white paper



Navigating the metaverse

Are virtual environments the next big thing in marketing or do wary marketers have a point?

I’m sitting on a sofa in a virtual bar enjoying a digital Châteauneuf-du-Pape. I’m seeing for myself what some consider the biggest opportunity for marketers since boffins plugged together a bunch of computers and called it the internet.

What’s sometimes known as the metaverse is attracting a lot of investment and gleaning promising results for marketers who have already taken the plunge.

But despite the buzz generated by Mark Zuckerberg’s recent investment in Meta and the plethora of successful online gaming platforms, I still meet marketers who look warily at cryptocurrencies, non-fungible tokens (NFTs) and Tulip-mania transactions, such as people spending hundreds of thousands of dollars on badly drawn monkey avatars, and fear they’re witnessing a bubble to which they’re not yet ready to commit valuable marketing spend.

In some ways, this wariness is not unreasonable. Cryptos (which underpin the commercial aspect of the virtual world) have certainly witnessed a bubble over the past couple of years, and some of the headline investments made in what are essentially nothing more than pixels have garnered the kind of public skepticism not seen since Charles Saatchi’s investment in Britart in the 90s (at least he walked away with a real shark).

Getting real

To help navigate the quagmire, I’m joined in my virtual booth by my good friend Charles Hambro, CEO and co-founder of GEEIQ, an enterprise platform that helps brands such as Armani, Gucci and Tommy Hilfiger navigate the metaverse effectively.

According to Charles, the new opportunities presented by virtual environments are analogous to the shift we saw from traditional media to digital and social media.

“It’s not as complex as some people like to make out. Virtual environments are simply new channels for marketers to engage with customers, meeting them where they like to hang out.

“Just as successful marketers of the past embraced new social and digital channels in addition to traditional print and TV, virtual channels are set to play an important part in today’s marketing mix.”

But how do these channels work and what are the key opportunities for marketers today?

Size of the prize

The global virtual reality market was valued at $21.83 billion in 2021, and there are widely varying projections around what it will be worth by 2030 ($227 billion according to Fortune, with others forecasting double and triple this).

The figures might vary, but everyone agrees the trajectory is steeply rising to the right.

While the technology has business applications in areas such as healthcare, product design, training and education, the big opportunity for B2C marketing has largely grown out of gaming platforms such as Roblox, where people go not just to game, but to spend social time in a facsimile of the physical world, with virtual stores, restaurants, entertainment venues, sports stadiums and even digital houses.

Equipment for VR is still a bit of a barrier for some consumers. The full immersive experience requires headsets, with optional gloves and touchy-feely haptic suits. Even so, there are some 171 million VR users worldwide.

Augmented reality (AR) allows a mixture of the physical world and virtual world via your smartphone, and the figures here are somewhat more impressive, with 1.5 billion global AR users.

That’s a lot of consumers spending online time in virtual environments – online time not spent on social platforms, viewing your social content and engaging with your brand. Some virtual world visitors don’t even engage with traditional social media platforms – this is where you have to go to engage with them.

Besides, we’re moving to a reduced cookie world, with its implications for data-driven personalisation on online advertising. The virtual world has an answer for that.

Virtual wallets

Virtual environments have different rules of engagement. Traditional online environments, including legacy gaming, social platforms and other online content, are built on the current web2 platform, whereas the virtual environment is built on web3.

All the technical differences between the two are not important right now, but the key thing for our purposes is that web3 incorporates blockchain technology – information stored in databases which are distributed around multiple networks in blocks of data that can be read and added to, but not changed.

This provides the security required for unambiguous custody of ownership and is the technology that underpins cryptocurrencies. For users, it means they can have their own crypto wallets, where they can keep not only crypto to make purchases in the virtual world, but also NFTs – digital assets to which they own the rights.

“For example, in a web2 game, you can buy items within the game,” explains Charles, “but if you leave the game, you leave behind everything you gained. With web3, items you purchased are logged in your digital wallet. You own the rights and can sell them to others – and, in some cases, carry them with you into other virtual environments.”

