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The Metaverse: What it is and why it matters for brands

The pandemic ushered in a new era where the virtual and physical worlds coexist, so it’s no surprise the metaverse has been a buzzword on the internet over the past few years. But what exactly is it? Is it Mark Zuckerberg’s latest big idea, or a techie’s newfangled dream? Or is it something brands can genuinely take advantage of?

The short answer is yes. The metaverse is projected to become an $800 billion market by 2024 and tech giants are already investing millions to make this dream a reality. Major companies and startups alike are becoming early adopters, collaborating with metaverse companies to create branded activations and more. If you’re reading this article, you probably want to learn more or are already thinking about joining the metaverse. Before you embrace these trailblazing opportunities, you should fully understand what the metaverse is and what it means for the future.

What is the metaverse?

Well, the metaverse is truly the stuff of your favorite sci-fi fantasy thriller coming to life. If you’ve ever watched Ready Player One or an episode of Black Mirror, you’ve probably seen some similarities to today’s metaverse.

To put it simply, the metaverse is an all-encompassing term that refers to immersive, hyper-realistic virtual environments where people can interact via personalized avatars.

The term “metaverse” was coined in the 1992 novel, Snow Crash. The book described the metaverse as a digital world that exists parallel to the physical world, with the ability to visit virtual spaces at will. Talk about life imitating art, right?

The metaverse doesn’t refer to one singular type of technology, but rather a group of technologies that will shift how we interact online. The metaverse is part of web3, which is basically the next iteration of the internet. The internet we know and love today—social media, apps, live streams, e-commerce—is known as web2.

Web3 is also difficult for people to wrap their heads around because it’s complex and comes with its own set of jargon (blockchain, crypto, NFTs, etc.). In short, web3 is the decentralized internet. Instead of tech giants like Google or Apple controlling the internet, everyday users will own, operate and contribute.

Some proponents say the metaverse will mimic the physical world entirely and a new digital economy will emerge. Users will buy real estate, sell and own goods, host parties, educate scholars and even get married.

However, there are several types of tech that currently fall underneath the umbrella term. These include, but are not limited to, the following:

  • Extended reality (ER) – another umbrella term encompassing virtual reality (VR), augmented reality (AR) and mixed reality (MR)
  • Virtual worlds created by metaverse users (e.g., Decentraland)
  • Massively multiplayer online games (MMOs), like Fortnite or Roblox
  • Decentralized autonomous organizations (DAOs)
  • Assets like cryptocurrency and NFTs (although some NFT advocates say otherwise)
  • Holograms
  • Video calls
  • Avatars
  • Digital and augmented reality concerts
  • Public blockchains
  • Photogrammetry – the process of creating digital 3D objects out of photos or video (e.g., Capturing Reality)

Tech companies and enthusiasts have varying visions for metaverse technologies, along with nuanced opinions, because they’re still a work in progress. It can develop into something we can’t completely fathom because we’ve never seen it.

It’s like the early days of the internet and social media—we knew they were impressive innovations, but we didn’t know they would become an integral part of culture and business. These ideas swelled into something bigger than our imaginations and the metaverse is the same way.

Now that you have a general idea of the metaverse, let’s dive deeper into two key aspects of understanding the future: common traits of a metaverse and interoperability.

Who created the metaverse?

Although Meta (formerly known as Facebook) made the metaverse a household name, the tech company did not invent the idea. The road to today’s metaverse—and the one of the future—was paved by several different trailblazers far earlier.

As mentioned above, the term metaverse was coined in 1992 by Snow Crash and it features some spot-on predictions of Meta’s plans. Some technology described in the book already exists too. The main character appears as an avatar in the metaverse, which he accesses through goggles and earphones. That’s reminiscent of today’s augmented and virtual reality glasses/headsets, but there are differences as well.

Hyperlinks, e-mail, messaging, digital photography and video are some of the building blocks that led us to Web2. The metaverse’s foundation includes the birth of Bitcoin, virtual communities, MMOs and extended reality devices. These are some of the building blocks that led to companies announcing their plans for the metaverse in 2021.

What common traits do metaverses currently have?

