Brands need a metaverse strategy.

The so-called metaverse piqued the interest of brands looking for ways to bridge the digital and physical divide amid COVID-19 lockdowns, which created a demand for virtual escapes. Now with Facebook announcing plans last week to transition into a metaverse company over the next five years, it’s become essential for brands to understand how to navigate digital worlds.

“The metaverse could be the next ubiquitous way to connect users across every platform and social touchpoint, whether it be a game, entertainment, video, zoom, SMS or phone call. The idea of a massive, centralized community is being invested into heavily and is coming,” says Victor David, co-founder and CEO of Epik, a global licensing agency connecting brands with major video games. 

In short, the metaverse —a term coined in Neal Stephenson’s 1992 novel “Snow Crash"— is a collection of digital worlds and assets, where interoperability allows users to interact as digital versions of themselves, also known as avatars, across platforms. The ultimate goal is to allow users to generate content and connect it across digital worlds. Users will be able to take their avatars and assets and move from place to place; a “Fortnite” skin could be brought into a “Minecraft” world, for example.

Essentially, the metaverse can serve as a playground where brands can connect to fans outside the constraints of the physical world through options as broad as the internet itself. It’s no surprise that imaginative creatives and forward-looking businesses are attracted to the potential, and experts say the interest will only grow with advances in technology.  

Facebook’s announcement last week of plans to create a new metaverse product group is only expected to further fuel a trend that had already been gaining momentum.

Ready Player One

The COVID pandemic has served as a catalyst for the emergence of these new virtual worlds and goods. The rise of gaming, avatars, blockchain technology and NFTs, tied to social e-commerce, stand as new portals into the metaverse. As people hunkered down in their homes, games like Epic Games’ “Fortnite,” Nintendo’s “Animal Crossing: New Horizons,” Microsoft’s “Minecraft” and the millions of gaming worlds of Roblox, became places where players could virtually transport themselves away from the monotony of their living rooms. Live streams of people playing these games on platforms like YouTube, Twitch and Facebook Gaming, have only increased their reach and popularity.  

Now brands are looking to become part of these worlds in an effort to connect with the largely Gen Z audiences that engage in these universes. Success stories like Fortnite’s Travis Scott concert, which saw 12.3 million views; and Warner Media’s “Wonder Woman: The Themyscira Experience,” which has been visited nearly 30 million times on Roblox, prove there’s a powerful opportunity.

“We’ve been tracking the use of synthetic experiences by brands over the last couple of years, and through the pandemic it became increasingly a replacement for physical experiences. But with video games at the center of youth culture today, it’s become a critical pop culture connection,” says Jeff Roach, president and chief strategy officer at independent Irvine, California-based agency Schiefer Chopshop: SCS.

In July, SCS worked with U.K.-based design studio Blockworks to create a virtual world within the blocky building platform “Minecraft” for farming and lawn care brand John Deere. In “FarmCraft,” players complete farming missions like harvesting crops they grow themselves while learning about automation in agriculture. The experience, created to introduce the brand to a new generation of tech enthusiasts, has already been downloaded more than 2.3 million times.

A side of NFT with your VR

Meanwhile, with people spending so much time on their phones and cryptocurrency becoming more widely adopted, digital assets like non-fungible tokens, or NFTs, have become popular, as well as the use of digital avatars in apps, social media and websites. Augmented reality (AR) and virtual reality (VR) experiences are also now converging with blockchain technology to form another name for the metaverse: “Web 3.0.” Anything that sits on blockchain technology like NFTs and AR or VR experiences are part of the metaverse because they are decentralized, meaning users can own and claim them as their own. 

There’s already a wide array of examples of brands experimenting in the space. Warner Bros., Gucci and Nerf, among others, have built their own virtual worlds on gaming platforms. More traditional brands, like Coca-Cola, Campbell's Soup and Anheuser-Busch InBev, have been tiptoeing into the metaverse by creating and selling their own NFTs on blockchain-fueled platforms. Meanwhile, brands like Nike, Sephora and Porsche continue to build AR or VR creative in platforms like Snapchat.

The main driver for these experiences is to raise brand awareness and connect with a new generation of consumers who are accustomed to digital realms. 

Eventually, virtual worlds and assets could become brands’ calling card, just as social media profiles and websites work today, says Cathy Hackl, a metaverse growth strategist who consults brands like luxury fashion line Asprey and jeweler Simone Farcshou. “Just like many in the early 2000s thought they would never need a social media presence, brands in the 2020s will need to start setting up metaverse teams that will help them enter the era of Web 3.0.”

While much of the efforts thus far have centered around using virtual worlds as a marketing vehicle, there’s also an opportunity for brands to profit from these experiences through digital goods. In games like Roblox and Fortnite, users use real currency to dress their avatars with skins or collect objects. Brands then share  a percentage of the sale with the platform or developer. A prime example of this is Gucci’s “Gucci Garden” Roblox event in May, where a digital version of a Gucci purse sold for more than it would in real life, despite it not carrying any value outside of the Roblox metaverse. Another popular route is to sell NFTs. While some brands are sending proceeds to charity, others like CNN, e.l.f. Cosmetics, Anheuser-Busch InBev and Porsche are experimenting with it as a new revenue stream.   

