For $1.4 million, you can purchase 65 parcels of land in the metaverse. This is how much Philipp Plein, a Swiss fashion company, recently paid for that plot size in Decentraland, a virtual world where real estate can be bought with cryptocurrency and developed to engage with an audience of roughly 800,000 registered users. 

Numerous brands are acquiring land there, as well as on competitor platform The Sandbox, which is still in testing, but already boasts over 500,000 registered crypto wallets and 12,000 unique land owners. Adidas, Atari, Care Bears, Samsung and Gucci are several of the marketers that have rights to plots on these platforms.

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As the metaverse takes shape, brands are eager to explore the commerce potential in virtual real estate, which is already being developed into shops and experiences by marketers looking to drive sales. 

Meanwhile, agencies are buying up land to expose clients to the metaverse ecosystem and its tradable assets, which mostly exist in the form of NFTs, or non-fungible tokens. Mediahub has a plot in Decentraland, as does Vice Media Group’s agency Virtue Worldwide; Media.Monks has presences on multiple platforms; and Wunderman Thompson built an office in a lesser-known metaverse called Odyssey.

Interest in virtual land has even reached more buttoned-up brands like JPMorgan Chase, which recently opened a lounge in Decentraland that features a roaming tiger and portrait of CEO Jamie Dimon.

Purchasing real estate in the metaverse is a significantly different marketing opportunity than merely installing an activation in a virtual world. Activations, such as a branded campaign on Roblox, are intended for short-term engagement, akin to a pop-up shop at a festival. Buying land, however, is a longer-term investment for an enduring presence on a platform. Through these acquisitions, whose steep prices reflect a need for serious commitment, brands are looking to create flagship destinations for users.

Some brands have established real estate to build hype for future activations around NFTs and wearables that will be accessible on the platform. That was the case for Adidas, which secured at least one 12x12 plot in The Sandbox for an undisclosed amount.

“Our acquisition of a plot of land on the platform is a way of expressing our excitement around the possibilities it holds,” an Adidas spokesperson said in an email. 

Others already have real plans set into action, such as Care Bears, which recreated its characters in The Sandbox as in-game assets in the form of NFTs, to be used by creators and featured in a larger Care Bears ecosystem.

“Ultimately, we also want to speak directly to our fan base in the NFT space and have a destination for Care Bears NFTs,” Robert Prinzo, head of global licensing for Cloudco Entertainment, parent company of Care Bears, said in an email. To do this, Care Bears will launch an NFT with Recur later this year. 

Overall, brands are placing a bet on the commerce opportunities that are emerging in the metaverse. From NFT collectibles to digital wearables to large-scale monetized experiences, the potential for new sales channels is becoming increasingly difficult to ignore.

“If brands want to set up shop and create and sell products, they need land,” said Benny So, head of communications at Metabrge, a metaverse retail shop.

Land for sale  

The Sandbox and Decentraland are the current heavyweights in the virtual land market. While Roblox has been the most popular world for marketers, with brands like Nike, Hyundai and Vans activating on the platform, it doesn’t exactly sell real estate because land there isn’t scarce. Instead, brands can sign up for free and create their experiences on an infinitely large map, and only once they start to earn money does Roblox begin to charge them large fees.

The Sandbox and Decentraland are controlled by their network of users, not the platforms themselves. Unlike Roblox, these worlds are tethered to the Ethereum blockchain, transact using cryptocurrencies, trade digital assets in the form of NFTs and offer land at premium prices. Only minor transaction fees are deducted to support the continued operation of the platform.

Other blockchain-based platforms are gaining traction, like Cryptovoxels, a Minecraft-like metaverse, or Odyssey, which offers specific opportunities for business-to-business services, as in the case of Wunderman Thompson. 

“The Sandbox might be right for one [brand], Decentraland might be right for another,” said Michael Litman, creative strategy lead at Media.Monks. “They really represent themselves as new channels for brand engagement and consumer participation.”

The Sandbox and Decentraland sell land upfront, via marketplaces, that are formatted as NFTs and must be bought using their in-game cryptocurrencies.

Brands can also purchase real estate on secondary marketplaces like OpenSea, though doing so requires extra caution thanks to the rampant fraud that exists on these networks. A recent phishing scam on OpenSea, for example, stole $1.7 million worth of NFTs from unwitting owners, including Decentraland tokens.

Finally, some brands can acquire land by partnering with the platform itself and setting up a licensing agreement, through which land may be offered at a discount in order to bring mainstream development to the platform.

“If you’re a major brand, say, like Nike, The Sandbox is probably going to be more willing to have an open relationship with that type of company,” said Mason Nystrom, research analyst at crypto research firm Messari.

