Everyone in the ad world is talking about the metaverse, but exactly what it is and how brands can find their place in virtual worlds, remains a bit of a Wild West. But it is one that marketers are eager to unlock. 

Last year marked the beginning of the metaverse going from a hypefest to hotspot, with Facebook changing its name to Meta, declaring its intention to be a metaverse company. Gaming platforms like Roblox and Decentraland have struck deals with brands ranging from luxury fashion houses to automotive. Many major marketers have tried their hand at NFTs. Even ad agencies are looking to the metaverse as a place to meet clients and train employees.

In many cases, these experiments have led to more questions than answers. Below, Ad Age takes a look at the biggest area of confusion and the questions you may be too afraid to ask. 

What is the metaverse exactly?

There are many misconceptions around what the metaverse is—and isn’t. The word “metaverse” comes from science fiction: Neal Stephenson coined the phrase in his 1992 novel “Snow Crash,” to describe a virtual-reality based online world. These days, the phrase more specifically refers to a collection of digital worlds in which users can create content and interact with others as avatars, or digital versions of themselves. The metaverse also allows for interoperability, meaning that users and their assets (like NFTs) can move freely from one world to the next. 

Read: Metaverse and Web3 marketing glossary for brands

But it is also important to mention that the metaverse is in early stages of development, and therefore its parameters and possibilities—including those having to do with marketing—are still being decided by tech companies, platforms and AR/VR developers. For now, marketers should know that the metaverse represents a convergence of extended reality (XR), gaming, social media and crypto, and thus offers a unique pathway to reach digitally minded audiences in engaging ways.

Read: Unlocking the metaverse

How do NFTs fit into the metaverse?

Non-fungible tokens (NFTs) are digital certificates of ownership that exist on a blockchain. Since blockchain technology will underlie the decentralized nature of the metaverse, NFTs are expected to play a big role in the space, from serving as rewards in play-to-earn video games to building identity as social assets.

Read: Crockpot creates an NFT—joining brands cooking up tokens

For brands, these tokens can be leveraged to build hype through giveaways and drive lasting engagement by offering exclusive rewards to NFT holders. Many NFT releases, or “drops,” contain a philanthropic component as well, typically in the form of donating proceeds of an auction to a relevant charity. Depending on the size of and interest in the drop, NFTs can also help to drive revenue for brands.

Read: How brands are using NFTs—a continually updated list

How can brands enter the metaverse?

NFTs have been an entry point for marketers into the metaverse, with brands from Taco Bell to Crockpot trying their hand at creating these tokens. Another opportunity is to partner with platforms like Roblox, Decentraland and The Sandbox to build branded experiences. 

With Roblox, for example, a brand can create a world around a specific theme and then invite users to inhabit its attractions, which may be anything from mini games to block parties to virtual stores. Nike created “Nikeland” on Roblox, an entire world dedicated to the footwear company, replete with dodgeball, building materials and a digital showroom. Chipotle and Hyundai also constructed branded worlds on the platform, as did a spate of fashion retailers, including Ralph Lauren, Forever 21 and Gucci. 

Read:
• Ralph Lauren dresses up the metaverse
• Why Roblox is a destination for branded virtual experiences
• Forever 21 builds world on Roblox

More traditional methods of advertising, like sponsoring events, are another possible way into the metaverse. Artists like Justin Bieber and Ariana Grade have hosted concerts on virtual platforms, attracting millions of eyeballs, and sports-focused video games for horse racing and soccer have also accepted advertisements in the metaverse.

Even agencies are getting in on the action by building offices in the metaverse, partly for PR, partly as a real testing ground for employees. Decentraland has seen several of these kinds of activations from agencies like MediaHub, Media.Monks and Droga5.
 

How can brands use the metaverse to help sell products?

The metaverse is mainly inhabited by younger, Gen Z audiences who are increasingly gaining spending power. Many of these consumers shop digitally, which makes the metaverse an important space for lower-funnel marketing. Shoppable experiences are quite possible on metaverse platforms, such as in the case of virtual stores, which combine the ease of an e-commerce platform with the interactivity of a video game. In addition, expect a rise in popularity of metaverse-native products like virtual clothing.

