Slowly but surely, the metaverse is merging with our digital world and setting new standards for digital experiences. Image by www.hbr.org.
If the term “metaverse” is trending in your world, you must be living in a cardboard box. In 2021 alone, internet searches for the term increased by 7,200 percent. More famously, CEO Mark Zuckerberg recently rebranded Facebook as Meta. While the metaverse may have originally seemed like a far-fetched digital utopia dreamed up by tech whizzes, it’s quickly becoming a reality. Metaverse-related companies raised upward of $10 billion in 2021. Epic Games of Fortnite fame raise $3 billion to fund its future in the metaverse and partnered with LEGO to build a metaverse for kids.
What is the Metaverse?
Maybe you’ve heard the term being thrown around but are still asking yourself, “What is the metaverse, really?” If so, you’re not alone. None of the key players in the metaverse have been able to definitively pin down its exact meaning. This may be because the existence and functions of the metaverse are complex and difficult to define in simple terms. However, according to venture capitalist Matthew Ball, the metaverse encompasses immersive environments, often using augmented reality to function in them. One key point is that it is meant to span both physical and virtual environments, making it an asset for hybrid events.
Perhaps most importantly, the metaverse uses avatars to provide users with the experience of physically inhabiting a virtual world. In a hybrid environment, remote attendees are still behind a screen while in-person attendees are moving through the physical venue. However, the metaverse provides a simulation of the physical environment where the in-person attendees are. Using avatars, remote attendees can navigate, manipulate, and interact with said simulation. This experience marks an unprecedented level of immersion. It’s quite literally a whole new world.
A Billion Dollar Market
The metaverse is nowhere near fully integrated- but it is here to stay. Image by www.searchenginejournal.com.
What does this mean for marketers? Essentially, the metaverse presents opportunities to connect with broader audiences in new, innovative ways. Let’s talk about some of the main reasons why we think the metaverse is here to stay.
The most obvious reason is the massive investment that has been made in it. Meta invested $10 billion into the infrastructure of the metaverse in 2021. NVIDIA Omniverse, a design and simulation platform, recently launched. But nowhere do we see the results of these investments more prominently than in the gaming industry. Immersive entertainment, sports, and educational experiences are taking place in the metaverse. Virtual employee training is happening via team collaboration with avatars. We are seeing virtual prototyping in the manufacturing and construction industries. Virtual showrooms featuring interactive product demonstrations are becoming mainstream on the internet.
Puzzle Royale launched its virtual video game in the metaverse in April 2022. Historically, games like Minecraft and Roblox were the first wave in metaverse development. In these games, avatars acquire and use virtual materials to build items. Metaverse gaming experiences are continuing to evolve and are marketed as interactive social experiences.
Interestingly, the metaverse is fully funded by a thriving virtual economy. It is fundamentally supported by cryptocurrency and digital goods and assets, including non-fungible tokens (NFTs). NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from one another. For those who aren’t familiar, a blockchain is a digital database that is distributed among the nodes of a P2P network.
Many have argued that online commerce has acted as the gateway to the metaverse. After all, the virtual-goods economy encompasses more than 40 percent of global gaming revenues generated by the world’s gamers. With payment credentials already embedded in the devices of users, online commerce has become mainstream.
What Can You Buy in the Metaverse?
The bridge between real world businesses and metaverse platforms is already being built. Customers can now order Domino’s pizza on Decentraland and receive a delivery in real time.
And Wingstop is allegedly planning for users to be able to trade NFTs, digital assets, and even artwork through an online marketplace. AfroTech divulges: “In addition, the trademark extends to downloadable software for trading cryptocurrency, NFTs, digital tokens, downloadable loyalty, and reward cards.”
This begs the question: Besides food, what else can be purchased in the metaverse? Well, real estate is booming in the metaverse. According to AfroTech, people are now spending actual house payments on pieces of virtual land. In fact, someone recently paid $450,000 to live next door to Snoop Dogg in the metaverse!
Ironically, with the advent of the metaverse, you can now buy money digitally. That’s right, virtual money is a thing, and the Fidelity investment firm has made two virtual coins available in the Web3 space. In a strategic effort to expose investors to the world of digital assets, the company has started an exchange-traded fund (EFT). EFTs are a kind of investment that is traded on an exchange- similar to individual stocks. However, EFTs generally don’t require a minimum investment, which means that even people with little money to invest can use them.
For example, if you want to invest in Vanguard’s S&P index fund, you need a minimum of $3,000. But you can invest in Vanguard’s S&P EFT for as little as the price of one share. EFTs are becoming one of the most popular ways to invest in stocks, bonds, and other securities. Because of this, they’ve attracted billions of dollars in investments.
It probably won’t come as a surprise that you can buy tickets to sporting events in the metaverse. In 2022, the Brooklyn Nets were the first professional sports team to enter the metaverse. Reportedly, the Masters- the world-famous golf tournament, for those who don’t know- is planning on doing the same thing in 2023.
Marketing in the metaverse requires companies to reflect on their goals and decide how to use this new digitized universe to achieve them. More and more, we’re seeing live commerce streams pop up on the internet. These events provide retailers, brands, and digital platforms a channel for showcasing value and making instant purchases. During live commerce, customers are able to participate through chats and reaction buttons. In the metaverse, attendees are represented by an avatar in the event space. They can move through a simulation of a physical space, interact with and experience products, and chat with vendors.
Tailor Metaverse Experiences to Your Target Audience
There's a whole new market of items you can buy in the metaverse, some of which may surprise you! Image by www.arstechnica.com.
The metaverse has helped create opportunities for immersive brand experiences online. But before you decide to become a part of it, make sure you know what your goals are. For example, let’s say you want to reach a younger audience. In that case, you might use gamification in your online events. If your goal is to promote a new product or drive sales, host a live, interactive demo. In the metaverse, users can interact with, manipulate, and experience products via a few clicks.
