The Metaverse, Web 3 and the Future of Marketing
This article was originally posted on the Master of Management, Marketing Analytics News.
By Samantha Beavers
Thirty years ago, sci-fi readers were introduced to a new concept called the metaverse through Neal Stephenson’s novel “Snow Crash” – a story exploring the power and danger of a virtual world where people can interact as digital avatars. More recently, “Ready Player One” hit theaters in 2018 and showed viewers a metaverse called OASIS that’s accessed through VR goggles. Though fictional, stories like these have encouraged audiences to consider the implications of an immersive digital world. Covid lockdowns, which replaced physical experiences with virtual ones, made this possibility feel more imminent.
Facebook upped the ante when it announced its new name, Meta, and its plans to build out the metaverse. And, with the company’s recent layoffs to invest more into this future virtual world, people – especially marketers – are paying attention. There’s also been an uptick in conversations about Web 3, a new generation of the internet built on decentralization and blockchain technology.
Whatever’s ahead, it’s uncertain and it’s confusing – so we sat down with Bill Rand, professor of marketing and executive director of NC State’s Business Analytics Initiative, to discuss the different possibilities and help marketers gear up for a more technologically advanced future.
Why should companies care about all of this?
Because no one really knows what Web 3 or the metaverse might look like, it’s difficult for companies to understand why it’s important and what they need to do about it. But I think it’s helpful to look back on where we’ve come from to provide some context.
Let’s think back to the early 2000s. This is when Web 2 – including social media, self-publishing platforms and content creation – really started taking off. Now, it wasn’t until 2006 that Facebook introduced the News Feed. Before then, Facebook was around, but it certainly wasn’t what it looks like now. All it was useful for was querying your friends – like you had to go to your friend’s page and be like, ‘Oh, they got married.’ But there was nothing being pushed at you. And so a lot of companies didn’t really have an interest in social media at the time – what was the point? I don’t know if anyone could have predicted Twitter or TikTok and the ways in which social media has changed our world and the way companies market.
I think we’re in a similar place right now. There’s all this newer technology – non-fungible tokens (NFTs) and blockchain technology and augmented reality (AR) and virtual reality (VR) and so on. All these technologies are clearly going to transform the web in some way – we just don’t know how. But because technology is moving so fast, it’s really important for companies to take an interest in this so they can think strategically about how to leverage these tools to drive their marketing strategies forward.
Explain Web 3 and the metaverse – how are they similar and how are they different?
Web 3 and the metaverse are related in many ways, but they’re associated with different sets of technologies – and in some ways, they’re kind of competing for the next evolution of the web. When people refer to the metaverse, they’re talking about this virtual 3D shared space that’s related to our physical world. Some classic examples of metaverse-like technology are things like Roblox, Minecraft and World of Warcraft. These are game platforms that immerse users in these shared digital worlds where they can move around, explore and interact with other people and digital objects.
But when we talk about the metaverse looking forward, as of now, we’re looking at Meta, Facebook’s parent company, which is starting to develop a larger version of this. This would be a massive digital world that’s kind of self-contained – so people could actually have full-time jobs, live their lives, find entertainment and shop in this world as digital avatars. So Roblox could be a smaller space within this larger metaverse. There may even be some connection to physical reality where there are representations of Raleigh or Paris or something. Right now, Meta has Horizon Worlds, which is this big VR platform that they expect more people to start populating, but the larger metaverse they have in mind doesn’t exist yet.
Web 3, on the other hand, refers to a set of decentralized technologies like blockchain and NFTs that would power a new version of the internet – one that gives users more ownership and control. In this way, Web 3 is kind of the antithesis to the metaverse. The idea is that we could all keep our own copy of a social network on our computers. No one would own it – not Facebook, Microsoft or Google – but it’d be something distributed among all our computers that each of us could manage and curate with our friends. This would allow us to move away from the “walled gardens” of Web 2, if you will. With Web 2, there are all kinds of social platforms and all these different “worlds” you can go into – but these platforms maintain a lot of control over what goes on inside. Plus, there’s not much connection to the outside world from them. You can’t take friends from your TikTok world and port them into your Facebook world, for instance. Web 3, however, would change that. Through a stack of innovative decentralized technologies, Web 3 would give users more control and allow them to combine this stuff together.
Can you speak a bit more to this concept of decentralization? Do you think technology is headed this way?
There are a bunch of companies out there that are kind of in this blockchain and cryptocurrency space already – and people talk a lot about all the cool stuff we could do with it. But what’s interesting is that the vast majority of people who are trading crypto are using Coinbase, which is a centralized tool. So, while there’s this big decentralized marketplace, most people are accessing it through one centralized tool in the end. So, even though I’m very much a technology optimist, part of me is a little cynical about this space. There are all these great advantages to decentralization, but to make it accessible to the average consumer, you almost have to centralize it.
For example, if you really want to take advantage of crypto, you would literally type your own code to transfer your crypto assets and keep them on a USB thumb drive that you keep in your pocket – and it’d never be connected to anything. That’s where the real benefit to crypto is, and there are definitely some people who access it this way, but the vast majority don’t – most are using a centralized platform.
When it comes to Web 3 versus the metaverse, it’s not 100% clear where we’re headed. From my vantage point, I think that both of these technologies are going to wind up merging together. You’re going to have VR and AR technologies that are built on blockchain-type structures. But I think there’s going to be a bit of a fight between these decentralized technologies and centralized ones. And I think whether you choose metaverse or Web 3 language to describe future technology says a lot about what you hope or think will happen. If you think the walled gardens of Facebook and Meta will win, you’re more likely going to use metaverse-type language. Or, if you’re invested in this “take the power back” kind of notion, you’re more likely to talk about Web 3. It’s almost a political debate within the world of the Web.
