Marketers are pushing ahead with metaverse experiments despite the foggy economy

This article is part of a limited editorial series, called The 2023 Notebook, designed as a guide to marketing and media buying in the new year. explore Serial here.

Since computer scientist Gavin Wood coined the term “Web 3.0“For nearly a decade, the concept has become an umbrella reference for everything from crypto platforms and metaverses to emerging technology like augmented and virtual reality. And despite all the hype and hype around Web3 over the past couple of years, marketers say 2023 will be another year. of experiments amid uncertain budgets and uncertain results.

As companies experiment with different aspects of Web3 tech, more brands like Tiffany & Co. Starbucks And Nike has moved beyond collectible NFTs for a favor Token gate tradeAnd Loyalty programmes and other ways to interact more directly with consumers through first-party data. These types of projects are still a small part of marketing compared to Web2 social channels like Facebook, Instagram, and Twitter. However, the research company Gartner expect That by 2027, more than 40% of large organizations around the world will use Web3, spatial computing, and other metaverse-based projects as ways to grow revenue.

Data challenges and the economic climate also put marketers in a very difficult position. Privacy changes and less reliance on third-party data give marketers new reasons to try alternative marketing channels, said Andrew Frank, vice president and analyst, Marketing Practices at Gartner. On the other hand, budgetary pressures and negative coding news are making marketers more wary about trying potentially risky Web3 initiatives.

“There are a lot of issues that play into the evolution of data marketing strategies and operations,” Frank said. “This has resulted in a wide range of approaches for Web3-style innovations in customer data and relationships, with a cautious majority and an ambitious minority. We expect to see some successful patterns in Web3 loyalty begin to emerge and recur, but economic conditions make it difficult to predict how long this will take.”

Marketers are looking to bypass cookies with Web3

As third-party cookies continue to slow down, some see a greater likelihood that first-party data will be used with Web3 capabilities. But many of Web3’s promises are still in their infancy – and in most cases still unproven. There’s also the possibility that 2023 could be a year of what Forrester describes as “reciprocal washing” by trying to make old media fancy new terms. However, analysts say brands will be smart about trying new things rather than repackaging the old.

This year will be “the year of the dynamic NFT,” according to Rob Davis, Chief Digital Innovation Officer for MSL US. But rather than seeing the adoption of truly decentralized platforms, expect the year to see increased interest in the “safe” and “less radical” aspects of Web3 such as the “metaverse-ish” experiences that are still just Web2.

“If we’re going to discuss who is bullish about Web3 and who isn’t, we have to agree on what Web3 is,” Davis said. “If we are talking about using blockchain as a platform on which experiences are built, I would say that few brands are optimistic. If we are talking about decentralization and demolishing the status quo, my answer would be the exact opposite.”

To this point, Web3 platforms that support encryption still have a small user base compared to Web2 virtual worlds like Roblox, which had 13.5 million apps downloaded in November 2022, according to data from Sensortower. For example, The Sandbox — which has worked with more than 200 brands including Adidas and Gucci — had just 2,000 installs of the app worldwide in November. And Decentraland, which has worked with brands like Heineke and Samsung, had just 1,000 installs worldwide in November of its Decentraland Explorer app and just 10,000 downloads so far.

Marketers experimenting with Roblox and other emerging platforms say there aren’t yet enough benchmarking capabilities to prove whether or not it’s worth it. Meanwhile, others have noticed It is important not to become platforms like Roblox and others too Cluttered with ads. Instead, it’s better to be smart about creating experiences than messy, said Mekanism’s media director Kevin Renwick, who worked with Eos on the Roblox experience.

“Otherwise, it would be like Times Square in Metaverse,” said Renwick. “A lot of noise but in the abyss.”

Testing the waters in Metaverse

In November, Red Wing made its first foray into Roblox by inviting players to design virtual “tiny houses” in exchange for a company donation to an organization that makes miniature homes in real life. A month later, Eos—a millennial and Generation Z-focused beauty brand—made its debut on Roblox with a Christmas-themed Mariah Carey that featured a multi-day event with a digital stage, free in-game items, and ways to interact with Carey’s avatar on a virtual platform.

“If you want to remain a modern brand in today’s world, if you want to be a contemporary brand in today’s world, you have to take some risks,” said Dave Schneider, Red Wing’s head of marketing. “One of the risks is playing in spaces where we frankly don’t know exactly where it’s going.”

Eos CEO Soyoung Kang wanted to reach users where they really are. “We started looking for new opportunities where there are startup platforms where you get a huge investment,” Kang said.

Noise and uncertainty go hand in hand with a lot of scrutiny

There’s also still the big question of whether people will even want what the metaverse has to offer: a recent Forrester report indicated that less than half of the online consumer plan would become metaverse users. And after non-fungible tokens were the rage in 2021 and 2022, NFT trading volume decreased 97% From its peak in January through September.

Amid myriad challenges, mixed expectations and more uncertainty, surveys of business CEOs say they believe the metaverse will be a part of their business in the near future. According to a PricewaterhouseCoopers 2022 survey of 5,000 consumers and 1,000 business leaders in the US, 66% of CEOs said their company was already involved in something metaverse-related, 38% said it would be a part of their business in 2023 and another 44% said it would be within three years.

“I use an analogy that someone came up with over the early days of the Internet and telephony without a GUI until the late 1980s or early 1990s,” PwC CTO Joe Atkinson told Digiday in an interview last fall. “If it took us 30 years to get here, it may take another 15 years to see the early strength of Web3.”

Some see Web3 technology as useful beyond marketing. According to Raja Rajamanar, Chief Marketing Officer of Mastercard, the “tsunami of emerging technologies” will continue to cause disruption in the sector. Despite the economic uncertainty, he said marketers still have to experiment with them, decide which ones to prioritize, and monitor and adapt.

There is also a lot of scrutiny in this sector. Last month, the Federal Trade Commission fined Epic Games, the maker of Fortnite, has been awarded $520 million over allegations including deceptive marketing and data collection practices directed at children. Roblox has also faced criticism from consumer advocacy groups, which Claim The company does not properly disclose advertisements or have sufficient protections to protect users from malicious actors. Meanwhile, some celebrities have faced mounting suspicions, lawsuits, and government settlements related to their roles as paid spokespeople for cryptocurrency companies.

Amidst all the criticism regarding cryptocurrency, one can see how this part of the budget can be the first to experience tough economic conditions. But Jeff Reno, co-founder and CEO of Invisible North, a Web3 marketing agency, expects venture capital money to continue to fuel metaverse innovation.

“The tens of billions of dollars raised by venture capital money will have to be used, so despite the market conditions, you’re going to see a lot of new funding for new projects,” Reynaud said. “Innovative ideas will be awarded because funding scrutiny will be more stringent in 2023 as the bear rages,” Reynaud said.

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