Read:
• Why virtual stores are an entry for brands into the metaverse
• How NFTs and the metaverse could solve supply chain issues

Why do people pay real money for virtual clothes?

As in the real world, owned assets in the metaverse help to build identity and status. So just as a consumer might buy themselves  a Gucci sweater in reality, they  may buy a digital version for her 3D persona, or avatar, to sport in the metaverse. This is why numerous fashion brands have launched stores across virtual platforms.

Moreover, virtual items can unlock special rewards that are unavailable to those who do not have them. Sometimes a brand may offer early access to future drops on the platform or gift the buyer with a physical version of the product. This is how brands can use the metaverse as a bridge between real and digital worlds and build engagement that lasts beyond any one specific event.

Does Meta own the metaverse?

No, Meta does not own the metaverse. The confusion stems from Meta’s name, which the company officially changed from Facebook, Inc. during its Facebook Connect conference in October. While Meta outlined its vision for the metaverse during that event, such as its game-like Horizon platforms and virtual reality headsets, the name is only an expression of its focus as a company and does not imply any ownership of the realm.

Read: Facebook's corporate name is now 'Meta'—preparing for virtual-reality future

Then who owns the metaverse?

No one entity owns the metaverse as a matter of it being decentralized. To this end, the metaverse is an extension of Web 3.0, an answer to the current iteration of the internet (known as Web 2.0), which is dominated by walled gardens, including Meta. In Web 3.0, users own their data, creators control the content they produce and the metaverse allows for people to move freely across platforms and worlds. Still, some critics have warned that the metaverse could resemble Web 2.0 if tech giants assert their dominance early. 

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Who are the key players in the space?

Gary Vaynerchuk of VaynerMedia has become an NFT guru, having created a personal initiative last spring that raised $20 million in its first couple days, then launching VaynerNFT soon after as a division of his ad agency. VaynerNFT has already teamed with names like Anheuser-Busch and American Eagle to help integrate the digital tokens into their marketing strategies.

Read: 12 marketing execs leading the metaverse charge

OpenSea is the largest NFT marketplace on which numerous brands have dropped their collections. It is also a popular destination for secondary trading, offering longevity to brands’ metaverse efforts. Dapper Labs is another platform to know, having created a marketplace for the NBA called NBA Top Shot, with plans to create a similar site for the NFL. The platform is making moves that are helping to popularize NFTs amongst passionate fanbases.

Read: NBA Top Shot NFTs jump from online into real world

Outside of NFTs, Roblox has become a go-to for brands creating their own metaverse worlds, especially for Gen Z audiences interested in gaming. Other emerging metaverse platforms include Decentraland and The Sandbox, which have recently seen branded casinos and sales of large pieces of virtual real estate, respectively. 

Lastly, Meta will be a major player in the development of the metaverse. The company is the largest to declare a full-fledged vision for the space, and is looking to establish itself early in order to claim a powerful stake.

Do you need a virtual-reality headset to experience the metaverse?

The technology to access the metaverse is still being constructed, and what tools are needed will vary from platform to platform. As of now, Meta’s vision for the metaverse appears to hinge on its Oculus headsets, whereas Roblox simply requires a smartphone or desktop. The use of crypto will also influence how the metaverse is experienced, since NFTs and cryptocurrencies exist on blockchain technology that is more difficult to access.

Is the metaverse safe for brands and consumer privacy?

As with any emerging space, risks exist in the absence of knowledge. While more established platforms like Roblox seem to pose lower risk (of course there’s always the occasional outage), a volatile market like NFTs has experienced all kinds of issues, from fraud to hacking to controversy over their negative impact on the environment. Moreover, in an ideal world the metaverse will be a haven for data privacy due to the cryptographic nature of blockchain technology; whether or not this becomes a reality, however, is too early to be determined.

Read: McDonald's NFT troll highlights metaverse risks for marketers

Questions of brand safety and privacy will resolve as governmental policy begins to play a greater role in the construction of the metaverse. For now, brands should take things slow, experimenting with established platforms and NFT marketplaces in order to get a feel for the space.