Why brands should enter the metaverse as part of their long-term strategy
With the metaverse predicted to generate $4-5tn across consumer and industrial-based businesses by 2030, it’s becoming an increasingly important channel for brand engagement. For The Drum’s AI to Web3 Deep Dive, Beanstalk’s Allison Ames, (president & CEO), looks at the opportunity for brands to conquer the digital realm by meshing it into their physical presence.
Can your brand afford not to have a metaverse strategy?
Before the pandemic, our world coveted a plethora of largely physical world interactions. Creative FOMO-filled experiences, pop-up interactive moments, global travel destinations (the farther, the better), among others, were the epicenter of many consumers’ cultural journeys. These events and Instagrammable moments were the buzzwords and focus not only for consumers, but as importantly, for brand marketers and businesses.
During that time, the world was just beginning to hear about this virtual place called the metaverse or Web3, NFTs and the like. Early pioneers in the space certainly understood the various Web3 platforms and opportunities - unlike the general public, brands or various businesses, which were neophytes in understanding how to play in this sandbox (pun intended). That all changed when the pandemic transformed our lives. It became the catalyst that parked us in front of our screens as outlets to our new world of lockdown. It became the digital vehicle for brands and consumers to create new ways to bring back our craved physical connections to our now virtual lives. Enter the accelerated importance of the metaverse.
The stats speak for themselves. According to McKinsey & Company, investment in the metaverse more than doubled in 2022, backed by private equity and venture capital ($12-$14bn) as well as buzzworthy corporate acquisitions (e.g., the pending $69bn acquisition of Activision by Microsoft). If you’re metaverse savvy, a day doesn’t pass without hearing about the successes and active users of Roblox, Decentraland or The Sandbox.
Let it be known. The metaverse is not going to be a flash in the pan. It’s here to stay and it isn’t just for gamers. It’s far more than that. It’s a new and future emerging expression for a myriad of brand experiences that connects and engages consumers and builds community. Think of it as the internet in 3D. The way that Gen Z grew up with the internet and social media is the way that Gen Alpha will grow up with the metaverse. Simply said, the metaverse allows brands to provide more creative approaches to engage through digital activations. Smart brands that have conquered the physical space now have a new opportunity to conquer the digital space and mesh it into their physical presence.
Creative connections are a cultural must-have
One of my favorite examples of creatively connecting with new consumers is what Gucci has achieved with its metaverse activations. Building off the success of Roblox’s short term activation of Gucci Garden in 2021, Gucci has established Gucci Town, a permanent presence inside of Roblox. It features a central garden that links together various areas, including a mini-game, café, and virtual store where players can purchase virtual Gucci wear for their Roblox avatar. The brand has even welcomed an avatar of Manchester City soccer star Jack Grealish, decked out in the ‘Gucci Good Game’ capsule collection.
Gucci has successfully leveraged the metaverse to create community and brand engagement. While a large portion of Gen Z has not yet established the income to independently afford Gucci products ‘in real life,’ Gucci Town enables this audience to experience the brand within the metaverse. This, in turn, creates affinity and brand love. As a result, Gucci is now one of Gen Z’s top two favorite fashion brands. This proves that brands can engage with consumers in new ways even if they’re not actually buying physical products, all with a long-term view of developing the next generation of consumers - a fundamental element in maintaining long-term brand relevance.
Brand marketers, take note: If you don’t start to disrupt this space ahead of your competitors, this space will most certainly disrupt you. The data speaks for itself. In an April 2022 survey conducted by McKinsey & Company, ‘’95% of business leaders expect the metaverse to have a positive impact on their industry within five to 10 years and 61% expect it to change the way their industry operates.’’
According to the same report, the metaverse could generate $4-5tn across consumer and industrial-based businesses by 2030, which is close to the size of Japan’s economy. Why? Because the metaverse is more than just about gaming. There are numerous meta-movements that engage consumers across age demographics and geographies. Consumers are reaching into their pockets and spending money on metaverse assets, and companies are investing in building a variety of infrastructures with state-of-the-art technologies to develop multi-faceted value propositions for different communities.
The importance of a considered approach that fulfills brand needs
How can brands be trailblazers in the metaverse? What is the right way for them to engage? While there is still limited history of metrics and ROI, brand owners have to be comfortable with a ‘test and learn’ approach. It’s the only way to travel. Similar to the early days of social media which tested various marketing concepts, smart brands should plan a long-term metaverse strategy consistent with their growth priorities and how they want to extend their brand love and penetration.
Six key questions for brands to contemplate as they plan their meta moment strategies are:
1. What value and message do you want to convey in the virtual world?
We have seen brands use their virtual presence to launch products, engage younger consumers or raise awareness of philanthropic ventures. Establishing clear goals and objectives are essential to maintaining authenticity.
2. How can you differentiate your narrative from your competitors?
For example, several food and beverage companies have done activations in the metaverse. However last year, Chipotle became the first restaurant to launch a new menu item in the metaverse through its Guajillo Steak Grill Simulator.
3. Is this a revenue play such as Forever21’s Shop City or a marketing activation like Oreo’s Oreoverse?
From a traditional licensing model to direct purchases of digital or special Web3-only physical products, to marketing and loyalty programs, among other examples, the metaverse is a significant playground for value creation for both consumers and businesses.
4. Is your business in the right sector to participate in the metaverse?
How and why will it fit in the metaverse? Business sectors that are in demand include corporate brands, mobility (e.g., automotive, plane apps, transportation services), fashion, art, restaurants, food & beverage, real estate, sports, music, live events, retailers, and personalities as well as digital twins (virtual replicas of different enterprises that can provide rich data for a business’ internal operations, from supply chain to manufacturing to training and development). McLaren, Nike, McDonalds, PacSun, Ariana Grande, and the city of Las Vegas are among brand owners who seamlessly fit in the mold of consumer expectations for metaverse activations due to their notoriety, innovation and unique offerings.
5. What is the right platform to properly present your brand?
While Roblox, Decentraland, Fortnite and The Sandbox have become the go-to platforms, there are other important metaverse platforms that are user-heavy and emerging (e.g., Upland, Spatial, Hyperfy, Voxels, etc.).
6. Is your business operationally ready to champion the initiative?
Just as companies have appointed leaders to drive various disciplines within their organization, companies must have a leader who will develop, implement, and manage their metaverse strategy. It shouldn’t be a part-time job.
Creating success in the metaverse requires both risk and a strategic, thoughtful plan. This digital frontier is here to stay and will continue to evolve with disruption, so the sooner smart brands begin to think about their virtual future and user experience, the sooner they will create change, imagination and opportunities for growth. If you don’t take that risk, you risk being left behind.
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Beanstalk, a global brand extension licensing agency, works closely with our clients to unlock brand equity and create many of the world’s most recognizable products and services.Find out more