Web3, metaverse, NFTs, blockchains, wallets … these are just some of the buzzwords promising to fundamentally change how brands interact with customers. So why is it that when we look around for evidence of this revolution all we see are brands building experiences in virtual worlds like Decentraland or watching digital pictures of apes with hats sell for millions? Is this what Web3 and the metaverse are meant to deliver?
Most people hear the term metaverse and immediately think of a bunch of people using avatars to interact in a virtual space. But virtual spaces are not the metaverse. Rather they are just one of three core building blocks of the metaverse.
Some of you may already use a crypto wallet such as MetaMask. These wallets are typically used to store your public or private keys for cryptocurrency transactions.
However, soon your wallet will also be the primary mechanism to provide proof of ownership for both digital and physical possessions. Most importantly they will also be used to prove you are you, replacing current forms of identity proofing.
This is transformational. Today you prove you are you primarily through third parties. Online it’s provided via companies like Google, Facebook and Apple. In return for this “service,” we give up most, if not all, of our online privacy. And since these companies control the capability to verify people online, brands are forced to spend millions for access to a customer they used to interact with directly. An entirely new customer relationship channel was born and it made companies like Facebook and Google very rich. But all this is about to change.
When an individual’s wallet is the primary method to prove a person’s identity, brands will no longer depend on third parties to do this on their behalf. As a result, they can once again begin to build direct, verified, relationships with customers. If brands can also create compelling reasons for customers to interact with them, they will no longer need to rely primarily on third parties like TikTok to attract customers. This leads us to the role of NFTs and virtual spaces.
What is an NFT? Simply put, an NFT is a unique digital identifier that cannot be replicated. This is also revolutionary. Because in the past, ownership of digital objects was practically impossible to enforce.
Dumb NFTs—creating and selling digital objects—are probably how you came to be aware of NFTs. People buy these digital objects in the hope that the price will go up to then sell them for profit. This is pure speculation and isn’t very interesting to marketers.
Smart NFTs are different. How? First, they are programmable and can be instructed to do things. They can hold rewards that can be unlocked when collected. They can be used to access special events. They can even change and communicate back to brands as they are interacted with. In the morning they can provide an offer for 20% off your breakfast; post-noon, it’s for lunch.
An example of smart NFTs being used this way is a Fortune 500 insurance brand’s recent “Virtual NFL Football” find. The company distributed virtual footballs around the country. People then used their phones’ AR function to find and collect the footballs which were redeemable for signed merchandise, tickets to games, meet-and-greets, etc. They hoped 500,000 would be collected over 4 days, instead 1.3 million were.
Now that’s fun and predictably went viral—but much more interesting is what the brand gained from this. Each of the fans who signed up downloaded a wallet that allowed them to collect their digital footballs. And because the wallet was based on an NFT that, if you recall, is a unique digital identifier that cannot be replicated, it is unequivocally connected to that customer. As a result, this company now has a verified “database” of hundreds of thousands of people connected via a direct channel (the wallet) that they can use to incentivize and reward their customers at any time (via NFTs sent to that wallet). Who needs Facebook now?
So now you have a direct channel to your customer and are providing them rewards, how do you extend this engagement? Almost all brands today are doing this by renting virtual land on third-party properties like Decentraland, Roblox and others. However, now that we understand that the real transformational power of the metaverse is via the wallet, is this approach short-sighted? Why would any brand replace one third-party brand with another one that disintermediates you from direct interaction with your customers? This is the difference between a truly Web3 approach and simply replacing one outdated Web2 model with another. Web3 is decentralized but direct interaction—decentralized but direct customer data, decentralized but direct loyalty and rewards.
Success in the metaverse will not come from hosting an event in Roblox. Success will come when you integrate all three core components of the Metaverse: 1) a customer Wallet 2) smart NFT loyalty and rewards and 3) hosting your own always-on virtual space(s). Combined, these pillars provide the foundation for the next generation of consumer engagement. The revolution is happening now and brands that do not understand the mechanics risk being left behind.