A digital presence in the metaverse is becoming necessary for a brand to be perceived as innovative. As a result, corporations have shown an increased appetite for investing in this space. This is exemplified by what many call the 2022 virtual real estate ‘land rush’. Investors are spending large amounts of capital on land in the metaverse – with the top 3 sales in Q1 this year ranging from $1,202,750 to $595,000. Well-recognised brands such as PWC, JP Morgan, Atari and Disney represent just some of the many corporations capitalising on the new revenue streams, advertisement opportunities, and increased customer engagement the metaverse enables. The momentum is high in the metaverse; several worldwide events now have digital counterparts. Organisations should be careful to not sit idly by as their competitors quickly move into this space.
However, to be successful in the metaverse, brands cannot simply digitise their current offering. They must take a metaverse-first strategy and understand how they can attract the main demographics (Gen Z and Gen Alpha) to their digital events and emerge as a market leader. The key is to provide real and tangible value to metaverse natives. Brands that are perceived as conglomerates trying to make cash quick will fail.
*For those who need a recap of what the metaverse is and how it works, scroll to the bottom
- You cannot transplant your physical service offering to the metaverse; it needs to be a community-driven strategy that brings value to the users
- All industries, from finance to retail, need to develop a metaverse play to remain relevant and not be out-innovated by the competition
- Companies need to develop short and medium term strategies by creating limited-time activations, renting virtual land for events, and iterating based on feedback, so they can curate a unique offering rather than a replica of their competitors
‘The metaverse is just for edgy fashion and tech companies, how can my organisation enter it?’
Organisations across a myriad of industries have entered the metaverse, from accounting firms like Prager Metis to beer brands like Miller Lite. It’s not just limited to tech and gaming companies. Instead, it represents a cultural shift to a more immersive digital environment.
Hearing these brands have moved into the metaverse raises questions about how it’s being used to offer their product and/or service. How do you enjoy a virtual beer? Is a Roblox Gucci bag really selling for over $4000 and what accounting services could possibly be needed in the metaverse?
All of these are valid questions. Brands need to understand they cannot just transpose their physical value offering to the metaverse. Instead, they must have a separate strategy designed specifically around the metaverse that focuses on creating value for the community – whether this is in experiences, wearables, games, or something completely novel.
The Australian Open and McDonald’s enter the metaverse
Several organisations have been successful with short metaverse activations, and their value propositions range significantly.
Take the Australian Open (AO)’s Decentraland play. In 2020-2021, the AO reported sustaining losses of over $100 million. So, in January 2022, they took a new tactic: a 2-week metaverse activation that focused on bringing value to the Decentraland community – a popular DAO* with Gen Z. Not only did this help differentiate the AO from other international tennis tournaments, it also brought their brand to a highly engaged customer base they could closely interact with – one that could represent an entirely new revenue stream.
The AO understood that accessibility to this international tennis tournament is limited, especially in a post-pandemic world, so they created a virtual replica of their stadium in Decentraland. Anyone could enter the stadium and visitors could collect items, see exclusive footage of players training, and watch archival matches. Furthermore, the AO minted 6,776 NFTs, each corresponding to a 19cm x 19cm square on a virtual tennis court. If any of the 400+ match-winning shots landed in these squares, the owner of the NFT was awarded AO wearables and merchandise. Within three hours of minting the price of these, NFTs spiked to over $20,000. The participants’ level of engagement and willingness to spend in this virtual environment is clear.
This strategy was a massive success. In fact, the virtual stadium experienced a total peak active visitor attendance of 28,285. This number of users is double the capacity of the real-life AO stadium. In this immersive environment, the brand could interact more directly with each of these users and see how they interacted with the brand, as compared to those in the stadium. It also gives the brand a better idea of their target customer. Whilst before the AO could only glean this from physical attendance, they can now understand and see exactly who engages with the sport at home. As a result, the AO can now develop more effective marketing material to reach these customers – customers who now perceive it as an innovative, market-leading organisation.
Another great example is McDonald’s; a company that consistently remains culturally relevant and connected to their younger audience. They’ve done everything from a McDonald’s movie to a BTS (world’s biggest boyband) happy meal. Most recently, they filed several metaverse and NFT trademarks, announcing on Twitter a simple but effective metaverse play. This strategy encapsulates the kind of forward-thinking behaviour that organisations must exhibit – or risk being left behind. As people spend more and more time in a day in these virtual worlds, they will get hungry. McDonald’s wanted to create a place in the metaverse where a person can walk in and order like they would in the physical world, and then receive the food at their house. The aim is to have a seamless experience, so someone in the metaverse does not even need to exit the world to get their phone out and order from Uber Eats. They can now do it all in the metaverse with no friction. This not only represents a new potential revenue and marketing angle for McDonald’s, it also starts to cement their place as a key dining partner in the metaverse before their competitors are able to. The fast food corporation have opened themselves up to opportunities to sponsor virtual events, franchise virtual locations, and reach new customers.
So, what should my organisation do now?
Some organisations have made themselves known as the first movers in their industry to the metaverse. But, it is important to understand that it’s not just about being a first mover; your service offering must put the users first and create value for the metaverse natives.
The metaverse is still in its infancy with much to be developed. And right now, the biggest limitation for the technology to overcome is hardware. Big tech companies like Apple will likely release AR / VR glasses to bring virtual worlds to the masses. So, the brands that will be successful at the point of mass adoption are those that have experimented and iterated their service offering. With that said, there are several questions companies must think about and act on.
Key questions you need to consider
- As the metaverse develops, more people will inevitably spend more time interacting digitally, with the potential for transactions and socialising in these metaverses. Can your current value proposition be translated to a unique experience for metaverse users, or what are you doing to create a digital service providing?
- Is your organisation built with digital strategy in mind, and have you forged partnerships with innovative organisations? Do you have the internal talent in your organisation to help develop initiatives to position your brand as innovative? Or are you planning on outsourcing / bringing in a new division, like JP Morgan and Disney have?
Throughout this series, we’ll be speaking to industry experts to explore all things blockchain, from building a financial ecosystem for the future to digital fashion and the metaverse.
Don’t risk getting left behind. Our team are fully equipped to help you move into the metaverse space. Connect with us today.
*Recap on what the metaverse is and how it works
The metaverse is a term used to describe a virtual world where, in most cases, users create avatars to socialise with others and interact with the environment. There are two types of metaverse – centralised and decentralised autonomous organisations (DAOs). The former consists of worlds such as Fortnite, while the latter represents worlds like Roblox and Decentraland. The critical difference between these two is who can make decisions in them. DAOs are completely owned by the user base and they all vote to make decisions. To show how this works in practice, let’s take an oversimplified example – if there was a decision to ban vowels in a DAO and 51% of users agreed to do so, they’d be banned and everyone would be talking in consonants only. This differs from a centrally-governed metaverse like Fortnite where the owners (Epic games) make the decisions for the users.
Two of the main metaverses in which major organisations like JP Morgan, Nike and McDonalds are hosting events, buying land and creating wearables are Decentraland and Roblox with 18,000 accounts and 49.5 million daily active users respectively. Several major brands have already had activations in these metaverses. Activations are limited time events hosted by the brand. The organisation will typically lease some virtual land for the duration of the event and use this to host games, concerts or create an exclusive social hub.