How Are Brands Experimenting with Web3?
When it comes to the Web3, some people see it as a way to monetize, some see it as an organizational tool for the future, while others see it as a scam.
Updated
Key takeaways
- When it comes to the Web3, some people see it as a way to monetize, some see it as an organizational tool for the future, while others see it as a scam.
- Coach’s NFT collection for the 2021 holidays supplied buyers with a distinctive bag.
- It’s possible that early tests might become a long-term strategy if businesses better grasp the potential and difficulties and enhance their approaches.
When it comes to the Web3, some people see it as a way to monetize, some see it as an organizational tool for the future, while others see it as a scam. Companies are currently implementing a variety of value-creation strategies utilizing Web3 capabilities, from enhancing brand recognition to testing new product ownership models. Both technology advancements and innovative approaches to business strategy are reflected in these new projects.
In order to obtain a better understanding of consumer behavior, early users of Web3 technologies are employing them to track customer journeys and engage in customer communities more precisely and competitively. These initiatives aid in establishing a company’s brand and increasing supply chain and distribution chain transparency, hence enhancing corporate governance and sustainability credentials.
This article explores three different approaches to Web3, namely virtual products, hybrid products, and decentralized ownership, with the goal of demonstrating how each of these Web3 strategies has the potential to deliver immediate commercial advantages to businesses. Brands may take advantage of this new era of the internet by experimenting with each and every one of them.
Virtual Products
An increasing number of businesses are working on the creation of their very own Web3 products, most frequently with the assistance of preexisting virtual asset manufacturers and platforms. This could be anything from real estate in Decentraland to characters on Roblox or skins for Fortnite to non-fungible tokens (NFT). The company is the one responsible for creating the assets and retains complete control over how those assets are displayed and used in virtual worlds. These trials attract younger people because they provide them with pertinent information about their behavior, which is one of the reasons why they are so popular.
Gucci & Balenciaga, one of Kering’s premium holding businesses, has a Web3 team and has launched many metaverse activities. Users will be able to make use of their avatars to explore the “Gucci Garden,” which is a commercial virtual environment built in conjunction with Roblox. As part of the event, a digital facsimile of the real-life Gucci bag was auctioned for 350,000 Roux (Roblox’s cryptocurrency), or $4,115 in real-world cash. Ralph Lauren partnered with Roblox to offer virtual winter clothes that avatars may try on at Roblox stores for the quarter ending December 2021, and the company ascribed its strong results to the campaign and its investments.
There is a drawback to selling digital items in that they can only be used on the platforms on which they were created. In Roblox, for example, you can wear the Ralph Lauren jackets, but you can’t wear them in Fortnite or other digital environments. Only in Decentraland can you find virtual assets such as fashion company Philip Klein’s building complex. There is a barrier to broader user acceptance and better usefulness of brand-generated tokens and properties because of interoperability issues amongst Web3 systems. It’s also challenging to monetize Web3 assets. Some people think of artifacts like NFTs or game skins as “PR experiments,” but they don’t really make or produce them.
Customer intelligence holds the most immediate promise for digital products in the near future. There are a number of ways that virtual assets may be utilized to assess the attractiveness of a product style or design swiftly. Companies can then transform popular virtual assets into tangible ones.
Hybrid Products
One of the ways firms are utilizing Web3 is to add digital content to their physical products. As an example, consider what happens if: Transaction protocols that automatically perform legally necessary events and activities according to defined parameters are recorded on the blockchain in the first place. In addition to the product’s origin, supply, manufacture, and design, this information is unchangeable once it is registered on the blockchain. Because of its distinctiveness and genuineness, the object becomes a collectible. This allows businesses to protect themselves from counterfeiting and reap the benefits of secondary sales, which have previously been impossible to achieve.
When the NBA’s Top Shot shop releases video footage of particularly memorable shots, like Step Curry’s clutch three-pointer or LeBron James’ famed slam, it turns them into NFT “trade cards.” A blockchain firm, Dapper Labs, partnered with the NBA and its players’ union in 2020 to create virtual trade cards that feature not just a highlight clip but also team-specific artwork, game and player data, a description of the action, a unique serial number, and extra details.
