The metaverse in 2023 and beyond – new challenges and opportunities for CMOs

12 min read by Charles Craik 17 Jan 2023

We wrote in The Drum: Will the metaverse drive people back to the real world? about the challenges and threats to creativity that the metaverse could present, but what does this brave new world offer up to CMOs, and how do CMOs engage stakeholders and audiences alike as the industry explores this new horizon of marketing?

Immersive, first-person experiences that drive advocacy, reputation and revenue. The metaverse could see a large-scale shift from flat media, passive experiences and third person interaction to creating active participants who ‘feel’ and ‘live’ as themselves and alter egos in almost whatever capacity they wish.

Which presents huge challenges for marketers and regulators alike to enhance market trust, improve marketing opportunities and functions through innovation while ensuring the safety and wellbeing of consumers in this potentially limitless landscape.

So what actually is the metaverse?

So many definitions continue to be batted around. However, an easy way to differentiate the metaverse and the internet as we know it is as follows:

The metaverse is something that people are part of – not something we look at.

  • The metaverse is “always on”, it exists in real time and spans physical and virtual worlds
  • People can adopt virtual identities, alter egos and engage in interactions with other individuals in the metaverse
  • People can ‘build worlds” in the metaverse and create their own content
  • The economy of the metaverse is built on nonfungible tokens (NFTs), with a cryptocurrency and the exchange of digital goods and services

Connections vs reputation

The personal nature of immersive experiences will enable brands to form deeper connections with audiences, and likely decrease lead to purchase times through stronger nurture.

However, there is a view and nervousness that The metaverse poses risk to consumers from brands who behave predatorily. Just as in the real world, underhand or blackhat tactics to influence buying decisions could have an even graver impact in The metaverse, leaving those brands who chose to walk that tightrope at risk of reputation damage.

Brands need to be extremely conscious of not blurring commercial and non-commercial content to remain compliant with advertising laws and regulations.

To do this, CMO’s should refer to the recently published guide by the UK’s Committee of Advertising Practice – Things can only get Meta, for guidance on the issues expected with advertising regulation. It is likely that brands will be required to define when content is entertainment or promotional for transparency.

Test and learn will be key

It’s vital for CMOs to navigate the metaverse with confidence but also with the backing of stakeholders with the understanding that it is very much a moving target.

As the beast evolves, so too will our knowledge of how people will interact with it, how individuals will move in and out of it, and how different brands and products will be received within it.

Alongside marketing approaches, productisation opportunities will present themselves, with digital products and experiences that build on physical alternatives offering new ways to make a sale.

A phygital approach

Bridging the gap between digital and physical experiences will be an incredible but exciting challenge for marketers, in a bid to create seamless customer experiences that render an ROI that benefits from the new realms of the metaverse.

Phytigal in its nature, marketers will need to leverage next-generation value exchanges using mobile devices, social networks, extended reality(XR) and sensors as users transition from the real world to the metaverse.

Phygital is expected to grow on a mass scale in the next decade, bridging the gap between the real and virtual whilst syncing with their completely digital counterparts to make completely frictionless transactions. This means that brands mitigate the risk of alienating markets and losing potential sales as people transition from real to the virtual.

It isn’t just ecommerce and retail businesses expected to benefit from the rise of phygital technology. Everything from equipment reliability in production lines through to full scale engineering will benefit from phygital technology to test real world components in a virtual space. Predictive capabilities of data will also support sectors in reducing waste and mitigating risk.

Leveraging the senses in the metaverse

As Nike and Walmart dip their toes in the water of metaverse retail, the metaverse presents opportunities and challenges in the senses it can provoke through experiences. In the absence of taste, smell and ‘touch’, the emphasis on the visual components and reactive application of motion that grabs attention will be paramount in virtual retail.

The use of sound is also incredibly powerful in evoking emotion and even physical responses. The genre and tempo of music can speed up or slow down browsing and even deter purchasing through negative associations.

In the absence of being able to try and touch products, retailers will need to carefully consider options like free delivery and quibble-free returns to encourage consumers in the metaverse to purchase risk free.

Virtual product placements

CMOs will be able to task their teams and agency partners with positioning their products as part of virtual experiences. Targeting opportunities are likely to be based on similar behaviours and patterns but driven by more complex data allowing for even more refined and lucrative approaches.

Companies like Bidstack and Anzu enable game developers to showcase ads within their worlds. Keen gamers are fairly receptive to seeing brands advertised as they explore the metaverse, with sports stadiums and streetscapes boasting digital billboards.

Just as in the real world, product placement success comes down to relevance. Individuals in the metaverse would expect to see products relevant to both their environment, and in a further step towards total personalisation, their needs and desires.

As we expect data sets and information to be even more detailed ad specific, smaller brands and businesses will have greater opportunity to target on a smaller scale but with better information, enabling a foot in the door.

Virtual spokespeople

The next frontier of influencer marketing is upon us, with brands collaborating with virtual influencers to champion their products, services and embody their values. The concept isn’t as strange as we may think, with ‘real life’ influencers being individuals their audience are unlikely to have met or ever meet.

With virtual influencers as the product of computer generated imagery that can be designed and crafted to perfectly engage customers, they are likely to be highly effective in building deep communities in a virtual space.

Taking influencer marketing a step further, virtual spokespeople in the metaverse will be anthropomorphized characters that act as brand mascots. As AI technology continues to evolve, it may be that these characters also adopt social intelligence to further blur the lines between reality and the metaverse.

Opportunities also open up for brands wishing to extend their collaborations with ‘real’ influencers into the metaverse. Post for rent has already built a digital influencer base camp in Decentraland, the first ever virtual world owned by its users, ready for brands to meet, greet and collaborate.

Is it more than just a flash in the pan?

Unlikely. In fact, almost certainly not. Despite ongoing scepticism about the metaverse, in 2021, Meta invested $10 billion in it. Microsoft’s $69 billion acquisition of gaming maestro Activision provided “building blocks for the metaverse” and metaverse-related companies continue to double, year on year, funds raised from the platform.

Constant enhancements to hardware mobile device capabilities continue to increase the accessibility of the metaverse and experiences are now expanding beyond the already established gaming arena, with retail, education, sport and entertainment now presenting consumer use cases for CMOs to consider.

Even B2B and HR applications are beginning to emerge, with employee training, prototyping and manufacturing exploring the potential the metaverse offers.

Collaborating in the metaverse could ultimately prove a CMO’s biggest opportunity, with a virtual landscape transcending geographical barriers, uniting talent from all corners of the globe in as close to a physical location as possible.

With meetings and creative sessions playing out in real time, with real voices and characters, it could be that access to the best thinkers and niche skill sets generate campaigns and concepts otherwise unavailable.

Ultimately, the metaverse may not be the right place for every brand, especially as the concept is still in its infancy, however the investment and early adoption of tools and platforms by certain brands means CMOs should remain open to the opportunities it presents to connect with new audiences, test products and concepts and deliver a stronger ROI through immersive experiences.

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