How does Metaverse Marketing change the advertising industry?

With Facebook changing its name to Meta, the concept of the metaverse has received widespread attention.

From web1.0 to web2.0, we have seen a new model of brand economy: through the mechanism of precise push of big data, advertisements are placed all over the network media, and then products are inserted through online fragmented information, and KOL soft implantation is used to sell products. The "Internet celebrity brand" is the iconic product of web2.0.

With the advent of the internet, we moved from a transaction economy to an attention economy. The development of the attention economy has firmly grasped the public's psychology and changed the cultural narrative on a large scale.

In web2.0, major Internet brands have control, such as Tik Tok, Xiaohongshu, Weibo, etc. They built the amusement park and set the rules of the game. Anyone who wants to enter must follow their rules, otherwise they will be kicked out, and they are also the biggest beneficiaries.

Web3.0 belongs to the era of creators. Each work is given a special number, which is unique, and all data is stored on the blockchain.

In this wave of digitalization, the development of the metaverse is bound to bring a new wave of impact to the advertising industry .

Here I have to mention NFT. Let me first briefly introduce to you what NFT is?

The full name of NFT is Non-fungible token, which is a "non-fungible token" based on the Ethereum blockchain.

Like virtual currencies such as Bitcoin and Ethereum, NFT also relies on blockchain for transactions. But the biggest feature of NFT tokens lies in their uniqueness and "non-homogeneity". Simply put, they are "digital collections" . They are uniquely identified using blockchain technology. Each digital collection has a unique on-chain serial number, which establishes a unique mapping relationship with specific works, artworks, and commodities, and can serve as the only proof of rights.

Digital collectibles are fundamentally different from homogeneous tokens such as virtual goods and do not have any monetary attributes.

This scarcity and uniqueness are in line with the consumption psychology and behavior of people in the new era. With the scarcity and brand value added, the premium space for NFT works has skyrocketed and may even be out of control. It is reported that a Dunhuang Feitian NFT payment code skin with an original price of 9.9 yuan, which was sold in limited quantities on the "Ant Chain Fans Grains" applet of Alipay, was hyped up to 700,000 to 1.5 million yuan on Xianyu, a full 70,000 to 150,000 times increase.

NFT represents the financial productization of attention. As more and more brands release NFTs, this may change the business model in the next decade, and the costs of brands may be reduced infinitely.

NFT makes it possible to determine the value ownership, property rights confirmation, and virtual identity authentication of various digital items in the metaverse. Therefore, NFT will be the basic hub of future metaverse economic activities. Some people even compare NFT to a ticket to open the metaverse world.

01 The hot NFT

In the third quarter of 2021, the number of NFT buyers was approximately 260,000, while in the same period of 2020, it was only 19,000. At the same time, according to a CNBC survey, more than 10% of American adults own cryptocurrencies.

According to statistics from Chainalysis, the current market size of NFT has expanded to US$44 billion, making it one of the hottest areas in the crypto market.

NFT has actually been extremely popular for a long time and has been performing well in the market.

From being unknown to being known to everyone, and even selected as the Word of the Year 2021 by Collins Dictionary, according to statistics, the usage of the term NFT increased by 110,000% in 2021.

In March 2021, artist Beeple's crypto art work "Everydays: The First 5000 Days" was sold at the traditional auction house Christie's for a sky-high price of US$69.35 million.

《EVERYDAYS: THE FIRST 5000 DAYS》-Beeple

Blockchain technology realizes the mapping of currency in the virtual world, thus giving birth to a large number of homogeneous currencies, thus setting off a boom in digital currency investment.

As a non-fungible currency, NFT allows everyone to see the possibility of projecting virtual time into the real world.

NFT may be able to change the advertising distribution model, the way the membership system is managed, and the core user reach and incentive tools.

02 NFT becomes a new model for brand marketing

Major brands have seen the future development of NFT and have begun to plan ahead.

Four months ago, the Coca-Cola brand and digital wearable device design platform Tafi jointly launched NFT digital collections.

Image source: Coca-Cola

In May, Gucci released their first digital virtual sneaker: the Gucci Virtual 25.

Image source: Gucci

This pair of shoes cannot be resold and can only be worn in the online world. It may be the cheapest pair of shoes ever sold by a certain luxury brand, "only" 78 yuan. After buying it, you can "wear" it in the virtual world to take photos or record short videos, and then share them.

