One popular topic of conversation at SXSW was Web3. There were a wide variety of sessions dedicated to different aspects of Web3 – the metaverse, cryptocurrency, non-fungible tokens (NFTs) as well as multiple brand activations related to Web3. Web3 is in its infancy and is rapidly evolving. But what is Web3 and how does it impact marketing?
What is Web3?
At a high-level, Web3 is the digitization of assets and blurs the lines between the physical and the virtual world. Web3 provides a decentralization of data ownership, allowing users to determine the level of data that they are sharing.
In Web3, your data identity follows you around instead of changing depending on the log in as it does in Web2 (think Facebook, Instagram and other social platforms). Web1 digitized information through the rise of companies such as Google; Web3 has risen in an era of unprecedented change where the virtual world may seem more compelling than physical reality. The metaverse allows users to move from browsing digital content to inhabiting a digital space to become immersed in stories.
Web3 as it Relates to Marketing – The Rise of V-Commerce
In her session, “Why Content Drives Customer Experience Innovation,” Maira Genovese of MG Empower talked about the continued importance of story in the face of Web3 innovation. She stressed that content should still be the foundation of digital strategy in a Web3 world because innovation without content experience is only technology without a human, emotional-centered context.
Liz Bacelar, the executive director of Global Innovation at the Estee Lauder companies, and Todd Caplan, vice president of marketing for PepsiCo, discussed the importance of brands being strategic in determining whether it makes sense for their brand to create Web3 projects.
In deciding whether to move forward with a Web3 project, marketers should determine the audience that they are targeting and whether it includes current Web3 users or the brand’s current customer base. Clinique and Peloton are brands that have both successfully leveraged different aspects of Web3 to grow and engage their respective communities.
An example that Bacelar provided of a brand connecting with their current customer base through Web3 was a Clinique project. Clinique created three digital assets (NFTs) that celebrated the brand. Those customers that were part of Clinique’s loyalty program wrote stories of optimism and how the brand has touched their lives. The Clinique team looked through those stories, chose three consumers and walked them through the journey of owning their first NFT.
Another great example of a brand connecting with its current customer base via the metaverse is Peloton. The company’s Chief Marketing Officer, Dara Treseder, talked about the importance of building community for their brand – from interacting with the instructors you prefer, to sharing your workouts via social channels, to comparing your workouts with colleagues and/or those you’ve met via Peloton – and how much those “virtual” aspects are a core feature of the brand. In a very simple sense, as Scott Galloway, professor of marketing at NYU, pointed out, Peloton is an example of a metaverse that doesn’t require cartoon-ish bitmojis or Oculus headsets.
Where Do We Go from Here?
Web3 is still in early phases, the user experience is still very clunky and because of this, brands that choose to step into this space have a responsibility to their customers to guide them. In considering Web3 projects to participate in, companies should select a project with values that align with brand values as opposed to just picking a project based upon audience demographics alone. As one speaker put it, we need to remove the “clunkiness” of the metaverse by meeting individuals where they are (see part 1 of this SXSW series) and move them from “browsing” to “inhabiting” the metaverse through a seamless experience.
The penetration of the Web3 space is low in terms of who is participating in context of the general population, so brands should be thoughtful in how they choose to engage and should avoid jumping in to just jump in. For those brands that do decide to move forward in this space, Web3 offers micro communities that brands can authentically and organically engage with.