By Jay Friedman, President at Goodway Group
In part one, we took a deep dive into objects, the key elements that make up Web3. On their own, objects are important but together they play a critical role in facilitating a digital environment that has already started to disrupt the way that marketers engage with consumers. How? Well, the conference badge that users bought for $1,000 is now liquid. This means they own it, it is stored in their wallet and they can sell it to others and vice versa. The validity of that sale? It is decentralized and can be done in and across a variety of applications in many different environments or worlds.
When building the framework for a Web3 strategy, marketers must consider the key facets of the Web3 environment that objects enable: decentralization, ownership and liquidity.
Embracing Decentralization. Web3 is an evolved version of Web1’s decentralized internet, combined with the technical interdependency established in Web2. Marketers will no longer need third parties such as META, Apple or Google to understand who consumers are (i.e. identity) and how to best reach them. To account for this, a Web3 marketing framework will account for decentralization and a digital world where marketers are required to go directly to the source to obtain insights into their customers and consumers who own their own data can revoke or grant access at their leisure.
Authenticating Ownership. At their basic level, fungible (i.e. currency) and non-fungible tokens (NFT) like digital art, clothing or the earlier example of conference passes, imply ownership in Web3. However, marketers will need to consider what role they will play in their marketing framework. For example, in the real world, small differences allow users to tell a real Louis Vuitton bag and a replica apart. But in a digital environment, NFTs can easily be copied and, while the buyer of the original is still the “owner,” beyond checking the ledger of the blockchain how would anyone else know? With this knowledge, if a brand were to launch an NFT, they’d need to carefully consider how they would plan to recreate authenticity without qualities like touch and feel that are essential to ownership in the real world.
Addressing Liquidity. Once digital assets are completely “liquid,” if a customer buys a $200 pair of Nike’s and receives an accompanying NFT sneaker, the buyer could potentially then sell the digital shoe to a friend transferring ownership from one user to another. This prompts a few questions for Nike. Do they enforce terms of service against NFT transfers? Do they build some sort of encryption into the NFT so that if it is moved from the wallet in which it’s initially claimed, then the NFT becomes invalid? And what if the physical shoe is $200 but the virtual pair is worth $300 prompting users to get in line to buy the real sneakers because they can get free shoes plus an additional $100 for selling the associated NFT?
As marketers build the foundation for their Web3 marketing strategies, they need to consider how they’re going to use parallel paths of economics — real-world economics with digital world economics — to price and distribute goods.
Using the Web3 Framework to Develop Marketing Strategy.
With a clear understanding of how objects work in tandem, marketers can begin to establish a strong foundation on which to build their Web3 marketing strategy. Now more than ever, marketers need to assess their brand value proposition and why a consumer chooses to interact with and be a part of a brand. In the physical world, some brands get away with a minimal or poor brand value proposition because they offer utility at a price that lowers the need for good brand/persona alignment. In the metaverse, utility will often not be a factor, rendering brand characteristics the sole differentiator.
Anticipating challenges will also be a priority for marketers. While we may not know everything the future holds, the past can be a great resource for charting a path forward. With that in mind, marketers must review both old and new strategies and determine which are applicable to new age challenges and which need to be evolved or completely thrown out in an increasingly digital world.
Ultimately the ability to think critically, adapt and identify what a brand represents to its consumers beyond the product or utility level will be invaluable in positioning marketers for success in Web3.