The metaverse is multifaceted and multidimensional. However, some characteristics define a metaverse. Here’s what they are and what they mean:

1)    A metaverse is always active

A metaverse doesn’t pause or end when you exit the platform. In a traditional video game, you can leave and return to where you left off. A metaverse is infinite, the world never stops, even when you go offline.

2)    A metaverse exists in real time

Metaverses sync with time in the physical world. Conversations and actions can happen in real time, regardless of where you are in the community.

3)    Metaverse users have agency

Users can explore a metaverse at their own free will. They have the freedom to do and say what they want. For example, in MMOs, various players can perform different activities at the same time.

4)    A metaverse exists as its own universe

As a virtual world, a metaverse functions as its own universe, with unique features, frameworks and rules. For example, users can create, sell, own and invest on metaverse platforms. They are rewarded for their life in the metaverse, making the experience emulate the physical world even more.

5) User-generated content is valued in the metaverse

Users on metaverse platforms can create original content for others to enjoy. Remember that decentralization is a core component of web3, so user-generated content goes hand-in-hand with the metaverse. There are also online communities like Decentraland that were created by the users themselves.

5) A metaverse can exist across multiple platforms

Video games like Roblox and Fortnite are great examples of metaverses existing across several platforms. Players can enter these metaverses on a variety of devices such as PCs, tablets and smartphones. In the future, these various platforms will work together seamlessly, which brings us to one of the biggest challenges of the metaverse: interoperability.

The interoperable metaverse explained

Interoperability is a fancy word for the ability to take virtual items, like clothes or houses, from one metaverse platform to another. It refers to the systems, protocols, rules, applications and technologies that enable users to travel seamlessly between metaverses.

The interoperable metaverse is an extension of the vision Meta, Microsoft and others are pursuing to make a reality. However, transferring virtual items from one world to another is a complex task that no company has been able to address for several reasons.

This lends the question: How will we approach user interface and experience in a 3D world that runs parallel to the physical? And how do we achieve that if the technology and computing power required is something no one has ever built?

The metaverse itself isn’t one single product or system, but an interconnected system of technologies, platforms and products that requires a lot of computing and engineering resources. It also isn’t owned by one entity. Individuals and companies across various sectors will have to work together to reach interoperability. Companies will have to work with their competitors like peers as opposed to rivals.

Businesses will also have to consider how to remain profitable in a space catered to decentralization.  Tech companies, in particular, will have to balance profitability with the resources required to reach this ideal metaverse—which could take several years. Meta announced in April 2022 that the groundwork for this to happen will be in place by 2030.

Interoperability is just one of the few hurdles that arise within metaverse discussions. But let’s look at the opportunities that already exist for brands in the near future.

The future of metaverse marketing

According to the Sprout Social Index™, marketers are the early metaverse adopters while consumers aren’t as eager. Overall, marketers are more likely than consumers to anticipate the metaverse and other emerging tech playing a role in their interactions over the next year.

Data visualization from Sprout's 2022 Index on how consumers and brands anticipate emerging tech playing a role in their interactions over the next 12 months

How to invest in the metaverse

Metaverse marketing allows you to tap into a niche audience, expand your brand’s reach and sell products in a new arena. The metaverse is still growing, but early investors are already seeing results in other ways.

More than two-thirds of marketers anticipate investing at least a quarter of their budget into metaverse tactics over the next 12 months, with 33% of marketers believing their brands are ahead of the curve for implementing AR/VR into their social strategy.

Percentage of budgets marketers anticipate spending on metaverse, AR & VR social strategy in the next two years

The gaming industry is one of the first to take advantage. Fortnite and Roblox are some of the largest metaverses, offering brands the opportunity for impactful collaboration, especially those that target Millennials and Gen Z. You can use these existing environments to engage with your target demographic groups, all the while promoting your brand in an authentic way.

Even though marketers are ready for the next big thing in tech, it’s important to strike a balance between meeting customers where they are and showing them what lies ahead in the future.

How to join the metaverse

There are several ways you can use existing technology to join the metaverse. If you want to experience the metaverse as an individual, consider investing in XR wearables such as Oculus Quest 2, Valve Index VR and Google Cardboard or Glass. These wearable devices offer a range of opportunities from gaming and entertainment to virtual workspaces.

