Will Web3 replace traditional marketing channels?
NFT Melbourne Panel Discussion: Web3 is the new website for brands in 2023
Last week, I had the pleasure of speaking on a panel at NFT Melbourne (Melbourne’s annual NFT conference). The topic we discussed on our panel was ‘Web3 is the new website for brands in 2023’.
Sharing a summary of some of the things we discussed:
→ What challenges are brands facing with the present-day internet?
→ What is Web3 and what are the benefits for brands?
→ Which leading brands are doubling down on Web3?
→ What are some of the obstacles to mainstream adoption?
What challenges are brands facing with the present-day internet?
Some of the key challenges that brands are facing in the present-day internet:
Rising customer acquisition costs, with brands experiencing a 60% increase in the last 5 years.
Non-portable communities on centralised and extractive platforms. Brands are held hostage by centralised platforms, with their data locked into these platforms and reliant on algorithms to determine their reach.
Highly competitive landscape with privacy updates from Google and Apple, eliminating third party cookie collection and making it harder for brands to offer personalised experiences.
What is Web3?
Web2 (approx. early 2000s - today):
Brought in an era of user generated content and collaboration.
Sites like Instagram and Wikipedia allow anyone to share their ideas with the world. These free platforms became the dominant way for brands and customers to connect. They own all the data and content created, and utilise it to generate revenue.
Brands have to be data-oriented and invest significantly in sales and marketing teams, to generate leads and move them through the marketing funnel.
Web3 (approx. 2015 - today):
Ownership and control is decentralised. Anyone can own a piece of the internet through NFTs, which can be objects like art, music, code, credentials, loyalty passes, governance rights etc.
This concept of ownership offers an alternative approach to marketing.
Brands can use tokens to attract early customers, develop communities, and incentivise them for their participation. These communities become evangelists, bringing in additional customers, increasing the value of the tokens and driving benefits for both parties.
What are some of the benefits for brands that incorporate Web3 in their marketing?
Hyper-engaged communities and token-gated experiences
Web3 technologies can allow brands to reinvigorate their customer journeys by allowing their customers to own a piece of the brand experience.
This shifts customers from passive recipients of products and services, to co-creators and co-owners of those products and services.
Through digital ownership, brands can turn their large followings into hyper-engaged communities, creating true evangelists for their brands. Token-gating enables brands to give their community members access to exclusive rewards more securely and cost-effectively.
They can also mobilise these communities around high value-adding activities for the brand, such as creating user-generated content or providing feedback.
Mini case study: Starbucks Odyssey
Starbucks recently launched Odyssey, which is an extension of Starbucks’ existing and successful rewards program, powered by Web3 technology. The experience allows members to participate in gamified challenges called “Journeys” to unlock “Stamps” (i.e. NFTs) that give them access to rewards and immersive coffee experiences that they can’t get anywhere else.
While Odyssey members unlocked these Stamps for free, these stamps have gone on to fetch upwards of $1,000 on the secondary market, and have generated $170,000+ in trading volume for the brand. And an added benefit? Each time someone within the program sells a stamp to someone outside the program, Starbucks is able to bring in an additional customer into the brand ecosystem, at little to no additional acquisition cost.
Mini case study: Nike Swoosh
Late last year, Nike launched .SWOOSH, a web3-enabled platform that provides a home for Nike’s digital community and virtual creations.
.SWOOSH will allow Nike Members to collect and eventually help co-create virtual creations, which are typically interactive digital objects such as virtual shoes or jerseys. Selected co-creators of Nike’s virtual products can earn a royalty on the virtual products they help co-create.
Through this initiative, Nike will be able to:
Incentivise their community to create user generated content at scale.
Understand emerging trends in real time, like which types of virtual assets sell best, to shape up future product development.
Create a forum for future concept testing, enabling them to build dynamic product-market fit.
Richer data and a next-gen CRM:
According to McKinsey research, 80% of consumers are more likely to purchase from brands that provide personalised experiences, but many brands today deal with difficulties in data tracking and analysis to drive personalised experiences for customers.
Crypto wallets provide a way to directly engage with a customer and have access to first-party data. Like a cookie, a wallet is a unique, anonymous identifier. Crypto wallets also empower the customer as they can control their data, how it’s used, and at what cost or benefit to them.
My view is we’re eventually going to see wallets embedded in brand’s websites, asking customers to connect their wallet for personalised experiences. Crypto wallets will act as a conduit for brands to speak directly to customers, as well as distribute content, ads and rewards.
Mini case study: Salesforce Web3
Salesforce has launched Salesforce Web3, an NFT management platform to help its clients create NFT-loyalty programs.