Care Bears, for instance, partnered with The Sandbox in September 2020, well before NFT and metaverse marketing became more mainstream. The early collaboration gave Care Bears virtual real estate to build a 3D version of the Care-a-Lot kingdom, where the bears are said to live. 

While use cases for both virtual worlds are still being recognized, The Sandbox has so far seen more interest from brands—such as Gucci, Adidas and Atari—whereas Decentraland has seen more interest from tech-first companies, coders and developers, said Media.Monk’s Litman.

The split has arisen because of The Sandbox’s video game-feel, attracting a flow of pop culture and celebrities, said Metabrge’s So. For example, Snoop Dogg owns a large plot of land on The Sandbox, and has become one of the platform’s most popular investors through NFT giveaways and the development of a so-called “Snoopverse.” DJ Steve Aoki also owns land in The Sandbox.

On the other hand, Decentraland offers more pristine visuals, said So, attracting designers and techies interested in the potential for creating realism in the metaverse. Yet some brands are also gravitating toward the platform for this very reason, as in the case of luxury designers for a Metaverse Fashion Week that will be hosted in Decentraland in March. Physical brands like Hugo Boss and digital brands like Republique are already on board to sell goods during the event, according to Vogue Business. 

Renting vs. buying 

Unlike Roblox, the land area in The Sandbox and Decentraland is capped, meaning there is a finite amount of plots available. This ceiling has created a de facto market for real estate highlighted by premium prices. The average 1x1 plot on both The Sandbox and Decentraland costs around $11,000, according to Nystrom. 

Metabrge, which has land on both platforms, spent more than $25,000 on a 1x1 parcel in Decentraland, and nearly $15,000 on a 3x3 parcel in The Sandbox.

Care Bears, on the other hand, received its land for significantly less since it is both a partner with The Sandbox and entered the market nearly a year and a half ago, when a parcel was worth just over $43. The brand declined to share financial details of its contract.

The juxtaposition of these two buying experiences underscores an important point for brands to recognize about these markets: Like the cryptocurrencies on which they’re based, they’re volatile, and their shakiness affects whatever NFTs are built upon them.

“This is crypto, and that has its own fluctuations and volatilities, so the price of land on each [platform] can vary massively from a day-to-day basis,” said Media.Monk’s Litman.

For this reason, renting parcels may be a safer, and more cost-effective, option for brands. Much like renting an apartment in the real world, brands can establish a lease agreement with a consenting owner of land, and receive rights to that property by paying a time-based deposit. 

Mediahub, for example, rented land in Decentraland to build an office that would allow it to show clients around a metaverse. The agency used a third-party platform called Rentabyl, and is now paying around $400 a month for publishing permissions over a plot, which it can update whenever it wants, said Simeon Edmunds, senior VP and creative director for Mediahub’s Radical + Disruption Lab. 

“It's super expensive to buy property versus leasing it, as long as you're flexible about where you want to be and how much space you want,” he said.

Identifying the hot spots 

What a brand does with their land will depend on the location of their plot inside the platform, represented by X and Y coordinates on a grid.

Themed districts have already emerged across Decentraland with names like Fashion Street, Crypto Valley and the Museum district, and The Sandbox has its own share of mini-environments, including a Las Vegas-inspired realm and forthcoming Hong Kong district from real estate tycoon Adrian Cheng.

Land use cases are often facilitated by the content of these districts, and brands should prioritize locations that fit the kinds of experiences they want to create, said Media.Monks’s Litman. A forthcoming fashion show, for example, will be held in March in Decentraland’s luxury fashion district and support a host of events including runways and after parties. Retail shops that sell digital wearables make more sense to be in this area than, say, Crypto Valley.

Last October, Decentraland held a music festival in the Festival Land district that featured high-profile DJs and entertainers. Brands buying plots in this area should feel comfortable designing experiences that cater towards music enthusiasts and heavy foot traffic. This also applies in undefined areas that nonetheless contain high-profile land-owners, such as the plots surrounding Snoop Dogg’s estate in The Sandbox.  

Use cases will also depend on the purpose of the brand’s presence. Mediahub, for example, built an office in Decentraland because it wanted to demonstrate projects and other business-related work to clients, said Edmunds. 

JPMorgan’s metaverse presence is not intended—at least currently—to offer financial services, and instead exists as a lounge to browse and wander through. 

While the company declined to comment for this story, Chief Marketing Officer Carla Hassan spoke about the activation in a recent episode of Ad Age’s Marketer’s Brief podcast. “I just really believe that whatever we do, it can’t feel like a gimmick. You can innovate in places, for sure, but it’s got to feel relevant and it’s got to feel like it’s contextual or in the proper context for any brand,” she said.

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