The metaverse is the future of the internet and the brands that don’t embrace it will be left behind. Providing experiences and opportunities that are more unique and exciting than those in the real world, it is unsurprising that major brands are getting involved.
Technological change has always influenced the relationship between brands and consumers. Web3 and the metaverse is no different, as major brands like Adidas, Gucci, and others experiment with events and campaigns in metaverse worlds and their own virtual experiences. And while some early efforts are far from perfect, all resemble a bright flicker of what the future holds.
“Brands are joining the metaverse because it’s going to be the future of the internet,” says Sam Huber, founder of LandVault, a studio that builds experiences in metaverses, such as Decentraland, for companies like Google, PayPal, and Hershey. “Entering the metaverse today is essentially an insurance policy for staying relevant when users migrate from 2D to 3D.”
Despite virtual experiences and the metaverse falling down corporate agendas in recent months, Sam suggests that this makes it the perfect time to begin experimenting, when the stakes are lower. “You can create your own experience, like Heineken did with their Silver Brewery in Decentraland, or sponsor significant areas,” he explains, noting that range of ways brands can experiment. “Even something as simple as a virtual billboard shows people that your brand is part of metaverse culture.”
“If brands don’t have a web3 strategy they will lose their audience.”
— Tony Pearce, CEO of Reality+
That view that the metaverse still matters is widely shared amongst metaverse-focused studios and industry insiders. “If brands don’t have a web3 strategy soon they will lose their audience,” predicts Tony Pearce, CEO of the metaverse gaming company Reality+, whose clients include ITV and the BBC.
He notes that just as brands should be experimenting, metaverse platforms are innovating too. Tony suggests that the new live streaming functionality on The Sandbox opens up new opportunities for brands, particularly in entertainment. “You might even see a brand like HBO launch a new series and have it premier in a metaverse cinema,” he speculates.
Ultimately, there is no single strategy that works across every organisation. “Brands need to look at the metaverse and think about how it can work for them, while also making it simple for users,” Tony emphasises.
The metaverse, or at least the virtual experiences that make up the buzzword, is increasingly a space where culture is born, fostered, and spread through the rest of society. Few events exemplify this more than the annual Metaverse Fashion Week in Decentraland, with brands like Dolce & Gabbana and L'Oréal joining over 100,000 unique attendees in March 2022.
“Metaverse Fashion Week generated close to $5 million in overall economic activity,” says Sam, whose company consulted some of the brands that participated. “There was also close to a 70 per cent conversion rate on digital merchandise for brands, which is enormous.” The expectation in the industry is that this foreshadows something much bigger. Morgan Stanley estimates that for luxury goods alone, the metaverse could reach 10% of the market by 2030, creating a £45 billion revenue opportunity and a 25% lift to the industry’s profit pool.
Although the overall attendance numbers for Metaverse Fashion Week are not eye-popping, the value of economic activity and the extremely high conversion rate signal great potential for brands that are early in co-creating digital culture through the metaverse.
“You see multi-million dollar brands being built on Instagram in a very short amount of time,” observes Diego Borgo, a web3 strategist for the likes of Salesforce and Škoda. “The metaverse is no different. Those who understand the medium and culture — and how to position themselves within it — can leapfrog competitors over the next five years.”
Mike Litman, Senior Web3 and NFT Director at creative agency Media.Monks, argues that successful brand entry into the metaverse comes down to the three C’s: culture, community, and commerce.
“As a brand you have to be creative and inventive with culture,” Mike says. “Then you can go out and build a community around those ideas. And once you’ve built a community, you then have a captive audience you can promote to.” Nonetheless, he cautions that brands make the mistake of skipping directly to commerce all too often, before building cultural creativity and community in an organic fashion. Following the culture-first framework in the right order puts brands in a stronger and more sustainable position.
Participating in and co-creating metaverse cultural events like the Metaverse Fashion Week is one such example of brands prioritising cultural creativity. And if brands push further, they can create entirely new metaverse tribes out of IP that has been doing little beyond collecting dust on the shelf.
“Brands are joining the metaverse because it’s going to be the future of the internet.”
— Sam Huberg, CEO, LandVault
When Tony began brainstorming metaverse ideas with ITV, one of the UK’s largest TV networks, he browsed the back catalogue to gain inspiration. What resulted is a powerful example of how the metaverse can create value from IP that was previously collecting dust on the shelf.
“I found this old show called Thunderbirds which was really doing nothing for ITV Studios at the time,” he recalls. “I decided to take that old licence and fast forward it by relighting the fire in the metaverse.”
The result was a metaverse replica of the Thunderbirds headquarters in The Sandbox, where people can embark upon rescue missions just like the superheroes from the show. Pearce says that the metaverse initiative, augmented with NFT avatars and collectibles, has spiked interest in Thunderbirds from a new, younger audience.
“As a brand you have to be creative and inventive with culture.”
— Diego Borgo, web3 strategist
His experience with Thunderbirds illustrates how the metaverse can make sense even for brands whose positioning is not as innovative as their competitors. Embracing virtual experiences is often a low-risk, high-reward endeavour to reboot and refresh.
“Today, you’re not going to reach millions of people on The Sandbox or Decentraland,” explains Sam, noting the range of clients that LandVault works with. “But what you can do is convert and deepen relationships with the audience already present, and we’re already seeing that with some of the ‘less sexy’ brands like Tyson Foods and Standard Chartered Bank.”
Since the metaverse is still in its infancy, brands have the luxury of experimenting with how they engage with those audiences. But as more people migrate into virtual worlds, and the back-end technology improves, how brands interact through the metaverse will continue to evolve.
“You need to make things super simple,” says Tony. “Blockchain games and metaverse experiences can be full of friction for the user, not to mention intimidating jargon. We’re working with the BBC on a trading card game with Doctor Who, but nowhere do we mention words like blockchain or NFT.”
Mike adds that the concept of developing a tribal identity in the metaverse is taking off, particularly in relation to digital assets. “I call it ‘The New Flex,’ where people signal their personality through material goods. Whether it’s a pair of NFT sneakers or membership to a community, digital assets in the metaverse are going to be a new way of expressing individuals’ identity.”
The potential for brands in the metaverse is immense, but some ways of going about it are better than others. Pearce’s Thunderbirds project is perfect evidence that it’s not about name brand recognition or dropping expensive NFTs. Instead, it’s about creating tribes, communities, and interactions that let people express themselves in the metaverse in ways that feel more unique and exciting than the real world. “That’s something I talk about a lot with the brands I consult with,” says Mike. “It’s really important.”
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