Marketing in the metaverse: The biggest opportunities for brands

Brands are rushing to build real estate in the virtual realm before the market becomes bloated, but some are more of a natural fit than others. Campaign speaks with five marketing and innovation experts to figure out which experiments show promise.

From virtual clothing to NFTs, and from branded shops within games to virtual concerts and fashion shows—there have been dozens of experiments by brands in the past year to figure out how to market to consumers in the next iteration of the internet.

In its full form, the metaverse, which means 'beyond universe' when reviewing its etymology, is a future iteration of the internet, made up of persistent, shared, 3D virtual spaces. The metaverse will, theoretically, be comprised of multiple interoperable virtual worlds, which will allow people to easily teleport from one experience to another, and facilitate everything from social interactions to entertainment, shopping and work.

In their metaverse whitepaper, the Mobile Marketing Association (MMA) and Culture Group describe the metaverse as "shared virtual worlds that seamlessly blend applied game mechanics, massive interactive live events (MILE), blockchain-enabled digital goods, and virtual commerce".

While this is currently a concept, aspects of the metaverse have been around for some time. Luxury brands began creating avatar apparel as early as 2018, and brands have been collaborating with games for a few years. Other areas, such as collectables and NFTs, have seen recent and dramatic spikes. And the technology driving massive interactive live events (MILEs) is in its early stages.

Despite its burgeoning status, the metaverse has become one of the most popular channels for brand experimentation throughout 2021. Early innovators are seeking to establish a foothold before the virtual realm becomes fully realised and commercial opportunities get harder to come by. But while some brand case studies have proven successful at reaching wide audiences, the long-term value of marketing in the metaverse remains a mystery.

Furthermore, while the gold rush has been led by certain categories of brands that lend themselves naturally to virtual goods and events, such as luxury, others have a trickier job proving their value virtually.

Campaign Asia-Pacific asks five experts with deep experience or insight into the metaverse to identify the areas in which they believe brands can add the most value, which categories of brands are a natural fit and which are not, the pros and cons of early experimentation, and the steps that brands should take before investing in the virtual realm.

Branded characters or real estate in games

Several brands have recreated their services or built branded characters or arenas within games, natively inserting themselves within an experience rather than interrupting it. Two games in particular, Animal Crossing: New Horizons and Fortnite, have become fertile ground for brand insertions.

Some have opted to replicate their real-world offering in the virtual environment. In the early months of the pandemic, Sentosa Development Corporation recreated Sentosa Island in Animal Crossing, inviting players to visit its attractions and do some virtual yoga "while cooped up at home". In the same game, food delivery service Deliveroo last year sent a fleet of virtual riders to deliver virtual treats to players, which it paired with promo codes to order food in the real-world.

Other brands that are less of a natural fit in games have had to be more creative. DBS bank recreated Singapore’s iconic Zouk night club in Fortnite, renaming it the ‘Live Fresh Club’ to advertise its credit card of the same name. Verizon brought the Super Bowl stadium to Fortnite, giving players the chance to meet avatars of NFL players, in a stunt it claimed "showed off what 5G can do". And since there isn't much of a need for fast-moving consumer goods (FMCGs) within games, these companies have opted for purpose-oriented integrations. Procter & Gamble's women's razor brand Venus created "more realistic" skin types for avatars in Animal Crossing featuring freckles, acne, cellulite, stretch marks and psoriasis as part of its 'My Skin, My Way' inclusive campaign. Unilever's mayonnaise brand Hellmann’s created a branded island in Animal Crossing where it invited players to drop off their spoiled turnips in exchange for a real-world donation to Canadian food-rescue charity Second Harvest. It formed part of the brand's purpose strapline that 'food is too good to be wasted'.

In all of these examples, the companies found ways to integrate their branding into the games. But there are brands that have chosen a stunt-based approach. Fast-food chain Wendy's sent a character resembling the brand's mascot into Fornite to 'kill' all the freezers in the game's Food Fight mode, after noticing that the Durr Burger restaurant in the game stored its virtual beef in freezers. The brand saw this as an opportunity to advertise its "fresh, never frozen beef"—a stunt which grew social media mentions of the brand by 119% and picked up several awards, including eight Cannes Lions.

