In the scheme of things, the internet is a relative new technology — it’s still evolving rapidly, and many believe we are moving into its third phase, dubbed “Web3.” Web3 includes foundation-level changes like the blockchain, cryptocurrencies and NFTs, as well as the virtual world of the metaverse.
This creates an opportunity for marketers who are looking for new ways to connect with their consumers and want to get in early on the next big thing. Web3 is actually so fundamentally different that many are finding the learning curve to be steep, and so new that they are having to chart their own path. If you’re a marketer and concerned that you may be missing out, there is good news — Web3 is still in its infancy, and even the early adopters are still trying to figure out the best way forward. Read on for some thoughts about where things could be headed.
What is Web3?
To get your head around Web3, it helps to first understand how Web1 and Web2 are defined, as each mark distinct eras in the evolution of the internet.
The Web1 era, typically considered to have run from the early 1990s through the mid-2000s, saw the majority of internet users acting primarily as consumers of content. Most web pages were static or an attempt to recreate print media online. While personal web pages were somewhat common during the Web1 era, they were a long way from today’s social media platforms, with very few of them offering the opportunity for visitors to engage with or comment on the content directly.
In the Web2 era, generally considered to have started in the mid-2000s and still ongoing today, the internet became dramatically more participation-focused and personal. It became common for the typical internet user to have multiple social media profiles, and personal blogs took off on easy-to-use platforms like Blogger, Tumblr and WordPress. These new platforms facilitated active engagement between authors and readers, companies and followers. Smartphones made accessing and engaging easier than ever, turning the internet into a place where you can easily share your life and stay connected with others.
Web3 includes several of the next big shifts in internet technology — changes that promise to decentralize the internet, putting more power into the hands of ordinary users while cutting down on the influence and control currently held by Big Tech and financial companies. The changes could also create more transparency with transactions and more privacy for individuals. One of the ways Web3 may achieve this is by incorporating a token-based economic infrastructure that includes technologies such as non-fungible tokens (NFTs) that allow individual users to have more ownership over the digital content they create. Blockchain technologies are already being used for smart contracts and other advancements that seem to create more efficiency, automation and transparency with everyday transactions. Web3 also promises to better support user-to-user online commerce with cryptocurrencies, eliminating the financial middleman (and middlemen percentages).
Finally, the metaverse offers an alternative way to experience the internet altogether. With roots in gaming and science fiction (seen Ready Player One?), the metaverse presents an immersive virtual world that allows users to interact with a connected, computer-generated world, including other people (and brands).
While the idea of the Web3 era is still largely conceptual, real-world money is being put into the very real technologies that define it. Last year, roughly $30 billion of venture capital was invested in Web3 projects. And while many of the developments of Web3 are still in early stages, fortunes have already been made. Many forward-thinking marketers are trying to figure out how these technologies can impact their business, and many more are watching patiently from the sidelines.
Opportunities for Marketers
Web3 could create a number of new and unique opportunities for brands and marketers to grow their businesses, raise brand awareness and boost consumer loyalty in the future. Among them:
NFTs and Community Creation
Web2 and social media changed the marketing landscape, creating ways to engage with your customers like never before. Some brands rushed in, and others got there late … but today, most every brand is investing in social media and seeking online engagement.
Marketers can get lost in the details of content creation and platform algorithms and forget that at the heart of all this technology is community development. Building passionate communities is an incredible way to build brand loyalty, and it turns out that NFTs (non-fungible tokens) may hold the key to your future community-building success.
These digital assets, which grant exclusive ownership rights to their holders, offer brands the chance to connect with early adopters. They can also give fans a chance to participate with their preferred brands on a deeper level, even becoming involved in brands’ economics.
First, let’s look at some of the features inherent to NFTs:
- NFTs offer the opportunity to own something unique, and something that may grow in value over time.
- Digital/blockchain contracts can add lifetime value to the ownership of an NFT, even after it is sold or transferred.
- In addition to being a collectible, an NFT can include an unlimited range of functionality and utility.
With those features in mind, you can imagine some of the ways NFTs could be deployed in marketing and community-building efforts:
- Loyalty and reward programs can be tied to NFTs — with membership offers that are only available to the token holders.