A few years ago, BMW made headlines with their Mini Augmented Vision prototype. This simulation allowed users to wear prototype glasses and “drive” the car down a simulation of a road. This way, they could see the dashboard the same way they would if they were driving the car in reality. Users had the ability to slow down, speed up, and otherwise interact with the car’s features on a virtual “test drive”.
The metaverse is seen as an innovative experience, so it’s an ideal space to inspire innovation in your marketing team. It’s also appealing to the experiential younger generations who value innovation above tradition. For example, the designer brand Gucci brought fashion to the metaverse when they created a digital realm in which individuals could interact with products via a digital persona. In other words, users can see what a clothing item looks like on a caricature of themselves.
In May 2021, Gucci and Roblox launched a brand experience called Gucci Garden. If you’re fashion-forward, this may sound familiar. This online event was a virtual recreation of Gucci’s very real two-week art installation in Florence, Italy. Using lifelike avatars, customers could “walk” through several themed rooms. Once there, they had the ability to view, try on, and purchase Gucci products. The overall effect was visually stunning: Once blank, genderless avatars were now decked out from head to toe in Gucci clothing and other items. This decadent digital experience was designed to connect with Gen Z, and it was a whopping success. It drew over 19.9 million visitors in two weeks.
The main takeaway: You should be designing metaverse experiences that appeal to your target audience. This isn’t as simple as it may sound. Businesses are challenged to cultivate a precarious balance between native advertising and immersive digital experiences (including games, virtual stores, and events). The digital experience must also have enough real-world activations to deliver value tangible value.
Take “Vans World” on Roblox: In order to increase brand awareness and appeal to Vans’ younger demographic, the company created an online experience in which customers could explore a virtual skatepark with friends. But it wasn’t all just fun and games- visitors had the opportunity to earn points through games to spend on virtual sneakers and customized skateboards. This experience was a wild success.
Work With Money-Making Models
Currently, the metaverse is more ideal for creating brand experiences than it is for driving direct sales. But that doesn’t mean sales aren’t being made, and that they won’t continue to rise. Direct-to-avatar sales of virtual products already constitutes a $54 billion dollar market. You may have heard of Nike Cryptokicks, which is a virtual model of the brand’s Nike Dunk sneakers. But Nike is hardly the only brand who has been trying out NFTs. Forever 21 sells a beanie in Roblox for under a dollar. In contrast, Gucci made headlines by selling a digital version of its Dionysus bag for $4,115- that’s more than the price of the physical item itself!
However, interest in buying digital assets is still lukewarm. Recent research shows that only 24% of consumers, including those who were likely early adopters of the metaverse, have built and sold digital assets.
Risks Associated with the Metaverse
Like any new universe, the metaverse is not without inherent dangers. Here's how to know and avoid them. Image by www.venturebeat.com.
Creating brand experiences in the metaverse is not without inherent risks. Customer service demands, user safety and security, and intellectual-property management are all areas to consider before engaging with users directly in the metaverse. Moving marketing strategies completely into the metaverse is not advisable at this time- especially for brands whose target audience includes people over thirty. Although the world is becoming increasingly tech-savvy post-pandemic, a 2022 Gartner survey showed that 35% of consumers have never even heard of the metaverse. So yes, now is the time to start dipping your feet in the metaverse- but not to dive all the way in.
Consumers are unlikely to spend all their time in the metaverse just because it exists. Current research shows that consumers are likely to spend only a fraction of their digital time in the metaverse. For example, customers buying mundane items like food deliveries or groceries are probably more likely to use a website or chatbox. Customers are more likely to pursue the metaverse for more immersive experiences when seeking entertainment, education, or exploration.
Also, we can expect that there will continue to be in-game currencies in virtual names that cannot be used outside of the platform or game. These are typically earned as part of game play, and the metaverse probably won’t change that. There will certainly be new payment mechanisms that offer new ways of acquiring in-game currencies, these probably won’t be options within the games themselves. That’s likely because of the costs and regulatory politics involved.
Our advice: Align your brand’s digital experiences with your consumers’ access and preferences. Introduce them slowly to the metaverse, but continue to focus primarily on online events and strategies that will bring in short and long-term ROI. In other words, there’s no need to fix what’s not broken. Although the metaverse is relevant, it’s largely in an experimental phase for marketers. Despite billions of dollars of investments, it is still only a small portion of the digital world for most consumers.
That said, creating immersive, metaverse-like experiences using avatars is a step in the right direction. The experiential market is already leaning toward immersion, and moving in this direction prepares you for the metaverse as it becomes more mainstream. Enterprise tech companies are digital leaders, so the more they adopt it, the more consumers will as well.
Measuring Marketing Success in the Metaverse
What are the right metrics to measure success in the metaverse? It’s easy to assume that they would be similar to those used to measure digital success: conversions, website traffic, social media likes and mentions, customer loyalty, and the cost of acquiring customers. However, the metaverse may need to define new metrics to measure the success of new digital behaviors such as building and selling NFTs. How can virtual products sold in virtual universes be measured? One possible solution involves promo codes that activate in real life, but there are sure to be many more as time goes on.
The metaverse is an exciting place to go- but there’s ample time to test the waters before diving all the way in. Our best advice is to dabble in its possibilities by creating metaverse-like experiences based on what you already know about your target audience. Use demographic and psychographic information to design a digital or hybrid experience that is tailored to your customers’ preferences. A universe unto itself, the metaverse is complex- so trying to take it on in one sitting is a recipe for disaster. Instead, keep up with digital leaders, know the trends, and make moves when the time is right.