Crypto wallets are seen by many as the obvious replacement for cookies. Wallets are unique, anonymous identifiers that record purchases and make them public. They could provide marketers with the means to segment and target users based on real-time purchasing history.

NFTs

Marketers in fashion have been quick to capitalise on web3’s ability to support NFTs. Following its acquisition of digital artefact creator RTFKT, Nike generated more than $185 million in NFT sales (virtual sneakers that can be used on avatars), with Adidas’s first collection garnering over $160 million.

And it’s not just fashion. NFTs are an entirely new marketing vertical that offers the potential for new business models and revenue streams, particularly those with desirable IP. The NBA’s NFT collection (comprising basketball video clips) generated trades of over $800 million, while the NFL is creating NFT versions of physical tickets for those who attend games.

“With the NFL’s email open rate at around 20 per cent, it’s no surprise more brands are seeing NFTs as a useful tool to boost audience engagement,” says Charles.

Fashion marketers have also created their own virtual spaces. Gucci opened its Gucci Garden in the Roblox virtual platform in 2021 (along with spaces in other virtual worlds). More recently, it gave us Gucci Town. Users can visit the store, interact with other visitors, play minigames, try the clothes on their avatars, pose with Gucci models and buy NFT items, such as Gucci handbags. 

Visitors to Nikeland can even take a swim in Lake Nike. In its first year, Nikeland has attracted over 26 million visitors.

“With social media, content is easy,” says Charles. “It’s all about ads and content. With virtual environments, it’s a bit more nuanced. Users are not just going to play games, they’re going to socialise and interact. They go to ‘watch parties’ (viewing shows together), virtual music concerts and sporting events.

“The successful brands understand this, and their focus is less on conventional advertising, but on how they can enrich the user’s experience. Marketers have to give them a reason to connect to their brand, and that revolves around content, not viewing ads.”

Making content work

In the beginning, brands were getting publicity just because they were engaging with virtual worlds, but that PR avenue is rapidly closing as more and more brands get on board virtual platforms. And while some conventional advertising might be appropriate (sports field perimeter ads or the odd OOH), the virtual world is all about getting creative.

Wendy’s, for example, inserted a character into the Fortnite virtual platform’s game Food Fight. Instead of attacking players who were fighting for the opposing food outlet, Wendy’s character started destroying freezers storing virtual frozen beef (to match its brand message of serving only fresh beef).

Soon, other players joined in. When the company streamed highlights on Amazon-owned video platform Twitch, it attracted 1.5 million views, while its brand mentions rose across all platforms.

Prior to its 296 GTB launch, Ferrari allowed Fortnite users to test drive the car in a battle royale, raising anticipation for the release of the real-world model.

Charles himself recently partnered with Elton John and Universal Music to create the Beyond The Yellow Brick Road experience in Roblox, which was built around the singer’s music and fashion legacy and marked his retirement from the stage.

GEEIQ developed the in-game economy and merchandise strategy, creating an engaging player loop that incentivised repeat visits and time spent within the experience.

As with any kind of marketing, there is no hard-and-fast rule around what will work and what will fail. However, if you think of marketing in virtual environments as similar to online marketing, chances are you’re less likely to succeed.

Virtual environments aim to emulate the physical world. You have a greater chance of success if you think of virtual marketing as more akin to real-world experiential and event marketing. You are creating events, experiences and brand spaces, not adverts.

Are you behind the curve?

If you’re a marketer who hasn’t considered virtual marketing yet, you haven’t missed the boat. 

It’s still early days, there are many technical issues to iron out around the equipment and the stability of some of the platforms. Cryptocurrencies are stabilising, but reluctance to adopt them remains widespread.

Nevertheless, the pacesetters are showing there are opportunities not just to get their products and services in front of customers, but to deliver a richer level of engagement, immersing them in a brand experience. There are also huge opportunities for creative agencies to develop truly inspiring content.



As Charles says over a second bottle of virtual Châteauneuf-du-Pape, “this is not about Mark Zuckerberg putting on a headset and looking at a virtual spreadsheet, it’s about understanding the data and using it to drive content that enriches the user’s experience and immerses them more deeply in your brand.”