- Beyond simply being collectible, NFTs could unlock unique benefits for owners, such as access to exclusive products, events, menu items, flavors, etc., that are not otherwise available.
- NFT membership could come with the opportunity to help with new product development, such as suggesting new flavors for a potato chip brand or naming a brewery’s new craft beer offering.
NFTs as revenue drivers
We’ve all seen the headlines about people making millions of dollars selling these (seemingly) simple digital tokens, and probably dismissed it as a fad. But given the ability to build in functionality and utility to these NFTs, let’s look at some potential ways that businesses can use them.
- You may have heard that rock bands don’t make money off their albums — the real money comes from going on tour and selling T-shirts. Are NFTs the T-shirt of the future? The digital breadcrumb is indisputable, providing incontrovertible evidence that you were at that show (or a founding member, or an early fan). If your brand is cool enough to sell T-shirts, perhaps you’re ready for NFTs?
- Most whiskeys and wines must be aged in barrels for a number of years before being released to consumers. These brands could sell NFTs that attach these token holders to a specific barrel (at the time of barreling). This creates an incredible connection to the product for consumers, and generates immediate revenue for the brand (vs. waiting until the product gets to market).
- People have used NFTs as a way to facilitate crowd-sourced investing. A group of YouTubers recently sold 10,000 NFTs, raising $23M in capital. They are using this money to open clubs and gyms, and the token holders will have unique benefits and access. Is there a way to engage your fans in your business, even allowing some financial upside as you explore a minimum viable product?
- Brands love superfans who are first in line to try their new products or services. NFTs might provide another way to reward these fans. By bundling the purchase of a new product with a digital token, you could provide lifetime value to these early adopters.
For most Americans, “metaverse” may be a familiar term (largely thanks to Facebook changing its company name to Meta), but the technology it represents and the possibilities it presents remain somewhat mysterious. In fact, according to research, nearly 70% of survey participants are either completely unfamiliar with the term “metaverse,” or they have heard of it but don’t know exactly what it is. Further, over 60% of survey respondents had already actively participated in the metaverse but didn’t realize it.
Currently, many (and likely even most) marketers may find themselves falling squarely into the “metaverse is a mystery” category, too. But while the metaverse may be by and large unfamiliar and even intimidating to most marketers, it could open up a … well, universe of marketing opportunities. Considering that research also shows that nearly 80% of survey respondents who have participated in the metaverse find that it allows them to be their true selves without fear of judgement, the space presents a huge opportunity for brands to foster deeper connections with their audiences and create meaningful and memorable brand experiences.
Some brands are already establishing a presence and selling products in the metaverse. For example:
- Gucci sold a digital bag for $4,115 — more than retail for the physical product.
- Nike has partnered with Roblox to create a virtual game space called Nikeland, where players can outfit their avatars with Nike gear and play mini games like dodgeball and tag.
- Other brands are partnering with gaming companies to create immersive product/brand placement experiences. For example, Wendy’s partnered with Fortnite to create a storyline in the game — and their efforts ended up earning them a Cannes Lion award.
All said, while the metaverse is still in its infancy, it’s clearly a place that holds huge potential for future growth — and for attracting new customers while furthering brand loyalty with existing ones. So, while many (and even most) brands may not be ready to take the leap into leveraging the metaverse to its full potential just yet, it’s definitely not something to altogether disregard. By starting to learn more about what the metaverse is, along with thinking hard about where and how they might fit into it and who they might connect with there, brands can be ready to hit the ground running in the space when the time is right — and thereby get a leg up on the competition.
Web3 is still in its very early days, and if you have not turned your marketing focus there yet, you’re not alone. Marketers are just starting to connect the dots to take advantage of the opportunities, and there will be many.
If you’re on the fence, consider this. Web3 technologies offer a great chance to connect with younger consumers who are very comfortable with cryptocurrencies and eager to engage with their favorite brands. Even for the older generations, crypto and NFTs are becoming easier to access. Consumers no longer need a special crypto-wallet, as these assets can be purchased with a credit card.
One thing is certain: As Web3 evolves, it will offer many opportunities to connect with your consumers and create stronger, deeper connections through technology than ever before. Contact us, to start the conversation for your brand.