With NFT management, businesses can mint and sell NFTs, monitor blockchain activity, and view real-time customer data. Salesforce will help their clients onboard to Polygon with its management platform.
The platform also includes Web3 Connect, an API integration that allows brands to create personalised, omni-channel experiences across Web2 and Web3, providing a 360-degree view of how customers interact with their NFT collections.
Salesforce has 150,000+ customers across industries like professional services, banking and retail using their CRM software. Given Salesforce will be supporting their clients in onboarding onto Polygon and experimenting with NFT-based loyalty programs, this offers significant reach for digital assets and crypto. Hopefully greater security and regulation will follow.
Net new business models and appealing to younger cohorts of consumers
Gen Z and Alpha are changing the face of retail. These digitally-native generations are used to experiencing brands every step of the way and at every moment.
In the same way that millennials shifted from material goods to experiences, younger generations are moving from the ownership of physical to digital goods and they natively understand this concept. Further, approximately half of all Gen Z gamers say that expressing themselves through their in-game identity is more important than expressing themselves in the physical world.
As a result, there is a need for brands to meet these consumers where they are. There’s a reason why brands like Forever 21 have sold virtual-first goods in Roblox, where 67% of users are under the age of 16 and 82% under 24. In fact, Gen Z already spend 15% of their discretionary income in the metaverse, which is expected to climb to 20%.
Mini case study: Forever21
Forever21’s viral success with their virtual beanies available to buy on Roblox is a prime example of this. The virtual beanies cost approximately $500 to launch but sold more than 1,000,000 units, offering significant cost savings for the brand.
I recently wrote about the direct-to-avatar economy and how brands can navigate products, marketing and data in a virtual-first economy. You can find the article here.
Which leading brands are doubling down on Web3?
Over the last few weeks, we’ve seen leading brands such as Amazon, Coinbase and Reddit make headlines launching new Web3-enabled initiatives.
Amazon:
Amazon is launching an NFT marketplace in April and will reportedly release 15 NFT collections alongside its marketplace. Customers will be able to buy NFTs tied to real-world assets. The company will alert US Amazon Prime customers of its digital collectibles plan once it goes live.
The NFTs will be available on Amazon’s website and customers can purchase them using a credit card. Amazon has no intentions to accept cryptocurrency or wallets such as Metamask.
Coinbase:
Coinbase has announced Wallet as a Service, so any company can build fully customisable on-chain wallets for their customers.
With the solution, companies can build native wallets into their applications, simplifying crypto payments, akin to Apple Pay and bypassing clunky and challenging user experiences.
Reddit:
Last year, Reddit made waves by becoming a trojan horse and onboarding millions into Web3 without mentioning the word ‘NFT’ once.
In July 2022, Reddit announced the launch of Collectible Avatars (which are essentially NFTs). They released 86k Collectible Avatars, ranging $10 - $100. These were minted on Polygon. In late October, these had a collective market cap of $100M USD.
Over 3M Reddit users created crypto wallets with Polygon. 2.5M of those wallets were used to purchase Reddit NFT avatars. At the time, this was more than the biggest NFT marketplace (Opensea), which only had 2.3M active wallets.
So, will Web3 replace traditional marketing channels?
While traditional marketing channels like email, social media and physical commerce may continue to have a place in our lives, Web3-powered marketing solutions will eventually become an essential part of a brand’s toolkit.
However, there are still a number of obstacles to solve for in paving the way to mainstream adoption, including:
Web3 technology needs to become invisible and brands should opt for familiar Web2 user experiences: e.g. When you pay for something with a credit card you don’t necessarily think about the technology stack behind it. Further, ERC-4337 opens the door to user-friendly crypto wallet designs that could potentially facilitate broader adoption.
Brands need to consider security and data implications when pursuing Web3 initiatives: Web3 puts a premium on data privacy and user control, and brands that ignore these trends risk damaging their reputation and losing the trust of their customers.
Brands should approach this new environment with a spirit of education and exploration.
With today being paralleled to the 1995 of the present day internet, brands have a rare moment to take action, learn and ask questions without a great risk of missing out.
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Disclaimers:
This article is for general information purposes only and isn’t intended to be financial advice. You should always obtain your own independent advice before making any decisions.
About me:
I’m Ashi, a senior marketer and founder of Insider, a next-gen loyalty solution that’s powered by the blockchain. Learn more about Insider here.
I’m passionate about highlighting use cases that are likely to drive scale and adoption, with a focus on the role that brands and marketing will play.
Feel free to reach out if you have any questions. You can find me on LinkedIn or Twitter!
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