Even the German beauty and lifestyle studio Look Labs launched the world's first digital perfume Cyber ​​Eau de Parfum last year, which is updated simultaneously in the form of physical and digital NFTs. Its NFT artwork uses near-infrared spectroscopy to extract the scent of the perfume and expresses the scent in the form of spectral data in the NFT artwork.

Image source: Givaudan

In February of this year, Swiss flavor and fragrance giant Givaudan announced the acquisition of French company Myrissi, whose patented AI technology can convert aroma into color spectra and images relevant to consumers, thereby predicting the emotional responses of end consumers.

In addition, Tmall also launched a digital collection exhibition on Double Eleven last year, and brands such as Wuliangye, Chando, and Kiehl's have launched their own digital collections.

The above pictures are from Tmall

Major brands have entered the NFT market, and NFT may usher in rapid development this year.

03 NFT: Eternal Brand Assets

What is the biggest difference between NFT marketing and digital marketing?

NFT is eternal . No matter what kind of digital marketing or digital advertising it is, the link between the brand and the user is short-lived. Under a new round of brand bombardment, the balance of user memory will shift, and no brand will be immune. In order to maintain a good relationship with users in a continuous and long-term manner, it is necessary to continuously achieve remarkable results in market competition in order to capture the minds of consumers.

As a digital collection, NFT is eternal and will not disappear or change with the passage of time . Users will think of the brand every time they see it. This memory association will deepen with the number of times they see it, linking the relationship between the brand and the person.

There may even be a situation where an NFT is passed down to the next generation of children. In this iterative process, the brand completes its strongest mission and has loyal brand guardians. At this time, it is not a simple relationship between brands and people, but is mixed with complex emotions between people, making them the "guardians" of the brand. This is not empty talk, but can be realized after the rise of NFT.

It’s like the vintage luxury goods today, which means second-hand goods. The older it is, the more popular it is, and its value increases with time.

04 Break through the barriers between reality and virtuality to create a brand metaverse

Why is it called a digital "collection"? Because of the scarcity of NFT and the fact that consumers own all rights to NFT, including the right to subsequent disposal of the collection, NFT appears as a collection, not a consumable. At this time, the identity of consumers has quietly changed into collectors or sellers, and the brand's NFT is transferred between different people as "currency", and the brand's network begins to cover the crowd.

In the world of the metaverse, any virtual item can become an NFT. The prototype of the metaverse has also begun to appear in movies in recent years. The virtual world constructed in "Ready Player One" is actually possible in the future. In the future virtual world, brands will build their own brand user base by continuously issuing NFTs, create the brand's metaverse, and establish deep connections with their users.

The brand will eventually break down the barriers between online and offline, integrate the real world with the virtual world, form its own digital assets by continuously releasing NFTs, and ultimately build a sub-universe of the brand to form a closed loop.

05 From brand to IP, future marketing trends

Back to the present, digital collectibles/NFTs can be used for both marketing and brand culture building.

NFT is committed to the track of cultural construction. NFT is moving from investment to consumption, and from control to community.

On March 29, 2022, in the NFT project rankings on opensea, World of Women ranked 7th, and its derived secondary project World of Women Galaxy ranked first.

The first female-themed project, World of Women (WoW for short), has excellent community organization and has driven the overall female market. Women's organizational and support capabilities have been greatly released.

On March 26, 2022, the project launched a secondary NFT series called "World of Women Galaxy", which generated sales worth approximately $79 million within 24 hours of its launch. In addition to secondary projects, they are also working on 3D projects, game development, film and television development, etc., quickly creating a phenomenal IP.

On the one hand, digital collections are used to deepen connections with consumers and employees; on the other hand, brand value is transformed into digital assets to initially build the brand's metaverse.

Los Angeles, September 17, 2021 PR Newswire: ENVOY Network, a premium NFT agency, announced today that their first NFT “Decentraboard” will be showcased via a giant digital billboard in New York’s iconic Times Square.

Image source: NFT News Insider

The billboard, located at the intersection of 1500 Broadway and West 43rd Street in Manhattan, will be visible from 6 a.m. to 2 p.m. from September 16 to 18, displaying 30-second ads, with each ad playing in rotation on the eye-catching large screen and shown at least 300 times a day.

The show will offer 304 unique opportunities to display a live digital billboard of an artwork or brand in Times Square, with the first batch of initial NFT issuance selling out in 2 hours and the second batch selling out in just 60 minutes.