Here are a few ways your brand can get involved in the metaverse:

  • Engage on digital platforms such as Roblox, Fortnite, Decentraland, Meta Quest 2 and Sandbox
  • Connect with customers via metaverse elements such as NFTs and virtual events
  • Create engaging content users can unlock through NFTs or mini-games
  • Share thought leadership content via avatars on metaverse platforms
  • Build immersive experiences for your audience
  • Tie your metaverse activations to real-world efforts (e.g., physical merch, prizes)

Many companies are already hosting brand activations in the metaverse, so don’t hesitate to research and explore existing environments to help brainstorm metaverse ideas for your brand.

Brand activations in the metaverse

Here are a few examples of brands who have joined the metaverse:

Gucci

Gucci’s clothing isn’t the only part of the brand that’s fashion-forward. The luxury fashion house has done several activations in the metaverse over the past two years. In early 2021, the brand released the Gucci Virtual 25, a digital sneaker that can be worn in AR or through apps like Roblox and VRChat.

The sneaker release was followed by Gucci Garden on Roblox, where players purchased exclusive designer pieces, like the Gucci Dionysus Bag with Bee. This bag was resold for over $4,100 worth of Robux, Roblox’s in-game currency, surpassing the cost of the actual physical bag. The virtual garden was a complement to a real-world installation called the Gucci Garden Archetypes, located in Florence, Italy.

The brand launched its latest metaverse activation, Gucci Town, in June. Gucci Town is a permanent space in Roblox where players can learn more about the brand, and express their style through virtual outfits.

From a marketing perspective, Gucci is sending a message about their brand: They are trendsetters in every sense of the word. They’re unafraid to reach audiences, experimenting with new ways to meet customers in every space they interact. Gucci is just one of many fashion brands taking advantage of the metaverse. The first virtual fashion week took place in early 2022.

Dolce & Gabbana

Along with Gucci, Dolce & Gabbana is one of the many fashion brands taking advantage of the metaverse. The fashion brand has a partnership with UNXD, a NFT marketplace for digital luxury and culture. In March 2022, Dolce and UNXD announced the highly anticipated launch of the DGFamily NFT community.

DGFamily features three digital boxes that also serve as membership to the Dolce & Gabbana NFT universe. Members receive digital, physical and experiential perks, such as exclusive wearable drops.

The boxes were sold blind, so buyers did not know which box they received until after the NFT was minted. Out of the 5,000 boxes created, 4,835 were launched. There were several notable buyers including Danilo S. Carlucci, CEO of MorningStar Ventures, and Ivan-Soto Wright, the CEO and Founder of MoonPay.

Although this idea of a two-dimensional membership and blind purchasing may seem absurd at first, the online hype illustrates a clear interest. According to data from Sprout’s Advanced Listening tool, from January 1, 2022 to June 30, 2022, the DGFamily NFT community earned 98% positive sentiment and over 848,000 total engagements on Twitter.

Dolce is yet another example of how creative industries will take up space within the metaverse.

Blavity

Blavity became an early adopter of the metaverse in 2020 after the pandemic hit, pivoting away from the media company’s annual in-person professional conference, AfroTech. Instead of canceling the event altogether, the company saw it as an opportunity to address Zoom fatigue and low engagement.

Blavity partnered with eXp World Holdings to create a fully customized virtual space, AfroTech World. AfroTech World featured everything from the in-person conference—prizes, workshops, pitch competitions, guest speakers, performances and expo halls.

@nakawunde

A day at afrotech. If you’re black and in/ want to get into tech, it’s the place to be #techtok #metaverse #blackgirltech #afrotechworld

♬ Dior – Ruger

The inaugural conference was so successful, the brand decided to continue offering a digital experience. AfroTech 2021 incorporated in-person happy hours and events in several cities across the US.

Between the 2020 and 2021 conferences, the brand experienced a significant increase in attendance and revenue. Not only were people willing to pay more for tickets to the metaverse, but attendance surpassed the 2019 in-person conference. In 2019, about 10,000 people attended while 15,000 attended in 2020. Over 16,700 attended both in-person and metaverse events in 2021. More sponsors advertised in AfroTech 2021 too, so total sponsorship revenue was up year-over-year as a result.

