There are quite a few people who believe that the latest paradigm shift for the internet is already well underway: the metaverse, they say, is almost here. When companies investing in a space and the media declare a moment, it’s reasonable to take a beat and see whether the reality can live up to the hype. But, if this is the “meta” moment — that is, if it offers something that people really want — it is safe to assume that a lot of companies are wondering what the metaverse really is and whether they should be a part of it. For brands thinking about how to navigate this new frontier, even knowing where to start can be daunting.
The basic idea of the metaverse isn’t complicated. Put simply, the metaverse includes any digital experience on the internet that is persistent, immersive, three-dimensional (3D), and virtual, as in, not happening in the physical world. Metaverse experiences offer us the opportunity to play, work, connect or buy (and just to make things extra fun, the things we buy can be real or virtual). It is also perhaps a misnomer to say “the metaverse” as if it were a monolithic, connected, or even interoperable universe, because it is not. Each entity that creates a virtual world does so with its own access, membership, monetization rights, and formats of creative expression, so the business and technical specifications vary widely. The metaverse refers more to the concept across these individual worlds and experiences and the acknowledgement that we are entering into a more substantive, immersive landscape than ever before.
A handful of businesses are already shaping the landscape, with entertainment and gaming companies leading the way. Major console and PC gaming titles, such as Fortnite, from Epic Games, have normalized playing and socializing with people in virtual settings. Newer gaming platforms, such as Roblox, allow people to create and play across immersive worlds created, and often monetized, by users. Decentraland is an entire 3D virtual world owned by its users, allowing them to create virtual structures — from theme parks to galleries — and then charge users to visit them, all powered by Ethereum blockchain technology. Other companies, such as MetaVRse and Unity, are creating engines to power brand and gaming studios and accelerate development of AR and VR content creation.
The immersive environment of the metaverse isn’t just an opportunity for consumer-facing companies, however. From training future surgeons to rolling out product demos to retail employees, there are plenty of business applications. For example, the leadership of tech company Nvidia believes that investing in metaverse simulations of such things as manufacturing and logistics will reduce waste and accelerate better business solutions. And Microsoft is positioning its cloud services to be the fabric of the metaverse, using its Mesh platform to enable avatars and immersive spaces to thread into the collaboration environments, such as Teams, over time. With post-Covid hybrid or remote working environments, many of these more creative virtual business experiences are likely to become even more relevant to how companies connect to their people and to their customers.
For companies still waiting on the sidelines, it is important for each brand to find its place and balance the risk-reward equation. Doing so requires grasping what is possible, and the companies that are leaning in fast can both offer inspiration and act as test cases. For example, there are plenty of brands taking full advantage of the gaming part of the metaverse with branded experiences that are essentially virtual and immersive sponsorships. While Nike is a highly established brand, it is certainly leading the charge at the assertive end of the metaverse spectrum, filing for patents for virtual goods and the opportunity to build virtual retail environments to sell those goods, as reported by CNBC. More recently, they acquired a company called RTFKT that creates virtual sneakers and collectibles for the metaverse.
The commercial applications of the metaverse are even further heightened by the new behaviors that are surging around buying products and services directly from social experiences, also known as “social commerce.” Social commerce is becoming a larger percentage of U.S. e-commerce over time and is projected to be $36 billion in 2021 alone, following growth patterns like those in China.
In response, the social media landscape is keen to capitalize on the intersection of where people connect and buy not only in a traditional internet context, but also in a 3D, immersive metaverse. Virtual showrooms, fashion shows, and dressing rooms suddenly have the potential to shift from fringe experimentation to mass adoption. And people aren’t just selling physical goods — in fact, Sotheby’s recently announced its own metaverse gallery for curated virtual art, housed in Decentraland. New business models for influencers, virtual goods — including non-fungible tokens (NFTs), which are one-of-a-kind creations traded and secured on a blockchain — and commerce on physical goods purchased in virtual worlds will all emerge in importance as capabilities scale.
Brands should always be in a test-and-learn mode, and the digital landscape in particular requires intellectual curiosity. The metaverse is potentially the next iteration of how humans use the internet to connect, communicate and transact — sitting on the sidelines too long is not likely to be an option.
Here’s what brands can do right now:
Pick your targets.
Think about how much your target audiences/customers are spending time in the metaverse and calibrate your speed of attack appropriately — brands focusing on younger demographics, for example, probably don’t have the luxury of sitting out the metaverse for long. Who are your target demographics, and what behaviors are trending with your current and prospective consumers right now that are indicators of how fast to move into the metaverse?
Watch the competition.
Start talking about moments when peer companies do things in the metaverse — like a showcase at a leadership meeting just to get the conversation going across the executive team. So much of the space can be intimidating, particularly when seemingly indecipherable concepts, such as NFTs or blockchain, are involved. Can you create a champion for these topics to bring approachable, tangible examples to every meeting?
Look for applications.
See whether the metaverse gives you opportunities as a company to not only try new things, but also to accelerate your purpose or long-term goals like sustainability, which is well suited to many applications of the metaverse. Almost every CMO already has made, or will soon make, a public commitment to sustainability-related ESGs, and they will soon be measurable. What can you pilot in the metaverse that allows you to test more sustainable approaches to serving your customers?
Plan your entrance.
Ask your agency team to begin formulating a point of view on how your brand should show up in the metaverse and when it might make sense. Holding companies and independent agencies are both keenly watching mass media behaviors and emerging trends, so it’s a great opportunity to ask them what they are seeing across their client portfolio. What tests could they put in place to enable you to get your brand exposed to the metaverse comfortably?
Keep your balance.
If you are already in it, prepare for the fact that all new spaces present risk and reward; manage accordingly, knowing that it may be super-unpredictable and lacking in standards. The good news is that the recent pandemic made us all way more agile than ever before. To state the epically obvious, there will be experiments that fail. Second Life offered the promise of the metaverse years ago and did not take hold, but the risk for the brands that participated was not significant or long term. So, if this is the right time, it’s important to consider how to be there.
Most importantly, people in brand marketing or leadership roles should start thinking about how to unleash their creativity and their storytelling. If the creative palette expands dimensions in the metaverse, we should be excited to create experiences at any point in the customer journey, from acquisition, to engagement, to transaction, to customer support, which have the potential to be both spectacular and stickier than before. And, someday, we will likely want to move from real to virtual worlds seamlessly. That will be the next frontier.
The views expressed are those of the author and do not necessarily represent the views of Ernst & Young LLP or any other member firm of the global EY organization.