Verasity founder and CEO Mark Hain said in an interview last year: In 2019, global (excluding China) digital advertising spending was US$325 billion and is expected to reach US$389 billion in 2021. By 2024, advertising spending will exceed $525 billion, $525 billion is the target market.

It can be seen from this that when the NFT trend is positive, digital advertising is actually increasing. The development of NFT has not caused an impact on digital advertising. Instead, it has accelerated the process of advertising digitization and promoted the development and updating of advertising. However, it is a heavy blow to Internet advertising based on web2.0.

06 NFT marketing is regulated both at home and abroad, what is the future of it?

The feasibility of NFT marketing has been demonstrated, but domestic and foreign policies are not conducive to its development.

1) The United States: easy to launder money, difficult to collect taxes

In fact, as early as October 28, 2021, Forbes published an article discussing the issue of NFT taxation.

NFT can be both a digital asset and a physical token. That is, when the ownership of NFT virtual assets is confirmed, the ownership of physical assets can also be confirmed. Based on such characteristics, NFTs, which were originally just encrypted artworks and personal portraits, are likely to develop into indispensable items such as real estate and vehicles in the future.

Media data is the essence of NFT collections. If the royalties and ownership of the work itself are lost, the NFT work itself will also lose its secular value. However, due to its rapid rise, the NFT market has no regulatory constraints and no clear legal provisions, so the rights and obligations of buyers and sellers are basically not guaranteed during transactions. Some people are jealous of this, and the harm is getting bigger and bigger, which in turn affects the normal development of the industry.

By purchasing NFTs and then reselling them, criminals can transfer cryptocurrencies associated with illegal activities to "clean" crypto wallets.

Earlier, the Commissioner of the U.S. Internal Revenue Service warned that NFTs are inherently invisible, and cryptocurrencies, which are equally invisible, cost the United States about one trillion U.S. dollars in tax revenue each year.

At present, the tax authorities of most countries still only regard cryptocurrencies as properties such as stocks. Although taxes can be levied, there is still no accurate statement on how the jurisdiction of taxation rights should be divided, and there is no conclusion on which NFTs should be taxed.

Although the IRS has not yet explicitly stated that NFTs are collectibles, it leaves some room for interpretation in the future. But tax experts seem to have classified it, grouping it with coins, stamps, metals and antiques, and labeling it as a tangible collectible.

2) Domestic: Prohibition of secondary market

Due to my country's strict supervision of virtual currencies, many departments cleared and banned virtual currency mining and trading in 2021. NFT itself also has token attributes and is in a very embarrassing position.

Therefore, domestic major companies chose to block its financial attributes, the most critical of which was to prohibit secondary transactions. Since Alipay launched NFT in June, its hype has caused the development team to have certain concerns. The subsequent rapid removal of NFT from the shelves on Xianyu has extinguished the greed of many speculators.

However, Xianyu’s actions are only a “symptomatic treatment”, and the root of the problem still lies in “whether transactions can be made”, which is the basis of its financial attributes, so major companies have begun to start from this aspect.

Previously, Jiemian News learned from a staff member of a large company that since the key to NFT speculation lies in transactions, not opening up transactions has become a prerequisite for compliance, and the domestic alliance chain is also different from the public chain and cannot interact freely.

Collections that lack liquidity are just props for users and cannot achieve the so-called NFT marketing, let alone build a brand ecosystem. For large companies including Ant Group, their digital collections are only open for transfer. To prevent speculation, they must be held for more than 180 days and undergo real-name authentication before they can be traded.

Whether it is changing the name from NFT to "digital collectibles", or blocking the trading function, or postponing the launch of the "transfer" function, every move behind the hot sell-out of NFTs from major manufacturers is done with caution.

In such a scenario, a scenario has emerged for each company regarding NFT business: just do it, don’t say it.

The essence of marketing is consumer demand management, and the essence of advertising is the attention economy. In the virtual world built by brands, all NFTs are part of the brand economy, and they are also subtly guiding the changes in consumer demand. For brand marketing, NFT has entered a deeper field.

NFT is not just about exporting culture to users and building brand IP. From the perspective of the transition from community to DAO, NFT marketing will be able to build a co-creation and symbiotic relationship between users and brands in the future. This is exactly the top of Maslow's pyramid of needs: self-actualization.

Perhaps NFT marketing is a key for brands to unlock future digital marketing, but due to its uncontrollability, it also faces huge challenges.