Marketing News & Strategy

Marketing News & Strategy

Companies need to reinvent their marketing playbook for digital worlds

What brands should know about the metaverse

Ilyse Liffreing

Brands need a metaverse strategy.

The so-called metaverse piqued the interest of brands looking for ways to bridge the digital and physical divide amid COVID-19 lockdowns, which created a demand for virtual escapes. Now with Facebook announcing plans last week to transition into a metaverse company over the next five years, it’s become essential for brands to understand how to navigate digital worlds.

“The metaverse could be the next ubiquitous way to connect users across every platform and social touchpoint, whether it be a game, entertainment, video, Zoom, SMS or phone call. “The idea of a massive, centralized community is being invested into heavily and is coming,” says Victor David, co-founder and CEO of Epik, a global licensing agency connecting brands with major video games.

In short, the metaverse—a term coined in Neal Stephenson’s 1992 novel “Snow Crash”—is a collection of digital worlds and assets, where interoperability allows users to interact as digital versions of themselves, also known as avatars, across platforms. The ultimate goal is to allow users to generate content and connect it across digital worlds. Users will be able to take their avatars and assets and move from place to place; a “Fortnite” skin could be brought into a “Minecraft” world, for example.

Essentially, the metaverse can serve as a playground where brands can connect to fans outside the constraints of the physical world through options as broad as the internet itself. It’s no surprise that imaginative creatives and forward-looking businesses are attracted to the potential, and experts say the interest will only grow with advances in technology.

Facebook’s announcement last week of plans to create a new metaverse product group is expected to further fuel a trend that had already been gaining momentum.

Ready Player One

The COVID pandemic has served as a catalyst for the emergence of these new virtual worlds and goods. The rise of gaming, avatars, blockchain technology and NFTs, tied to social e-commerce, stand as new portals into the metaverse. As people hunkered down in their homes, games like Epic Games’ “Fortnite,” Nintendo’s “Animal Crossing: New Horizons,” Microsoft’s “Minecraft” and the millions of gaming worlds of Roblox became places where players could virtually transport themselves away from the monotony of their living rooms. Livestreams of people playing these games on platforms like YouTube, Twitch and Facebook Gaming have only increased their reach and popularity.

Now brands are looking to become part of these worlds in an effort to connect with the largely Gen Z audiences that engage in these universes. Success stories like Fortnite’s Travis Scott concert, which saw 12.3 million views; and Warner Media’s “Wonder Woman: The Themyscira Experience,” which has been visited nearly 30 million times on Roblox, prove there’s a powerful opportunity.

“We’ve been tracking the use of synthetic experiences by brands over the last couple of years, and through the pandemic it became increasingly a replacement for physical experiences. But with video games at the center of youth culture today, it’s become a critical pop culture connection,” says Jeff Roach, president and chief strategy officer at independent Irvine, California-based agency Schiefer Chopshop: SCS.

In July, SCS worked with U.K.-based design studio Blockworks to create a virtual world within the blocky building platform “Minecraft” for farming and lawn care brand John Deere. In “FarmCraft,” players complete farming missions like harvesting crops they grow themselves while learning about automation in agriculture. The experience, created to introduce the brand to a new generation of tech enthusiasts, has already been downloaded more than 2.3 million times.

A side of NFT with your VR

Meanwhile, with people spending so much time on their phones and cryptocurrency becoming more widely adopted, digital assets like non-fungible tokens, or NFTs, have become popular, as well as the use of digital avatars in apps, social media and websites. Augmented reality (AR) and virtual reality (VR) experiences are also now converging with blockchain technology to form another name for the metaverse: “Web 3.0.” Anything that sits on blockchain technology like NFTs and AR or VR experiences are part of the metaverse because they are decentralized, meaning users can own and claim them as their own.

There’s already a wide array of examples of brands experimenting in the space. Warner Bros., Gucci and Nerf, among others, have built their own virtual worlds on gaming platforms. More traditional brands, like Coca-Cola, Campbell’s Soup and Anheuser-Busch InBev, have been tiptoeing into the metaverse by creating and selling their own NFTs on blockchain-fueled platforms. Meanwhile, brands like Nike, Sephora and Porsche continue to build AR or VR creative in platforms like Snapchat.

The main driver for these experiences is to raise brand awareness and connect with a new generation of consumers who are accustomed to digital realms.

Eventually, virtual worlds and assets could become brands’ calling card, just as social media profiles and websites work today, says Cathy Hackl, a metaverse growth strategist who consults with brands like luxury fashion line Asprey and jeweler Simone Farcshou. “Just like many in the early 2000s thought they would never need a social media presence, brands in the 2020s will need to start setting up metaverse teams that will help them enter the era of Web 3.0.”

While much of the efforts thus far have centered around using virtual worlds as a marketing vehicle, there’s also an opportunity for brands to profit from these experiences through digital goods. In games like Roblox and Fortnite, users use real currency to dress their avatars with skins or collect objects. Brands then share a percentage of the sale with the platform or developer. A prime example of this is Gucci’s “Gucci Garden” Roblox event in May, where a digital version of a Gucci purse sold for more than it would in real life, despite it not carrying any value outside of the Roblox metaverse. Another popular route is to sell NFTs. While some brands are sending proceeds to charity, others like CNN, e.l.f. Cosmetics, Anheuser-Busch InBev and Porsche are experimenting with it as a new revenue stream.

Becoming part of the metaverse

For brands looking to claim a place in the metaverse, the path to get there isn’t as simple as becoming immersed in the worlds themselves, however. Brands and agencies are continuing to experiment with the most effective ways to design their own environments and how to place ads in front of people in virtual worlds.

For starters, brands need to play by specific rules. Each platform has their own approach to branded content. Roblox, for instance, is selective with the brands it chooses to work with on experiences. Facebook started allowing ads in its Oculus virtual reality games this June, but so far player backlash has stunted application. The only company using the format, Resolution Games, decided to stop after players complained. “Minecraft” also has its own set of commercial guidelines for regulating the use of logos and advertising on the platform. It’s for this reason that Blockworks focuses more on campaigns that have a youth education angle. “Minecraft” allows the virtual experiences, called “maps,” to be sponsored by brands. Along with the FarmCraft work, the agency recently created a financial literacy world for Ally Bank and an employee training simulation for PepsiCo.