By Jay Friedman, President at Goodway Group
Web3 has quickly become a big topic of conversation amid the rise of the “metaverse.” It’s already impacting marketers, such as changing the way brands approach branding with an authentic brand personality and enabling brands to provide more personalized experiences.
However, to prepare for this digital future, marketers need to understand these new concepts and environments so they can both efficiently and effectively reach and engage consumers.
So, What is Web3?
The common consensus on Web3 is that it reverts back to the Web1 version of the decentralized “internet,” but with the interactivity and richness we’ve come to expect with Web2. This diverges from Web2 today, which is mainly oriented around big tech platforms. Change is coming, so it’s imperative that marketers work to understand Web3, starting with its key component – objects such as chains, tokens, wallets, and worlds.
Marketers can use Web3 to increase their brands’ value and relevance to consumers but will be constrained unless they have a good grasp on the underlying root components of what’s coming. Let’s take a deep dive into what each of these are and how they work:
Blocks and Chains. There’s a reason it’s called blockchain! A block is a set of data, usually a transaction or set of transactions. They are chained together to tell the entire history of all activity within that protocol (Bitcoin, Ethereum, etc.) Because anyone who runs a node on the blockchain can see any and every transaction that has ever occurred in that protocol, the potential for transparency is unprecedented.
Why should this matter to marketers? Because blockchains are the core foundation on which Web3 is built. It offers users a never-before-seen level of control over their data and user experience. Marketers will need to understand how items they sell are converted to blocks and permanently established on the chain, and perhaps more importantly, that Web3 will likely eliminate the ability to sidestep user privacy preferences.
Tapping into the Power of Tokens. Tokens are representative of ownership of everything from money — for example, Bitcoin and Ethereum — to a conference badge or an exclusive club membership that you could likely sell, i.e., non-fungible tokens (NFTs). Interestingly enough, there are no regulations as of yet within the tokenization realm, which is a crucial point for marketers to consider.
Incorporating tokens in your brand strategy undoubtedly means buying into speculation or profit potential — the key component to consider is identifying how much your brand is willing to buy-in. If a brand issues a token, what does owning that token truly represent? In the future, tokens will likely represent true ownership shares within a company (like stock certificates) but for now, marketers must align a consumer’s expectation of ownership with the reality.
The Supporting Role of Wallets. Wallets are fully portable and interoperable personal spaces where we can not only store tokens but also interact with Decentralized Apps (DApps), digital applications, or programs that exist and run on a blockchain and access bankless financial services. Most wallets can store multiple assets, including cryptocurrencies, NFTs and Defi (i.e., Alpha Finance) tokens.
In laymen’s terms, all that means is that wallets are essential to efficiently access and manage one’s crypto assets, making it a mandatory investment for anyone using Web3. Unlike real-world banking with traditional checking and savings accounts, Web3 wallet users have complete control and responsibility for their assets, so there is no intermediary when it comes to accessing a consumer. This also means they have complete privacy, and so marketers will need to offer a real value proposition to collect a consumer’s data.
A Balance Between Worlds Worlds merge user experiences across real life, virtual reality, gaming, and other digital channels and platforms. All of these come together to create an interactive and immersive digital universe that will reshape marketing as we know it.
To fully benefit from this hybrid environment, brands must have a clear understanding of their brand voice to ensure it transitions seamlessly across worlds. What a brand stands for is the defining factor that will connect them to consumers regardless of which world they choose to engage them. It is imperative that marketers carefully consider the values that comprise their brand when engaging with consumers in Web3 to create a consistent, cohesive customer experience.
With this in mind, there will likely be a few potential hurdles beyond branding, for which marketers should prepare when blending the real and digital worlds. For example, most people don’t want to spend the entire day behind a VR headset, so how can brands make virtual reality-based worlds more comfortable? Marketers need to constantly ask themselves these types of questions to ensure they are adequately positioned for success.
Where to Start When Building Your Web3 Strategy
Ultimately, brands are a way consumers represent themselves in both the digital and physical worlds. When formulating a brand strategy in Web3, consider what the brand represents to its consumers at the core and not the product or utility level.
This being a true primer, there is clearly much more to learn before embarking on Web3 initiatives. Be sure to work with external partners who have practical and ROI-minded approaches to this new world!