Metaverse, Web 3.0 and NFTs: What marketers need to know
Recently a student of mine at the University of Oregon introduced me to a digital clothing app that allows users to house a “digital closet.” Curious as to what value it provides, I downloaded the app and began to experiment. At first glance, it looked like a Snapchat lens, where you can overlay virtual clothing, jewelry, hats and other fashion accessories over your image via your mobile phone’s camera.
The app charged a fee for users to upload a photo of themselves that would then be altered to include the digital fashion item so that they could post it on their social media. This is worthless to me — as I can easily alter an image of myself or snap a photo through an AR lens. Most social apps these days offer similar capabilities.
However, after more exploring, this digital closet app also sold the idea of being able to wear these digital fashions on virtual dates and in virtual meetings. In my view, this is how I envision a truly digital closet — one you can wear virtually, wherever you are. To get this capability, you needed to purchase an NFT.
Excited by the idea of wearing a digital, pink feather boa during my next online class, I eagerly attempted to buy a cool NFT. After an investment of several hours and dollars, I’m still unable to wear my digital fashion in a Zoom meeting. This capability doesn’t even exist. So, what gives?
NFTs just aren’t there yet
Let this story be a cautionary tale. Without the right strategy, you will annoy your audience and might never win them back. There have been many headlines announcing the failure of NFT drops, Porsche being one of the latest casualties. (Yes, Porsche!) This is just the start of NFT woes.
A recent court ruling has suggested that NFTs are securities and need to be treated as such, with oversight by the SEC. This same court ruling now holds the brand responsible for violations resulting from their attempt to reduce friction in purchasing the NFT and provide a better user experience.
While NFTs may be risky for marketers, the metaverse can still offer brands opportunities to engage their audiences, share digital goods, and build community. And if there’s just one thing I want you to take away from this article, it’s that NFTs, the metaverse and Web 3.0 aren’t the same.
Dig deeper: What is the metaverse and how can we get there?
If they aren’t the same thing, how are they related? Why do the media, agencies and industry experts keep bundling them together?
These terms are often intermingled because of a lack of historical perspective and the belief that all digital goods ownership begins and ends with an NFT. This isn’t the case. You can own a digital item, digital land in the metaverse and not get anywhere near an NFT or the blockchain. Let me try and offer simple definitions of these terms through a marketing lens.
If you are old like me, you remember the promise of Web 2.0 and the excitement around turning passive internet users into active creators. Tools like WordPress, YouTube Studio and others allowed anyone to create web content. Social platforms allowed communities to come together like never before and offered a framework for those communities to share product reviews and recommendations.
Smart marketers were not only excited about these innovative technologies but quick to adopt them themselves and begin exploring their new capabilities. I see Web 3.0 in the same way.
The promise of Web 3.0
The common definition of Web 3.0 (or Web3) often includes technologies such as blockchain and cryptocurrency. However, I choose to define Web 3.0 more broadly. The future of the internet is spatial and I see Web 3.0 as referring to this new 3D version of the internet.
Immersive spaces aren’t reliant on the blockchain or cryptocurrency and it’s misleading to suggest otherwise. I also feel that a component of Web 3.0 is moving users from creating 2D elements such as images and videos to creating 3D content.
Whether this 3D content lives on a decentralized network is yet to be determined. To recap, Web 3.0 is a broad term referring to the future of the web as being spatial, which may or may not include emerging technologies such as NFTs, blockchain and cryptocurrencies.
The metaverse commonly refers to virtual spaces where users will spend time. Here, the promise of Web 3.0 will come to life and provide the infrastructure and framework to support these interoperable and immersive spaces. I believe the metaverse exists, yet it’s an aspirational vision of what we can achieve in the future. We all have a role to play in shaping it. You can read my take on how we get there in my Manifesto for the makers of the metaverse.
Today, we have a network of private clubs or walled gardens (I would call “virtual worlds”). They have different languages, rules and currencies, making navigating from one community to another difficult.
This also challenges brands looking to build a community in one of these immersive spaces. In the same way you carefully choose where to place your media spend to reach your target audience (i.e., CIO.com, Wall Street Journal, CNN, USA Today, etc.), you need to hunt down your audience across these virtual worlds.
You can identify the right platform with the help of this report, which shows the size, demographics and technology behind all the major virtual worlds, including Roblox, Second Life, Decentraland, The Sandbox and hundreds of others.
Digital ownership is not new
So now that we have a working definition of Web 3.0 and the Metaverse, how do NFTs fit into this mix of emerging tech?
A non-fungible token (or NFT) is defined by Merriam-Webster as “a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain and that is used to certify authenticity and ownership.” If we remove the bit about blockchain, then the virtual world of Second Life has been offering NFTs for over a decade.
Second Life was forced to solve the issue of digital ownership back in 2006 as content creators on that platform were selling their virtual goods. Initially, the Second Life platform didn’t have a framework to prevent users from copying virtual items such as clothing, skins, furniture and buildings. The creators of this content couldn’t “own” their creations. The developers quickly created a system of permissions that allowed a content creator to designate if the item could be copied or transferred to another user.
If the creator wanted to make a one-of-a-kind thing, they could. But it was more common to sell multiple versions of the item that were non-transferrable, more like buying an item of clothing off the rack. I could only wear that item if I purchased it from its creator. This system allowed many Second Life designers to earn significant dollars in real life, with the virtual world’s first millionaire, Anshe Chung, being announced during that time.
Does it solve an actual problem?
One of my major problems with NFTs is that I don’t see the problem they solve. You can create digital ownership without NFTs. Their value is positioned as allowing for true ownership of a digital good through a decentralized platform instead of relying on infrastructure provided by a big tech company. And this may be true, but right now, that benefit is exactly what makes them risky and difficult for consumers to engage with.
I have had a digital closet in Second Life since 2006, and I still “own” every item in that closet. I can even wear them today on the platform. This is an amazing statement, given the shifting landscape of the metaverse and immersive worlds over the last 20 years. I predict that NFTs, as we know them today, will go away and this technology will morph into something truly valuable — but not for years to come.
The promise for the metaverse, Web 3.0 and NFTs is a world where I can wear every item in my digital closet anywhere. The promise includes immersive spaces for work, for play and even for navigating around the real world with the use of AR eyewear — and a persistent and interoperable digital layer that interacts with real-world and virtual worlds. This vision will become a reality. We’re just not quite there yet.
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Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.