proof of ownership of a digital asset, are forming the connecting bridge, for the moment at least. NFTs function as a talisman for brands, a way to engage virtual audiences and confer status on NFT holders. Brands like Stella Artois, Papa John’s, Acura, the NBA and many others are experimenting with NFTs, some to promote products or provide product functionality, others to highlight good causes and support charitable work. AdAge keeps a continually updated list of how brands are using NFTs. Another way brands connect with virtual consumers is by creating experiences on platforms like Roblox. At Nikeland on Roblox, one of the earlier, high-profile brand entries in 2021, users could dress their avatars in branded sneakers and apparel, play games and unlock sports superpowers. Branded virtual apparel as a digital commodity is a straightforward implementation. Gucci just upped their profile from Gucci Garden to Gucci Town – dropping virtual bags and apparel within limited-time windows to style your Roblox avatar. Other recent brand implementations include a McLaren F1 Racing experience and a Chipotle Burrito Builder event – the possibilities are staggering. The Value Conundrum As these examples illustrate, major brands are already betting on the metaverse, and their participation generally falls on one of two tracks. The first is brand integration, like the user experience strategy Nike, Gucci, Hyundai or Chipotle have pursued on Roblox. Users can interact with the brand, hopefully developing an affinity of lasting duration that extends to the brand’s products in the physical world. The second track is to create NFTs and associated content, placing assets in virtual storefronts or other digital venues and marketplaces. This strategy requires finding a way to create scarcity because virtual land and digital content like NFTs are valuable in proportion to their perceived authenticity and ability to generate demand that exceeds supply. As Scott Galloway observed “credible scarcity and authenticity will unlock real value in digital markets”. So, the question remains: what is the value of a potential customer interacting with an avatar brand representative in your virtual apparel showroom? What’s the value of out-of-home signage for your virtual showroom if placed on a plot of land adjacent to Snoop Dogg’s virtual plot? How much will it cost to design and build a truly immersive virtual brand environment, and what’s the return on that investment? The truth is, we just don’t know yet. It’s not a coincidence that most of the brands now active in the metaverse are there to drive awareness rather than conversions, at least so far. The metaverse may develop in unexpected ways, so for marketers who want to get their digital feet wet, now is a good time to watch closely, drop into some virtual worlds and interact with whoever is there now. Just like traveling to a new country in the physical world, take some time to observe with an open mind and respect the local customs of that corner of the metaverse. It’s complicated, but then again, isn’t any new world?
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Despite the Bear Market, Younger Generations Should Embrace ‘Buy and Hold’ Strategies Crypto, Neobanks, NFTs
The economy is looking even more dire, and there are lessonsperformance marketers can take away Mesut Ugurlu/Getty Images Most financial planners would steer their client away from get-rich-quick investment approaches and instead advocate for “buy and hold” strategies. In most cases, the latter involves finding reliable workhorses of the stock market and then hanging onto them for years or even decades. Generations Y and Z have a different idea about how they want to build their assets. From cryptocurrency and bitcoin to NFTs and other digital assets, younger investors are forgoing blue chip stocks that their parents and grandparents used and taking bolder, riskier moves with their money. Some of the shifts can be traced to the rise of “neobanks,” or those fin-tech firms offering up apps, software and other technologies that help streamline mobile and online banking. According to Forbes Advisor, neobanks—which specialize in checking and savings accounts—tend to be nimbler and more “transparent than their megabank counterparts, even though many of them partner with such institutions to insure their financial products.” “The advancement of digital banking and the rise of neobanks is creating a new paradigm of how younger millennials and Gen Z want to interact with their finances and investments,” Nasdaq has pointed out, adding that the adoption rates for neobanking are high in the U.S.—a trend that’s supported the expansion of cryptocurrencies, digital assets, digital wallets and digital real estate. “With digital-only finances and tools, the realm of possibilities for investing extends beyond the physical,” Nasdaq also stated. It went on to say that mainstream consumer brands are also shifting brand equity into the digital world; Walmart is launching cryptocurrency and NFTs and Nike is creating shoe NFTs for the metaverse. “Other brands have rushed to claim space in the metaverse, even while the future of the metaverse remains unclear.” They’re already digital-savvy Credit the digital-savvy Gen Z and the younger end of the millennial generations with driving higher interest in electronic-based investment options. Already used to communicating on social, learning remotely and basing important decisions on virtual peer reviews, these consumers gravitate toward options that older generations didn’t have when they were in their 20s and 30s. Take NFTs, for example. Used to indicate ownership or usage right of a