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?