TBWA's Asia head of innovation, Tessa Conrad, mentions Wendy's as "one of my favourite examples of brands exploring the metaverse over the past couple years".

"Seeing them really immerse themselves in the gaming landscape across Fortnite, Twitch and many others is just plain cool," Conrad notes. "What I like most is that it’s not just one-off marketing campaigns, but clearly driven by a wider strategy."

Elsewhere, Tourism New Zealand tapped into the popularity of gaming in a different way. Instead of partnering with a game, the tourism agency created a 'Play NZ' campaign that emulated a 'gamer walkthrough' of the country's sites and attractions, giving homebound consumers the chance to "satisfy their wanderlust", general manager Andrew Waddel said at the time. It partnered with gaming influencers, Twitch and YouTube for the campaign.

Conrad notes: "What Tourism New Zealand has done to bring tourism and exploration to light-touch gamers through streaming and creator partnerships is smart. Since most people weren’t able to travel recently, being able to explore more 'real life' travel while in the virtual world is a great touch."

Digital goods for avatars

Avatars, a virtual embodiment of our physical selves that have been around as long as the internet, are viewed as the "first mega opportunity" for brands due to the seemingly endless opportunities to clothe, style and feed them. Almost every product that is marketed to humans can be sold to their virtual counterparts. 

Michael Patent, the founder of Culture Group, believes avatars will become ubiquitous among the internet population, replacing usernames. Currently limited to individual platforms, in the future they will serve as our self-sovereign identity (SSI) and will be able to teleport across platforms and experiences, no longer requiring users to log into every platform they visit. They will have their own digital style, currency and possessions.

"The avatar is a remarkable virtual canvas for our creativity and our expression," says Patent.

Luxury brands have been the first to tap into this new opportunity. Gucci has released digital collections of its signature clothes and goods in Roblox, with avatar creator Zepeto, and Giphy. The brand has also integrated the SDK of avatar creator Genies directly into its app so customers can dress their avatar while purchasing their own physical clothes. Gucci is one of several brands offering to clothe avatars in designer gear.

Emma Chiu, the global director at Wunderman Thompson Intelligence, who recently authored a report on the metaverse, comments: "A lot of luxury brands like Louis Vuitton, Balenciaga and Gucci are creating digital possessions that can be bought in-game, dropping limited-edition NFT collections and even making their own branded game worlds. These are very exciting and interesting examples of brands not only moving into games, but creating digital third spaces for people to gather, hang out in, and create new experiences together."

Direct-to-avatar (D2A) is "fast becoming the new retail strategy", Chiu suggests, as more people, particularly the younger generation, are spending time online and creating a version of themselves online.

"Experts are predicting that virtual goods will in the next few years become as important if not more important than physical goods," Chiu says. "And as more people open up to buying digital possessions, this new form of ownership will be leading the way for how brands launch new collections."

In the future, brands may opt to launch new collections virtually first and use this as a testing platform before they decide what to physically manufacture and sell, Chiu suggests.

Alex Wills, the chief experience officer of post-production facility The Mill, adds that there is a "huge amount of interest and activity" regarding digital goods and the ability to connect virtual experiences directly to commerce. 

Patent foresees greater offline-to-online activations: "I can see a world in which you buy a product at a store, you scan something, and that unlocks an opportunity for your avatar to access an additional platform or to access an additional virtual good."

Collectables and NFTs

Luxury brands have also emerged as a natural fit within collectables and non-fungible tokens (NFTs), another burgeoning space in the metaverse.

NFTs are digital assets that are secured on the blockchain. When someone purchases an NFT they purchase a unique token (entry) on a blockchain ledger that proves they uniquely 'own' a digital asset. This new form of online trading has skyrocketed in popularity over the past year, to the point that brands are selling digital versions of their goods for more than their physical price.

"Gucci selling a digital handbag for more than its physical value really shows what the metaverse economy could potentially be," comments Chiu.

Beyond luxury, TBWA's Conrad calls out the NBA as a brand that has proven adept at capturing emerging trends. "Through tapping into the age-old consumer behaviour of collecting and trading sports memorabilia, they’ve innovated and progressed that into the new age of NFTs," she says.

