How Can Brands Enter the Metaverse?

Few people still believe that the latest paradigm shift on the internet is still underway. The metaverse is now said to have entered our lives. When companies that have invested in a particular area and the media issue an invitation, it makes sense to pause for a moment and check whether the reality matches what is being marketed. However, if the time for this "meta" has come (that is, if it is truly offering something people want), we can assume that many companies are wondering what the metaverse really is and whether they need to be a part of it. For brands considering how to navigate this new space, even figuring out where to start can be daunting.

At its core, the idea of the metaverse is not complicated. Simply put, the metaverse covers any digital experience on the internet that is persistent, immersive, three-dimensional (3D) and virtual, and that does not exist in the physical world. Metaverse experiences offer us the opportunity to play, work, connect or buy (and to make things more fun, the items we buy can be real or virtual). At the same time, it is also wrong to describe "the metaverse" as if it were a single, connected, even interoperable universe, because it is not. Every organization creating a virtual world does so with its own access rules, membership terms, monetization rights and forms of creative expression. For this reason, business and technical specifications vary widely. The metaverse instead refers to the relationship among these individual worlds and experiences. The concept of the metaverse also points to the recognition that we are entering a more real and immersive environment than ever before.

A number of businesses, led by entertainment and gaming companies, are already shaping this new world. Major console and PC gaming brands such as Epic Games' Fortnite have normalized playing and socializing with other people in virtual environments. Newer gaming platforms such as Roblox allow people to create and play in immersive worlds built by users and often monetized. Decentraland is a 3D virtual world owned by its users and entirely powered by the Ethereum blockchain technology. In this virtual world, users can build virtual structures from amusement parks to galleries and then charge other users to visit them. Other companies such as MetaVRse and Unity are building engines to power brand and gaming studios and to accelerate the development of AR and VR content creation.

That said, the immersive nature of the metaverse is not just an opportunity for consumer-facing companies. There are many business applications, from training the surgeons of the future to demonstrating products to retail employees. For example, the leadership team at the technology company Nvidia believes that investing in metaverse simulations in areas such as manufacturing and logistics will reduce waste and improve business solutions. Microsoft, too, is positioning its cloud services to be the foundation of the metaverse, using its Mesh platform to allow avatars and three-dimensional spaces to enter collaboration environments such as Teams over time. With the move to hybrid or remote work environments after COVID-19, many of these creative virtual work experiences will become even more important in terms of the relationship companies build with their employees and customers.

Looking at companies that have not yet entered the metaverse, it is important for brands to find an application area and weigh the risk-reward equation. Doing so requires understanding what is possible. Fast-moving companies can both inspire and serve as test cases. For example, many brands fully leverage the gaming function of the metaverse. These companies essentially deliver branded experiences through virtual and three-dimensional sponsorships. As reported by CNBC, although Nike is a deeply established brand, it is leading the more ambitious end of the metaverse spectrum by filing patent applications for virtual products and creating virtual retail environments to sell them. More recently, they acquired a company called RTFKT that creates virtual sneakers and collections for the metaverse.

Commercial applications of the metaverse are growing further with new behaviors that revolve around purchasing products and services through direct social experiences, also known as "social commerce." Social commerce is becoming a larger percentage of US e-commerce over time and is estimated to reach 36 billion dollars in 2021 alone, with growth rates similar to those in China.

In response, the social media environment wants to capitalize on the intersection of places where people connect and buy not only in a traditional internet context but also in a three-dimensional metaverse. Virtual showrooms, fashion shows and dressing rooms have the potential to move from being fringe experiments to mass adoption almost overnight. People are not selling just physical products either. In fact, Sotheby's recently announced its own metaverse gallery in Decentraland for curated virtual art. New business models for influencers, including non-fungible tokens (NFTs), which are one-of-a-kind, traded and secured on a blockchain, will all gain importance as the capabilities scale, including virtual products and physical goods purchased in virtual worlds.

Brands should always be inclined to test and learn. Especially the digital environment requires intellectual curiosity. The metaverse is potentially the next phase in how people use the internet to connect, communicate and transact. Sitting on the sidelines, inactive for too long, will not be an option.

Here is what brands can do right now:

Choose your targets.
Think about how much time your target audience/customers spend in the metaverse and adjust the pace of your entry accordingly. For example, brands focused on younger audiences probably do not have the luxury of staying away from the metaverse. What are the demographics of your target audience? What behaviors are currently trending among your existing and potential consumers, and what are the indicators of how quickly you will move into the metaverse?

Watch the competition.
In a leadership meeting, bring up the fact that other companies are doing something in the metaverse. This way, the topic can also be discussed among the management team. Much of the space, especially when it comes to seemingly opaque concepts such as NFTs or blockchain, can be intimidating. Can you find a champion who will bring accessible, concrete examples on these topics to every meeting?

Find application areas.
Look at whether the metaverse offers your company opportunities not just to try new things but also to accelerate the pursuit of your purpose or long-term goals such as sustainability. These goals may align very well with many applications of the metaverse. Almost every CMO has made or will soon make a clear commitment to ESGs (environmental, social, governance) around sustainability. That is because these criteria will soon become measurable. What could you try in the metaverse to test more sustainable approaches to serving your customers?

Plan your entry.
Ask your agency team to start building an approach on how your brand should enter the metaverse and when it would make sense. Holding companies and independent agencies are closely watching behaviors and rising trends in mass communications. So asking them what they are seeing in their client portfolio is a great opportunity. What tests can they run to make sure your brand's entry into the metaverse is smooth?

Keep your balance.
If you have already entered the metaverse, prepare for the fact that all new spaces involve risk and reward. Manage the process knowing that this space may be quite unpredictable and lack standards. The good news is that the recent pandemic has made us all more agile than ever. It goes without saying that there will be failed experiments. Second Life delivered on the promise of the metaverse years ago but could not gain traction in this space. However, the risk for the brands that participated in the project was not significant or long-term. So, if the right time to enter the metaverse has come, it is important to think about how to be present there.

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Most importantly, people in brand marketing or leadership roles must start thinking about how they can advance their creativity and storytelling. If the creative team expands the dimensions in the metaverse, we should be excited to create experiences that are both more spectacular and longer-lasting than before at any point in the customer journey, from purchase to engagement to transaction to customer support. One day we will probably want to move easily between real worlds and virtual worlds. That will be the next stage.

The opinions expressed are those of the author. They do not reflect the views of Ernst & Young LLP or any other member firm of the global EY organization.

HBR Turkiye