Since computer scientist Gavin Wood coined the term “Web 3.0” nearly a decade ago, the concept has become a blanket reference for everything from crypto and metaverse platforms to emerging tech like augmented reality and virtual reality. And despite all the hype and hullabaloo about Web3 over the past two years, marketers say 2023 will be another year of experimenting amid uncertain budgets and uncertain results.
As companies test various aspects of Web3 tech, more brands such as Tiffany & Co., Starbucks and Nike have moved beyond merely collectible NFTs in favor of token-gated commerce, loyalty programs and other ways to interact more directly with consumers via first-party data. These types of projects still make up just a small part of marketing compared to Web2 social channels such as Facebook, Instagram and Twitter. However, research firmGartner expects that by 2027 more than 40% of large organizations around the world will be using Web3, spatial computing and other metaverse-based projects as ways to increase revenue.
Data challenges and the economic climate are also putting marketers in a challenging catch-22 situation. Privacy changes and less reliance on third-party data give marketers new reasons to try alternative marketing channels, said Andrew Frank, a vice president analyst with Gartner’s marketing practice. On the other hand, budget pressures and negative crypto news make marketers more cautious about trying potentially risky Web3 initiatives.
“There are so many issues at play in the evolution of marketing data strategies and operations,” Frank said. “This is resulting in a broad range of approaches to 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 be replicated, but economic conditions make it hard to predict how long this will take.”
Marketers look to move beyond cookies with Web3
As third-party cookies continue their slow process of deprecation, some see more potential in using first-party data with Web3 capabilities. But many of the promises of Web3 are still in their infancy — and in most cases still unproven. There’s also the chance that 2023 might be a year of what Forrester describes as “metaverse washing” by trying to make old media fancy with new terms. However, analysts say brands would be smart to try new things rather than repackage the old.
This year will be “the year of the dynamic NFT,” according to Rob Davis, chief digital innovation officer for MSL U.S. But instead of seeing the adoption of truly decentralized platforms, he expects the year will see increased interest in “safe” and “less radical” aspects of Web3 such as “metaverse-ish” experiences that are still just Web2.
“If we are going to discuss who is bullish about Web3 and who is not, we have to agree on what Web3 is,” Davis said. “If we are talking about using blockchain as a platform upon which experiences are built, I’d say quite a few brands are bullish. If we are talking about decentralization and demolishing the status quo, then my answer would be quite the opposite.”
To that 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 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 app installs worldwide in November. And Decentraland, which has worked with brands such as Heineke and Samsung, had just 1,000 installs worldwide in November for its Decentraland Explorer app and only 10,000 downloads to date.
Marketers experimenting with Roblox and other emerging platforms say there still aren’t enough measurement capabilities yet to prove what’s worth it or not. Meanwhile, others notethat it’s important that platforms like Roblox and others don’t become too cluttered with ads. Instead, it’s better to be smart about creating experiences rather than clutter, said Kevin Renwick, media director at Mekanism, which worked with Eos on its Roblox experience.
“Otherwise it’s just going to be like Times Square in the metaverse,” Renwick said. “A lot of noise but into the abyss.”
Testing the waters in the metaverse
In November, Red Wing made its first experience within Roblox by inviting gamers to design virtual “tiny houses” in exchange for the company donating to an organization that makes miniature homes 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 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 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 play with some risks,” said Red Wing CMO Dave Schneider. “One of the risks is playing in spaces that frankly we don’t know where it’s gonna go exactly.”
Eos CMO Soyoung Kang wanted to reach users where they already were. “We start looking for new opportunities for where there are emerging platforms where you’re getting an outsized investment,” Kang said.
Hype and uncertainty are paired with plenty of scrutiny
There’s also still the big question of whether people even want whatever the metaverse has to offer: a recent Forrester report pointed out that less than half of online consumer plan to ever become metaverse users. And after non-fungible tokens were all the rage in 2021 and 2022, NFT trading volume dropped 97% from its January peak through September.
Amidst the myriad challenges, mixed expectations and more skepticism, surveys of business execs say they think 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 business leaders in the U.S., 66% of executives said their companies were already engaged in something related to the metaverse, 38% said it would be part of their business in 2023 and another 44% said it would be within three years.
“I use the analogy that someone came up with via the early days of the internet and dial-up with no graphic user interface until the late 80s or early 90s,” PwC CTO Joe Atkinson told Digiday in an interview last fall. “If it took us 30 years to get here, it might take us another 15 years to see the early power of Web3.”
Some see Web3 tech as beneficial beyond marketing. According to Raja Rajamannar, chief marketing officer at Mastercard, the “tsunami of emerging technologies” will continue bringing disruption to the sector. Despite the economic uncertainty, he said marketers should still experiment with them and decide which ones to prioritize, monitor and adjust.
There is also plenty of scrutiny 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 directed at children. Roblox has also faced criticism from consumer advocacy groups, which claim the company doesn’t properly disclose ads or have enough protections for safeguarding users against malicious actors. Meanwhile, some celebrities have faced increased skepticism, lawsuits and government settlements related to their roles as paid spokespeople for cryptocurrency companies.
Amid all the crypto criticism, one could see how this part of the budget could be the first to go facing bumpy economic conditions. But Geoff Renaud, co-founder and CMO of Invisible North, a Web3 marketing agency, expects VC funds to continue to support metaverse innovation.
“The tens of billions of dollars raised by VC funds must be deployed, so despite market conditions, you will see a lot of fresh funding for new projects,” Renaud said. “Innovative ideas will be awarded as funding scrutiny will be much tighter in 2023 as the bear rages on,” Renaud said.
This article first appeared https://digiday.com/
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