unique asset—typically art, music or a video game item—”these tokens are built and managed on a blockchain, the same digital ledger technology system utilized by bitcoin and other cryptocurrencies,” as explained by The Motley Fool. Younger investors have taken to NFTs like a moth to a flame, so to speak. According to YPulse, 13% of people aged 13 to 39 have purchased NFTs and 28% have bought cryptocurrencies, the latter of which further proves the Gen Z and millennial thirst for alternate, digital investment options. This research “found that between crypto, NFTs and digital land, more young people have made digital asset investments than have invested in stocks.” “We also found that overall, young people don’t believe that they can build wealth the same way that previous generations did,” YPulse added, “making new avenues to making money more attractive to them.” Time to sharpen your pencils Right now, performance marketers should be watching the trends, sharpening their pencils and coming up with new ways to attract, serve and retain these digital-centric generations of consumers. Accepting cryptocurrencies as a payment option is one method to lean into this trend. There’s a massive digital opportunity for fin tech, banks, financial companies and other brands that can meet consumers where they are right now. It also opens up the opportunity for even more brands or influencers to be able to play in this space and leverage their hip and cool business approaches. From exclusive branding opportunities to VIP offerings to specialized experiences, younger generations of consumers want it all. And while the boundaries may be down for marketers right now, the environment is evolving quickly, and companies are catching on. Keeping up and staying out in front of the digital metaverse requires effort, energy and resources, but the payoff can be significant for marketers that jump into the emerging space now.
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How marketers will use blockchain technology and NFTs in 2022 for identity, branding and engagement
Blockchain technology and NFTs aren’t going anywhere, and some big brands have already dipped their toes in and demonstrated that they can generate real engagement.Marketers are always in search of new strategies and technologies to gain a competitive advantage, so it’s not surprising that in outlooks for the upcoming year, there’s been a lot of talk about how NFTs and blockchain technology can give brands a lift. The digital landscape has expanded to include 3D AR and VR environments. Meanwhile, Meta (the company formerly known as Facebook) has gotten out front with the concept of a connected metaverse.When weighing all of the options that appear on the horizon, marketers should set clear goals and expectations instead of chasing the next flashy gimmick. But they also shouldn’t miss out on the transition to blockchain and virtual environments going on right now in some marketing channels.Blockchain’s benefits for identity“The industry has known for a while that blockchain’s transparent, decentralized nature, and immutability have valuable applications in preventing ad fraud and securing the ad supply chain,” said Mel Bessaha, Senior Vice President of Demand for video platform Connatix. “Those same benefits also deliver great value for brands that are dedicated to building strong first-party data strategies. Those strategies will naturally require as much first-party data as possible.”Because the location of all data in a blockchain is recorded in a decentralized, public ledger, this makes the blockchain much more transparent to consumers when it comes to their data’s provenance. Companies using blockchain technology for data also have a number of security options in handling and storing the data, either on or off the chain.The advantage concerning transparency of customer data is that the data isn’t being managed privately out of view on a company’s database, or shared with a third party without a customer’s permission. This way, there’s no disconnect between how a business uses customer data and how a customer expects it to be used, regardless of how customers interpret a particular data-sharing agreement when they check the box to grant permission. Sharing their data by way of blockchain is a way for brands to build trust with customers who fear that their customer data is being exploited in other transactions and lengthy permission agreements.“Consumers want to be able to opt out of data sharing, and they want transparency into what data is being collected,” said Bessaha. “Brands that can offer that transparency – which blockchain offers – will win consumers’ trust, and incentivize them to continue engaging with the brand and sharing data. Businesses in digital need to prove consumers are getting a fair trade when they share their information, and blockchain provides that proof.”If companies gain more trust with consumers by using blockchain technology, this sweetens the deal for acquiring more first-party data, which every brand needs now more than ever.NFTs in the metaverseNon-fungible tokens are digital objects that use blockchain technology to make sure that they are unique. Anybody who acquires an NFT can prove their ownership because the transaction is recorded in the decentralized, public ledger.This is important, because the visual representation of the NFT on a computer screen can easily be copied with a screenshot. It’s the blockchain itself that designates who owns this rare digital gem.For brands, NFTs can generate brand value and brand love in a number of ways, but as a virtual souvenir it makes the digital object more personally significant to