Part of a limited editorial series called The 2023 Notebook, this article is intended to be a guide to marketing and media buying in the new year. Discover the series here.
Since computer scientist Gavin Wood coined the term “Web 3.0” almost a decade ago, the concept has become a comprehensive reference for everything from crypto and metaverse platforms to emerging technologies like augmented reality and virtual reality. And for all the hype and hubbub surrounding Web3 over the past two years, marketers say 2023 will be another year of experimentation amid uncertain budgets and uncertain outcomes.
As companies test various aspects of Web3 technology, more and more brands like Tiffany & Co., Starbucks, and Nike have moved beyond mere collectible NFTs and have token-gated commerce, loyalty programs, and other ways to interact more directly with consumers via first-party data. These types of projects still represent only a small part of marketing compared to Web2 social channels like Facebook, Instagram and Twitter. However, research company Gartner expects that by 2027, more than 40% of large organizations around the world will use Web3, spatial computing, and other Metaverse-based projects to increase revenue.
Data challenges and the economic climate are also putting marketers in a challenging catch-22 situation. Privacy changes and reduced reliance on third-party data are giving marketers new reasons to explore alternative marketing channels, said Andrew Frank, vice president analyst at Gartner’s marketing practice. On the other hand, budget pressures and negative crypto news are making marketers more cautious about trying potentially risky Web3 initiatives.
“There are so many issues involved in developing marketing data strategies and operations,” said Frank. “This leads to a wide range of approaches to Web3-style innovation in customer data and relationships, with a cautious majority and an ambitious minority. We expect some successful patterns in Web3 loyalty to emerge and replicate, but economic conditions make it difficult to predict how long this will take.”
Marketers want to go beyond cookies with Web3
As third-party cookies continue their slow decay, some see more potential in using first-party data with Web3 capabilities. But many of Web3’s promises are still in their infancy – and in most cases unproven. There’s also a possibility that 2023 will be a year of what Forrester calls “metaverse washing,” trying to dress up old media with new terms. But analysts say brands would be wise to try new things rather than repackage old ones.
This year will be “the year of dynamic NFT,” according to Rob Davis, chief digital innovation officer at MSL US. less radical” aspects of Web3 such as “metaverse-like” experiences that are still just Web2.
“If we’re going to discuss who’s optimistic about Web3 and who’s not, we need to agree on what Web3 is,” Davis said. “When we talk about using blockchain as a platform to build experiences on, I would say that some brands are optimistic. If we are talking about decentralization and breaking the status quo, then my answer would be exactly the opposite.”
Up to this point, crypto-enabled Web3 platforms still have a tiny user base compared to Web2 virtual worlds like Roblox, which had 13.5 million app downloads as of November 2022, according to Sensortower data. For example, The Sandbox – which has worked with more than 200 brands including Adidas and Gucci – had just 2,000 app installs worldwide in November. And Decentraland, which has worked with brands like Heineke and Samsung, had just 1,000 installs for its Decentraland Explorer app worldwide as of November and just 10,000 downloads so far.
Marketers experimenting with Roblox and other emerging platforms say there aren’t enough metrics yet to prove what’s worth or not. Meanwhile, others are noticing that it’s important that platforms like Roblox and others don’t get too cluttered with ads. Instead, it’s better to be smart when it comes to creating experiences than to create clutter, said Kevin Renwick, media director at Mekanism, which worked with Eos on its Roblox experience.
“Otherwise it becomes like Times Square in the metaverse,” Renwick said. “A lot of noise, but into the abyss.”
Test the waters in the Metaverse
In November, Red Wing got its first experience with Roblox by inviting players to design virtual “tiny houses” in exchange for a donation from the company to an organization that makes miniature houses in real life. A month later, Eos — a Millennial and Gen Z-focused beauty brand — made its own debut on Roblox with a Christmas-themed theme starring Mariah Carey that included a multi-day event with a digital playhouse, free in-game items and ways to interact with Carey’s avatar on a virtual stage.
“If you’re going to be a modern brand in today’s world, if you’re going to be a contemporary brand in today’s world, you have to take some risks,” said Dave Schneider, CMO of Red Wing. “One of the risks is playing in spaces that we honestly don’t know exactly where it’s going to go.”
Eo’s CMO Soyoung Kang wanted to reach users where they already were. “We’re starting to look for new opportunities where there are emerging platforms where you get an outsized investment,” Kang said.
Hype and uncertainty are paired with a lot of questioning
There also still remains the big question of whether people even want what the Metaverse has to offer: a recent Forrester report indicated that less than half of online consumers plan to ever become a Metaverse user. And with non-fungible tokens all the rage in 2021 and 2022, NFT trading volume fell 97% from its peak in January through September.
Amid the myriad of challenges, mixed expectations, and more skepticism, executive surveys say they believe the Metaverse will be a part of their business in the near future. According to PwC’s 2022 survey of 5,000 consumers and 1,000 executives in the US, 66% of executives said their companies are already involved in something related to the metaverse, and 38% said it’s part of their business in 2023 would be, and another 44% said it would be within three years.
“I’m using the analogy someone found from the early days of the Internet and graphical-less dial-up to the late ’80s or early ’90s,” said Joe Atkinson, PwC’s CTO, in an interview with Digiday last fall. “If it had taken us 30 years to get here, it might take us another 15 years to see the early power of Web3.”
Some see benefits in Web3 technology that go beyond marketing. According to Raja Rajamannar, chief marketing officer at Mastercard, the “tsunami of new technologies” will continue to disrupt the sector. Despite the economic uncertainty, marketers should still experiment with them and decide which to prioritize, monitor, and adjust.
There is also a lot of research on the sector. Last month, the Federal Trade Commission fined “Fortnite” maker Epic Games $520 million over allegations including deceptive marketing and data collection practices aimed at children. Roblox has also been criticized by consumer protection groups, who claim that the company does not properly disclose ads or have sufficient safeguards in place to protect users from malicious actors. Meanwhile, some celebrities are facing increasing skepticism, lawsuits, and government settlements related to their roles as paid spokespersons for cryptocurrency companies.
Amidst all the crypto criticism, one could see how this part of the budget could be the first to hit rocky economic conditions. But Geoff Renaud, co-founder and CMO of Invisible North, a Web3 marketing agency, expects VC funds to continue supporting Metaverse innovation.
“The tens of billions of dollars raised by VC funds have to be deployed, so you’re going to see a lot of new funding for new projects despite market conditions,” Renaud said. “Innovative ideas will be awarded as the funding review will be much tighter in 2023 as the bear rages on,” said Renaud.
Marketers forge ahead with metaverse experiments despite murky economy
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