Vans

Vans is a prime example of using the metaverse to truly connect with your target audience. The skateboarding apparel brand created Vans World, a skatepark on Roblox, where players can learn new tricks, buy gear and earn Robux. One of Van’s core demographic is 13- to 35-year-olds, so its metaverse activation is truly a masterclass in collaboration. The virtual skatepark has welcomed over 48 million visitors and the brand is generating revenue from the sale of its virtual apparel.

Megan Thee Stallion x AmazeVR

Grammy-award winning artist Megan Thee Stallion, joined forces with AmazeVR for a VR concert tour titled, Enter Thee Hottieverse. The “hottieverse” is a reference to her fan base, who she calls the “hot girls and boys.” She’s a self-proclaimed nerd known for setting trends and milestones within the music industry, so making the metaverse part of her tour is authentic to her personal brand.

The VR concert featured a half-hour of Megan performing, and was held in movie theaters across the country. The first leg of the tour quickly sold out after it was announced in early 2022. Several other musical artists have dabbled in the metaverse as well, including Ariana Grande and Travis Scott, who hosted concerts in Fortnite. Earlier this year, Fortnite allowed players to earn skins (digital clothing) of Silk Sonic.

Coca-Cola

Coke merged the metaverse and physical world with its limited edition flavor, Coca-Cola Zero Sugar Byte, inspired by the digital space and gaming. The soda can is pixel-laden, with designs forming the shape of the iconic Coca-Cola logo.

Zero Sugar Byte was available exclusively online in the US, but some international locations had retail launches. Pixel Point, another space on Fortnite, allows players to experience the drink in the metaverse through mini-games. Fans can also scan a Sugar Byte package to access an AR game.

@metaversejohnny

An exclusive metaverse-born PIXEL-flavored Coca-Cola that also has an Augmented Reality game?? Umm yes 🙌 but also… #metaverse #coke #cocacola #soda #ar #augmentedreality

♬ Stranger Things – Kyle Dixon & Michael Stein

This multi-dimensional drink is just one of the beverage brand’s many metaverse activations. For example, they also offered an NFT collectible last year.

Limitations and opportunities within the metaverse

These activations are great examples of brand marketing in the metaverse. But there is much more to consider before integrating it into your strategy.

There’s a reason why pioneering sci-fi novelists like Octavia Butler and Isaac Asimov warned us of the woes of futuristic technology. The metaverse comes with a heap of data, privacy and security concerns.

Any new tech innovation requires more security measures, but the metaverse will demand new methods for data privacy and protection. For example, personal verification could require more user data, increasing privacy risks. Some experts are concerned about the metaverse being used as the ultimate surveillance tool. And if something happens in the metaverse, what are the legal ramifications in the digital and physical worlds?

Along with interoperability and privacy concerns, there are also some hardware limitations. Many VR and AR glasses/headsets are bulky and still come with accessibility issues, such as motion sickness. If the hardware isn’t accessible, it will be difficult to guarantee everyone can participate, which defies the goal of decentralization.

However, with limitations comes opportunity. Video games and virtual worlds are easier to build and design, and XR wearables come in a range of price points (so they’re becoming more affordable). By 2024, there will be an estimated 1.7 billion augmented reality user devices globally. 

In a study from the Pew Research Center and Elon University’s Imagining the Internet Center, 54% of experts said that the metaverse will be more refined, immersive and a well-functioning aspect of daily life for half a billion people or more globally by 2040.

The metaverse as a muse

In a way, the metaverse is an emulsion of culture, art, fashion, entertainment and technology. It’s still blossoming, but there’s an opportunity for brands to curate some impressive opportunities. Don’t be afraid to get creative and experiment. After all, the metaverse was birthed from imagination. Make the sci-fi pioneers proud.

To learn more about the data behind the metaverse, emerging technologies and the future of social marketing, download the Sprout Social Index™.

The post The Metaverse: What it is and why it matters for brands appeared first on Sprout Social.

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