I’m not sure where we’re going to land. History seems to indicate that in most cases, advanced technology ends up being centralized – that the Facebooks and the Googles of the world win. But on the flip side, the original web itself was built on decentralized technology. So it’ll be interesting to see what happens.
What does this mean for consumer privacy and digital marketing? What concerns and hopes are there regarding this future technology?
Thinking about where we are now in the Web 2 world, there’s very little value placed on privacy. A lot of it is being taken away on a regular basis. If we were to move into a more decentralized space – that Web 3 world – I think there’s a possibility that we could take some privacy back. And I don’t think this would be a world in which there’s no digital marketing, but one in which consumers have more control over their digital marketing. Consumers can decide how much of their data they’re willing to give up in order to receive certain benefits.
For example, one of Google’s suggested replacements for their third-party cookies is a kind of Web 3 technology called FLEDGE. With FLEDGE, users’ browsers would conduct ad auctions on their personal devices. So instead of Google using third-party cookies to track your browsing data and decide which ads to show you, all of the decisions about which ads you’re shown are made by your own computer – and most of this data is contained in a more localized space. So the hope is that some of these decentralized technologies, including crypto, could improve privacy.
On the other hand, if you think about “Ready Player One” and “Snow Crash” – these are dystopian stories. So there’s a lot of cynicism people have about the metaverse. And one of the primary concerns is that if a company like Meta winds up controlling this digital world, they could restrict the amount of freedom people have in that space because of the power they have over it. It’d be like saying, “We own this entire town, so you can’t do anything unless we say it’s okay for you to do it.” Any company that big is going to be held accountable to some degree, so they’re going to have to allow some freedom – but the potential for restriction is a bit problematic.
How can companies start preparing for a more digital world? What advice would you give?
The biggest thing is that companies need to start exploring their options in this space. Obviously, what this looks like will vary depending on the size of your firm. And again – because we don’t know yet what Web 3 or the metaverse will look like, this is difficult. However, that doesn’t mean companies can’t start thinking strategically about this.
Specifically, companies should consider what in this space creates value for their customers – and this really depends on what customers see in the organization. Do they value memories? Loyalty? Better customer interactions? I would try to figure out what needs customers have and see if there’s anything in these sorts of technologies that could help fulfill those needs.
That said, I would not recommend throwing all your eggs in one basket. Don’t assume that VR, NFTs or crypto is going to be the future. It’s too early to say that.
Can you give some examples of how companies create value with these technologies?
Let’s take the NFL, for instance. Their customers value memories. So what they’re doing now is minting these NFTs around particular sports moments. And that’s obviously expanding a connection they already had, right? Fans used to collect ticket stubs. But nowadays, a lot of those printed materials don’t exist anymore. So the NFL is minting NFTs of game tickets, and you can have an NFT associated with a particular game you attended. That’s a clear extension of their traditional value proposition. Concert venues are doing a similar thing, where they’re printing NFTs of their tickets to shows. Now, whether or not people find value in these 20 years from now – we don’t know. But what we see in these examples is that these organizations are looking at what fans used to have access to that the digital world took away – and they’re recreating that in some form.
Meanwhile, some companies are leveraging VR and AR to create a better connection with their customers. For instance, Toms Shoes now offers a virtual giving trip. When somebody buys a pair of Toms Shoes, they can participate in a VR experience where they take a trip to Peru to deliver shoes to a child. That’s because one of Tom’s propositions is that for every pair of shoes you buy, they give away a pair of shoes. Even though they can’t gift every customer of theirs the ability to go on a trip to Peru and give away shoes, they can give them the VR experience of participating in that – and so that’s kind of a natural extension of something their customers probably wanted. Customers buy Toms Shoes partially because of this philanthropic effect, and these virtual trips help provide customers with this intimate connection.
So my advice to companies is: think about what your core value proposition is and whether any of those technologies can extend that out. But don’t just dabble in this stuff. If something is not core to your value proposition, don’t do it just to do it.
What investment should companies make in research and development for these things?
The Gartner Hype Cycle for Emerging Technologies is a really great resource that can help companies determine this. It basically tells you how far into the future you should be looking at certain technologies and what sort of investments you should be making in them. This year’s Hype Cycle puts NFTs past the peak of hype. Meanwhile, Web 3 – which is a bigger construct – is just before the peak of hype. This means they’re expecting more around Web 3, so I would say now is probably the right time to be looking at making some modest investments in these areas in terms of R&D.
According to Gartner, we’re probably about two to five years out from reaching a plateau of interest in this space – which is where it kind of becomes part of the steady mainstream market. So, it’s pretty important for companies to start thinking about if they have the resources needed to invest a bit in this space.
Any last takeaways?
As with any new technology, my advice is to keep reading and keep listening. If you hear good examples of companies leveraging these technologies to add value to their customers, pay attention. Start figuring out how you could leverage these tools yourself. The truth of the matter is that the future is going to be faster than we want it to be, so you have to be ready for it.
Also, don’t be daunted by this. Yes, it’s confusing – in fact, I’ve talked to some people who are running startups in this space and it’s confusing to them, too. And yes, some of it’s hypothetical at this point. But that doesn’t have to paralyze you. Take some small steps forward and start by educating yourself.