But there has been significant debate about the true value of NFTs, when in many cases the digital asset that the buyer 'owns' is not exclusive and can be freely available online for anyone to copy and enjoy. For example, anyone can download and own a version of an NFT video by Beeple that was sold for US$6.6 million.

With little guarantee over the long-term value of these assets, brands rushing to create NFTs are doing so for reputational purposes, says Conrad.

"Right now you see a lot of movement on NFTs from an investment or PR perspective, with many brands releasing something just to have their moment in history without thinking about a longer-term strategy around it," she says.

That said, Conrad still believes NFTs have an "exciting future from a wider creator standpoint as well as through utility".

"By having the ability to reshape collectibles, art and content the possibilities are endless," she adds. "So I think we’ll see a shift away from many looking to make quick money, towards brands and creators figuring out a longer-term utility path."

For this reason, Conrad doesn't view any aspects of the metaverse as fads. Rather, certain uses and creations within areas of the metaverse will be denounced as fads as the technology and user base continues to evolve. 

Massive interactive live events (MILEs)

MILEs use a single simulation to bring together large amounts of users who all interact and influence an event or game in real-time. Most MILEs have been game-based, such as Genvid’s Rival Peak, a three-month interactive media experience that was distributed on Facebook Watch. But the ability to engage large audiences has applications across many industries.

In the music industry, Travis Scott performed a live concert in Fortnite to 12.3 million gamers, a collaboration that went on to win the Grand Prix in Digital Craft at Cannes Lions. Balenciaga designed a video game, Afterworld, using Epic Games’s Unreal Engine to debut its fall 2021 collection.

The Mill's Wills says Balenciaga's approach "begins to hint at how future facing brands should look at producing moments and campaigns that span multiple, owned and shared virtual platforms".

The Mills recently produced a 45-minute real-time 3D rock concert for Riot Games's virtual band Pentakill. Wills says some clear principles are emerging from these early proto-metaverse experiences: "Leveraging strong IP, creating experiences tailored and authentic to the audience and ensuring that the experiences themselves are crafted by the very best 3D artists."

These examples demonstrate the opportunity for companies to use MILEs to open up access to events like concerts, festivals or fashion shows. The next stage will see users influencing the outcome of such events.

Patent says: "Massive interactive live events democratise the storytelling process. We've seen the success of Wattpad and fan fiction. We've seen the success of some fan influence outcomes on Netflix. Creating global IP in which the consumer determines the outcome in real-time is going to be really significant, and I see that playing out virtually and cross-border."

David Porter, VP of global media at Unilever for APAC and Africa, believes mainstream brands are likely to gravitate to MILEs, which are "already a reality with live commerce streams and huge audiences in China".

"I expect we will see these roll out across the region very quickly," he adds.

Brands that lend themselves well to the metaverse, and those that don’t

Fashion and luxury brands have featured prominently throughout the case studies featured above as brands that, for the most part, “tend to value context and talkability over scale”, says Unilever’s Porter, who is also the APAC chair of the Mobile Marketing Association. “But the metaverse is a complete world, which will over time attract all types of users, experiences and commercial activities,” he adds.

“Unilever’s compass is our knowledge that brands with purpose grow, companies with purpose last and people with purpose thrive. So we will be looking for our brands to behave in the metaverse with the same purpose that they bring to the real world.”

Other FMCG brands such as Coca-Cola are relying on the power of their brand to succeed with their investments. The beverage giant launched an NFT collection in July that fetched $575,000 in an online auction.

While most of the experts Campaign interviewed for this feature believe the metaverse is “for all brands”, Culture Group’s Patent points out that “certain FMCGs are going to have trouble because their brands aren't built for true lifestyle engagement”.

“A shaving cream, or a razor, or a shampoo, for example,” he says. “When I think of automotive, luxury, consumable products like food and beverage, travel, hospitality, real estate, airlines—I could absolutely see those working in virtual engagement.”

TBWA’s Conrad suggests some brands will have an easier evolution towards the metaverse than others.