the customer. It’s not a Burger King crown that any BK fan can pick up at a store. Instead, it’s a unique object that a customer jumped through specific hoops to acquire, and they can prove it on the blockchain.There is already an environment where consumers can show off their NFTs, provided by blockchain vendors who mint NFTs and provide digital wallets and trophy cases where users can keep them. But when operating in a virtual environment, those NFTs can follow a user wherever they go. This makes NFTs essential to VR experience, and a reason why they would grow in importance as a VR metaverse takes shape.NFT responsibilityOne thing marketers should pay attention to is the bad rep certain blockchain technologies get for using up lots of energy. To update the ledger for each unique token or coin, computers in a decentralized network are put to work generating a new chain. Many blockchain venders have gotten out ahead of this concern by pledging their sustainability practices.When marketers introduce an NFT promotion or other blockchain strategy, they will want to let consumers know that the technology they are using is environmentally responsible.“Consumers will be thinking through the impact of carbon emissions released by the creation of NFTs and other digital tokens,” said Libby Morgan, Senior Vice President, Chief Strategy Officer for the digital media and marketing trade association IAB.Marketers in the metaverse“Marketers are going to begin exploring branding opportunities in the metaverse,” said Stephen Hoelper, President, North America, at programmatic messaging company Doceree. “Brands that deliver an engaging and less invasive experience than the current digital marketing landscape will gain the greatest impact out of the gate in the new space.”“Brands are being put on notice: prepare for the metaverse,” said Sanjay Mehta, Head of Industry, e-commerce at cloud-based experience company Lucidworks. “This is a chance to reimagine virtual experiences and find better ways to do all the things we’ve been trying to do in the real world, including building community among customers, experiencing physical goods virtually, understanding shopper behavior, and creating more personal (AI-powered) concierge-style services.He added, “There are a million directions retailers could go, but those with clear intentions and a desire to enhance the total experience with the metaverse (versus building something from scratch just because) will be able to pull ahead.”With a lot of publicity generating the idea of the metaverse, it still remains largely conceptual, according to Jack Smith, Chief Product Officer for ad verification company DoubleVerify.“It’s early days for both the technology – hardware and software – and the content required to meet the ‘meta-opportunity,” Smith said. “Interoperability is also key. For the metaverse to function like the physical world, virtual environments must be interconnected. It can’t be a series of individual walled gardens. While the metaverse will take years to be realized, it’s not as far away as we might think given the rapid advancements in VR and AR amid the pandemic.”Brand theft in the metaverse?When taking their first dive into a virtual environment like the promised metaverse, marketers should understand that some of the strategies and logic on traditional channels might not carry over. That’s because laws protecting intellectual property are rooted in the real world, aka “meatspace.”“The most significant difference in IP and licensing issues between the metaverse and meatspace is clarity of ownership,” said Aron Solomon, Chief Legal Analyst for attorney lead gen company Esquire Digital. “If we look at a Nike sneaker in our tangible world, we know that a counterfeit pair of bred toe Jordan 1s from Sneaker Street in Hong Hong is inauthentic because we can accurately trace its provenance – the original licensed Nike shoe.”He cautioned, “Tracking ownership on the blockchain-based metaverse is going to be impossible by traditional legal measures because of uncertainty of ownership and the potential for (otherwise very cool) infinite alterations of the thing in issue, here, lets say, an NFT of a pair of bred toes.”As the metaverse becomes more connected with greater participation, a cat and mouse game might likely develop, possibly resembling ad fraud in the advertising landscape or other forms of deceptive digital scams.Marketers should be pay close attention to how they might release NFTs, selecting proven partners in this emerging space.As with any new digital channel, there is an excitement for discovery among consumers that marketers can also share. But eventually the buzz will need to lead to revenue.New on MarTech About The Author Chris Wood draws on over 15 years of reporting experience as a B2B editor and journalist. At DMN, he served as associate editor, offering original analysis on the evolving marketing tech landscape. He has interviewed leaders in tech and policy, from Canva CEO Melanie Perkins, to former Cisco CEO John Chambers, and Vivek Kundra, appointed by Barack Obama as the country’s first federal CIO. He is especially interested in how new technologies, including voice and blockchain, are disrupting the marketing world as we know it. In 2019, he moderated a panel on “innovation theater” at Fintech Inn, in Vilnius. In addition to his marketing-focused reporting in industry trades like Robotics Trends, Modern Brewery Age and AdNation News, Wood has also written for KIRKUS, and contributes fiction, criticism and poetry to several leading book blogs. He studied English at Fairfield University, and was born in Springfield, Massachusetts. He lives in New York.