Another option is to find ways to bridge the virtual and physical divide and drive customers to a brand across both worlds. This fall, Hasbro’s Nerf will sell a line of Nerf Roblox blasters in stores, which include a code gamers can redeem in Roblox to equip their avatar with the same blaster. 

Becoming part of the metaverse

For brands looking to claim a place in the metaverse, the path to get there isn’t as simple as becoming immersed in the worlds themselves, however. Brands and agencies are continuing to experiment with the most effective ways to design their own environments and how to place ads in front of people in virtual worlds.

For starters, brands need to play by specific rules. Each platform has their own approach to branded content. Roblox, for instance, is selective with the brands it chooses to work with on experiences. Facebook started allowing ads in its Oculus virtual reality games this June, but so far player backlash has stunted application. The only company using the format, Resolution Games, decided to stop after players complained. “Minecraft” also has its own set of commercial guidelines for regulating the use of logos and advertising on the platform. It’s for this reason that Blockworks focuses more on campaigns that have a youth education angle. “Minecraft” allows the virtual experiences, called “maps,” to be sponsored by brands. Along with the FarmCraft work, the agency recently created a financial literacy world for Ally Bank and an employee training simulation for PepsiCo.

Some brands are already creating metaverse-focused marketing teams, much like digital or social teams that have evolved over the last decade, says Roblox’s Christina Wootton, VP of brand partnerships, but declined to reveal which brands are doing this. 

Many are also choosing to work directly with creators or developers and bypass the platforms, a route which allows them to tap into creators’ expertise and existing followings. Gucci, for instance, worked with Roblox creator Rook Vanguard to create the virtual items for Gucci Garden. Platforms are actively encouraging this type of approach by building out creator programs like Roblox’s UGC Avatar Creator Program. 

Seeing this, startups like Metaverse Team, which created a Roblox game for Nerf, or BeyondCreative, which worked with Verizon to create a stadium for the Super Bowl within “Fortnite,” are continuing to emerge made up of creators from specific platforms. The NFT space is also growing with startups like Genies, which has recently scored deals with Warner Music Group to create NFTs for artists; NBA Top Shot maker Dapper Labs; and Utah-based Tafi, which debuted Coca-Cola’s NFTs last week.

Other brands are experimenting with creating virtual worlds of their own so that they don’t have to cater to rulebooks and can garner first-party data at the same time. Cosmetics and skincare brand SK-II worked with ad agency Huge to create its own virtual SK-II City to transport users to the virtual streets of Tokyo, featuring Olympians like Simone Biles. Although there are no avatars, visitors can journey around the city to see virtual stores of female entrepreneurs and watch various films. Unlike concepts built on gaming platforms, the virtual experience will continue to evolve with different brand messages and interactions.  

“By creating an experience beyond just selling, you can engage users at a whole new level,” says Ben Skelsay, group VP of Huge APAC.

Since metaverse work varies widely, efforts can take anywhere from a few days or weeks for NFTs, and up to six months for multi-layered brand experiences. The John Deere FarmCraft project, for instance, took roughly four months to produce, says James Delaney, managing director at Blockworks. Fully immersive digital worlds do not come cheap: Costs can range from $10,000 for NFTs to $500,000 or more for virtual worlds.

Laying the groundwork  

The rise of the metaverse will have repercussions to the marketing and advertising industry, similar to how e-commerce has disrupted retail. Namely, more work in virtual spaces means a higher demand for agencies and game developers who can build 3D digital assets, as well as digital engineers and coders who can take a brand’s aesthetic and meld it to fit its new digital reality. “Brands need to prepare for this shift now and produce 3D models that represent their products,” says David Ripert, CEO and founder of Poplar Studio, which works with brands to do just that. Most brands today, he says, still rely heavily on 2D assets like photos and videos. For work in the metaverse, they need 3D models of their products that they can then deploy across platforms.

Beyond securing the talent and creating the work itself, brands need to figure out how to be authentic in this new setting. “Just because you are an iconic brand in the physical world, doesn’t mean it transfers over into the metaverse,” says Akash Nigam, CEO and founder of avatar agency Genies. “Someone needs to reinvent your brand with the metaverse in mind. These brands will ultimately start from scratch, reinvent their digital goods in a more fantastical way, and exceed boundaries for what is feasible in the physical world.”

When Wootton speaks with brands about joining the platform, she recommends they try to enhance gameplay without interrupting how players are already experiencing the game. For instance, a brand could place branded items within the existing avatar marketplace or build out a virtual train ride players can choose to hop on to reach a movie scene; this is what Warner Bros. did  around the premiere of “In the Heights.” That experience alone showed the power of the metaverse: Nearly 1 million players took part in a virtual flash mob on the same day in the virtual streets of Manhattan, something that could never occur in real life.

“It’s not just about having a known IP,” says Wootton, “but rather how that IP makes shared experiences in the metaverse better, more engaging.”