“Brands easily set up for success are those with an already very active, passionate, close-knit and repeating audience. The metaverse is community-driven so if you already have a solid community, now is your time to shine,” she says.

“Also, a lot of the brands we see making first moves are ones that have been very primed to experiment and build within digital landscapes—brands that are great at audience work, data, social and ecommerce applications. Because of their early and long-standing work in these areas, they are set up for success as they continue to evolve with their users.”

The Mill’s Wills agrees the evolution into the next iteration of the internet will be slower for some brands: “We are certainly seeing sectors like luxury and fashion embrace experimentation more readily that perhaps some of the more traditional but established marketeers, although it wasn’t so long these brands themselves were struggling to make the leap to ‘digital’ at all. So it shows that all brands need to make this leap—but the more analogue/physically rooted brands might well take a little longer to jump in.”

When and how to enter the metaverse

Choosing to be an early adopter is a “no-brainer” if you believe in the first-mover advantage, “which most marketers do”, according to Porter, who leads advertising association The World Federation of Advertisers in the APAC region.

Being perceived as the “first” to do something creates a long-lasting halo effect, says Conrad.
“If your first moves are thoughtful and well done, you’re able to raise the expectations that your consumers have of you. Also being first means you get to have more PR, make more ‘ownable’ moments, work out the kinks before everyone else tries it, get top partnerships locked-in and figure out the effects on your wider experience outside of the metaverse,” Conrad says.

“In short, you get to build a very solid long term strategy by starting to experiment and learn now.”

The downsides of investing in an unproven channel are cost and the likelihood of making mistakes with less case studies to learn from. To overcome the fear of failure, Conrad suggests looking beyond traditional brands to learn how to create something of value.

“Creators are now brands of their own, and they are currently leading the way in the metaverse. Looking at the work of BAYC, CryptoPunks as well as creators, there’s a ton of lessons that brands can learn and apply in a much more authentic way than if they were looking at traditional brands,” she says.

Rather than rushing in, a more considered approach may be better for brand sustainability, suggests Wills. While there are benefits to being perceived to be an innovator in an emerging space, it is “far more impressive to be laying down markers that clearly ladder up to a longer term strategy”. One need only to look at the past two iterations of the internet to see that "a lot of money and time was wasted at the beginnings of these S-curves", Wills says.

"Our recommendation would be to develop a framework strategy to allow early experimentation and experience development—but one that is not expensive. Throw away one-offs, instead everything should build towards a longer term vision. Look at all your touchpoints and understand how immersive technologies today can enhance engagement. And build towards future interfaces including wearables," Wills suggests.

When it comes to experimental or innovative work, brands struggle to identify objectives, according to Patent: "Understanding and having a clear objective that can or cannot be connected to core business is critically important". The objective could be as simple as landing a piece of work authentically, which can lay the foundation for future work that impacts the bottom line.

Porter agrees brands should have "at least some idea in advance of what success might look like and measure for it". But, he adds, tests can have unexpected consequences, especially in emerging channels.

"So brands should be open to different outcomes and our media partners should be open to use cases which were not what they originally had in mind. Nobody can say for certain yet whether this will be a place most effective for building equity, purpose or performance," Porter says.

What everyone can agree on is that the metaverse will play a huge role in the future of business, such that all brands will need to be involved in some way if they want to continue to see growth.

Conrad says: "For brands wondering how to get started and whether the metaverse is 'right' for them, I think they just need to look at their audiences. Where is there growth coming from? Where is it going to continue to come from? It’s almost guaranteed some of that is going to come from what happens in the metaverse.'

Patent surmises: "The customer of tomorrow is in the virtual realm. If we look back at Web 1.0, Web 2.0, the internet was experimental at one point. Then it became a place where some brands were successful, then it became a place where you had to be, and now it's the primary form of communication for most brands. We're going through that same process. In the first iteration of the internet that took 10 years. I think now that process is going to take 12 to 18 months."

This story first appeared on Campaign Asia-Pacific.

Tags

Subscribe today for just $116 a year

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.com , plus get exclusive discounts to Campaign events

Become a subscriber

GET YOUR CAMPAIGN DAILY FIX

Don’t miss your daily fix of breaking news, latest work, advice and commentary.

register free