The aforementioned examples show how firms experiment with hybrid items. Secret Level generates NFTs of iconic TV and film moments that can be bought, collected, and exchanged on the blockchain. Anybody’s limited-edition goodies owners can trade NFTs for resealable, shareable, or redeemable sweatshirts. Coach’s NFT collection for the 2021 holidays supplied buyers with a distinctive bag. Adidas offered special access to merchandise and sales, invites to additional events, and personal styling services to fashion shows and collection launch guests via blockchain.
Ralph Lauren’s Winter Escape is a holiday-themed metaverse experience created by Roblox and Ralph Lauren.
The hybrid strategy benefits brands in two ways: Verifiable information regarding the sources of products is one; community-building is the other. On the other side, generating currencies and storing data on the blockchain has energy and environmental concerns. Carbon emissions from bitcoin mining—solving mathematical problems that authenticate transactions in the currency—in the United States are anticipated to reach over 40 billion pounds.
You also need people who are knowledgeable about cryptocurrencies and the blockchain, interdepartmental communication, and customer-relationship management programs that are state-of-the-art so that activities may be recorded on the blockchain and rewarded in order to generate and maintain these goods.
Shared Ownership
A new paradigm is emerging in the field of brand management. The blockchain allows several clients to share ownership of something rather than a company selling a single item to a single consumer. As technology advances and experimentation continue, every marketer should understand how distributed ownership works because it has the potential to transform both how customer communities are managed and how product value is generated and shared.
Distributed ownership platforms like Otis let users purchase, sell, and exchange SEC-securitized shares of collectibles like artwork, comic books, jewelry, or fashion clothing items in order to develop alternative asset portfolios. Otis or a similar site allows consumers to acquire a small portion of Michael Jordan’s shoes when he shattered the backboard glass in a 1985 game, for example. If the group of shareowners collectively agrees to sell the shoes, then the customer will be able to make a profit from the sale of their share.
This kind of governance may have several effects on historical brands—first, a mufti-person cart. Suppose the identical item has two prices: an individual price and a shared shopping cart price. The latter option allows buyers to join a club and negotiate for savings. Pinduoduo uses a public shopping cart.
Secondly, mid-and premium-tier firms may promote group buying, which provides them with real-time information on client demand. Real-time data is based on individual purchase and browsing history but also on the purchase and browsing history of everyone in the buying group. As a result, companies may negotiate better deals with producers based on this information. Customers benefit from better pricing, while businesses benefit from fewer worries about having to sell off extra goods (and devalue their brand).
In the third scenario, for luxury brands, consumers acquire a piece of jewelry or a handbag that is either handed down through the group or resold at a profit for the benefit of the group.
One example of a distributed ownership platform is Friends with Benefits, a self-described “headless media community lifestyle brand” network in which individuals have varied levels of access and governance authority depending on the number of tokens they have earned or acquired. Access to the FWB Discord channel, a subscription to the FWB newsletter, and the ability to attend in-person events are all included in membership privileges. FWB is a completely user-driven website that has evolved from a music discovery platform to a company incubator to a gathering place for bitcoin investors. Every activity is recorded on the Ethereum blockchain and verified by network fee-paying users.
Customers gain from dispersed ownership as a method of producing profits on production and property rights for brands. Customers receive tangible benefits and a stake in their preferred brands as a result of this kind of ownership. The value of a token or product rises as a result of more market activity, which draws new participants and generates even more market activity. It is a self-reinforcing system.
Having said that, the positive feedback loop that connects the value of a product or token to the activity on the market is not there when there is little or no demand for the product or token. Another concern associated with ownership fragmentation is the loss of brand control. Effective decentralized systems are still only suggestions in the majority of circumstances.
In other words, all of these Web3 techniques are still in their infancy. It’s possible that early tests might become a long-term strategy if businesses better grasp the potential and difficulties and enhance their approaches.
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