By Chris Twining
Marketers face numerous challenges when it comes to engaging consumers and building stronger customer experiences. We have seen increased regulatory pressure on big tech in areas of data harvesting and collection and in an era of data privacy things are only going to become more difficult.
NFTs (non-fungible tokens) represent one of the biggest opportunities for brands to reimagine how they engage and reward consumers for their loyalty, interaction or even purchase.
Before getting into how the technology will revolutionise marketing, it is important to look back on the evolution of the web and how we arrived at this point of decentralised technologies shaping the future of marketing. Web 1.0 saw the genesis of e-commerce and brands using the internet to create better access to products for customers and more effective means of distribution. The period was a one-way stream of sale and naturally, with this evolution, we saw new platforms such as Ebay and Amazon capitalise on online customer behaviours.
Next came web 2.0, the social web, where consumers engaged their peers through the internet, sharing, commenting, liking and following their favourite celebrities, moments and tastes. This era spelled the beginning of true digital identity, and we began using these social platforms to flex our social status, from exotic trips to flaunting a new Gucci Bag, social media allowed us to create that clout.
But all good things come to an end as the detrimental effects of “social” began to prevail and the negative impact on mental health and misinformation led to sanctions and guidance on how these spaces should be used. And while all of this was going on, there were those in the background working on a democratised vision of the web that is closer aligned with its early origins than the walled garden we know today.
Web 3.0 in its simplest form is the decentralised web, a democratised internet built by visionaries as opposed to a web controlled by a privileged few who make mass gains from the internet. Without one governing party, this new vision of the web allows for new forms of ownership, identity and experience.
NFTs are a byproduct of Web 3.0, as they utilise the technology that this new decentralised web operates on. For NFTs to be non-fungible (unable to be replicated) they must be “minted” to a blockchain, a cryptographically designed piece of technology that allows for all interactions on the chain to be registered and completely transparent/available to all.
The technology is still incredibly nascent, and we are only at the beginning in terms of where it can go. But, moving forward, we will see technology develop continually moving from digital art and profile pictures to much more sophisticated means of utility…
The brands making the biggest leaps in the NFT space are those already carrying a lot of cultural clout with audiences such as luxury fashion and sportswear. Gucci, part of the Kering group, has been in the NFT space for some time, experimenting with virtual items prior to the launch of its own NFT collaboration.
In 2021 Gucci launched its first virtual sneakers, which sold for a much more reasonable price of $18 vs the $918 of Gucci’s real-life sneaker
In 2021 Gucci launched its first virtual sneakers, which sold for a much more reasonable price of $18 vs the $918 of Gucci’s real-life sneaker. While the launch held no utility, it was a sign of things to come from the brand; they’ve since launched NFTs with Super Plastic, a high-end toy brand, with the current floor price (minimum price a single NFT will sell for) of 3.5 ETH, which equates to around $1,200.
Gucci also collaborated with pseudonymous Web3 influencer WAGMI San from 10KTF to create a storefront based in virtual world, “New Tokyo”, selling NFTs styled in Gucci’s latest looks, but applying the looks to existing intellectual property in the space such as Bored Ape Yacht Club and Crypto Toadz, thus elevating existing projects with a luxury flair.
There are several concerns in this nascent space but, worrying, most is the amount of fraud and fake NFT projects. “DYOR” or do your own research is a term which has been coined in the space to warn people about the increasing amount of fraud. To date it is estimated that more than $8.8 million has been lost to scammers, and this number will expectedly continue to rise, so DYOR!
The other main issue is the energy required to mint and trade NFTs. Known as gas fees, the cost is used to pay for the energy usage needed to complete an action on the blockchain. Some 80 per cent of all NFTs are currently on the Ethereum blockchain, which runs on a proof-of-work, meaning it takes a lot of computing power to create and unlock new creations on the blockchain.
It’s always risky for brands entering new spaces and technologies; uncertainty brings risk. As NFTs generate such high net new incomes, it will naturally attract fraud
Newer blockchains such as Solana and NEAR operate on a proof-of-stake, which doesn’t require the same degree of computing power as Ethereum. As the space develops, we can expect more established chains like Ethereum to move to proof-of-stake and become more environmentally friendly. In turn, each mint or trade will cost as much in energy as adding a photo to Instagram!
It’s always risky for brands entering new spaces and technologies; uncertainty brings risk. As NFTs generate such high net new incomes, it will naturally attract fraud. But it is important for all those involved to read and understand what is happening in this space and then understand how to incorporate Web3 technologies into an overall marketing strategy.
In addition, with sustainability at the top of many brand’s agendas, making sure to work with the right project is extremely important when entering the space. However, with the speed of change within this sector it is important to stay plugged in to the latest news, trends and audience attitudes. Partnering with specialists in this area, such as the team within dentsu gaming, will give brands the best natural and authentic advantage.
The big advancement from brands in this area has been their willingness to explore digital worlds and build persistent experiences in the Metaverse. Dentsu worked with Heineken to create the first brewery in the metaverse in Decentraland. The experience was for the launch of its new lower ABV brand Heineken Silver, but also saw the first beer being brewed in the Metaverse. Numerous people joined the experience to engage with the brand and explore beyond the physical product.
This kind of thinking allows brands to engage customers in new ways; the tricky bit is maintaining the space, but with that comes a number of opportunities to develop the experience and offer greater utility over time.
We know that the Metaverse and Web3 as a concept is still in it’s infancy, but every week new developments are bringing us closer to the full potential of this space. But for us to get there we must think of the Metaverse beyond just being a digital space for people to hang out. We must think of it as the coming together of both the physical and digital.
Technologies such as 5G and the ultra-acceleration of gaming engines making virtual experiences lifelike will allow for new user cases and never-before-seen activations to be possible and will reduce the barriers to entry currently limiting what can be done beyond building on virtual land or minting virtual goods. In essence, activities we can do IRL and in the virtual world will become more blended.
I am incredibly bullish on the future of Web3 and the Metaverse and I think it will completely change how we live our lives. Both our professional and personal experiences will become completely immersive and our ability to shape our digital identities beyond just social media will be interesting, whether that be the IRL you or the new virtual you… All is to play for and again we’re at the beginning, let’s see where it takes us.
Chris Twining is global innovation & media director, dentsu
