"The hype for NFTs is over!"
Last week the DMEXCO, the leading marketing convention in Germany, took place in Cologne. Covering key developments of the marketing industry, the German web3 community came together at the DMEXCO to discuss and exchange on the latest learnings. Of course, the Arvato Systems business development and innovation team was also around. Let me share my take aways and observations.
Marketeers currently envision metaverse advertising as a combination of our current online and offline marketing activities. Brands place virtual billboards on top of buildings in Decentraland or create virtual showrooms in Roblox for users to see and interact with. The user’s wallet can be used to identify individuals and shows their location, what NFTs they own and what transactions they did so far, amongst other things. Depending on this information and how the user is interacting with the content shown (how long the user is looking at the content, how near the user’s avatar is standing to the content, clicks on links, …) the information on the billboards can be adapted. Programmatic advertising will still be a thing.
Therefore, marketeers can expect to apply established best practices to their metaverse advertising activities. Still, this is expected to be just the first step marketing in the virtual world will take. In the future it is likely that (and that’s my hope) the ways users interact with brands will further develop and therefore new advertising possibilities and formats will arise.
The role of web3 communities
A presentation particularly interesting was held by Twitter. They analyzed the behavior of the web3 community when tweeting. So far, the web3 community can be categorized in six segments: hobbyists & enthusiasts, investors & traders, NFT lovers, crypto devotees, financial freedom seekers and maximalists. These user groups are mainly talking about: fan marketplaces, world building, weverse, digital/NFT art, fan empowerment, avatars, AO3, fan art & fan fiction, and Patreon. Current growth topics are: passive income, NFT collaborations, fashion & collectibles, NFT avatars and crypto gaming. This shows how important the role of the user in web3 is. Users want to actively be a part of brands and co-create online experiences while also monetarily benefiting from their engagement. “Fans no longer just follow, they are calling the shots.” Also, fans are creating value for themselves and each other with the notion of currency-driven membership.
Twitter also shared some facts and numbers:
The web3 user twitters 6.5x more than the average user.
There is a 400% yoy growth of the number of web3 tweets.
The number of tweets mentioning NFTs skyrocketed in 2021 and 2022 (not a surprise).
In the last years they could measure a plus of 3584% conversation around fan marketplaces.
They also gave some advice for brands:
Fans over brands: celebrate people who love you and find new ways to build them up and bring them close.
Support fan spaces: respect the need for fans to cultivate their culture and help them where you can.
Reward with access in physical and virtual worlds: learn what they love and find virtual ways to surprise and delight.
Reimagine collaborations: creators have more cred, so support them with new projects – fan designs, virtual products, …
The discussions around community onboarding showed the different perspectives and opinions within the web3 space. Brands as well as web3 service providers are dealing with the question of how to reach current web2 users and whether to onboard them to web3 applications and platforms through education. One side argued that consumers have to be educated on e.g., how blockchain and NFTs work to fully understand the use cases and products presented to them by brands. Brands shall target their larger consumer base with their metaverse offering trying to not only focus on web3 enthusiasts but also the “average” web2 consumer.
The other side argued that it is neither worth it nor possible to onboard web2 people to web3 platforms as they are not open to the technology and that educating them does not do the trick. We shall focus instead on offering experiences that convince web3 enthusiasts and first movers. Currently, the main buyers are crypto natives with a lot of capital covered by a market mostly offering art, collectibles, and fashion. When the technology and market mature mass adoption will follow automatically. First step should be to gain experience through pilot projects for niche customer segments to be able to position your brand for when mass adaption happens.
The future of NFTs
Everyone, not only the web3 gang, witnessed the rise and fall of the NFT hype in the last year as it was covered by basically every newspaper. Of course, the future of NFTs was also widely discussed at DMEXCO. People heavily agreed that the role of NFTs will significantly change. Till now dropping NFTs without any goodies attached only offering the perspective that the NFTs’ value might rise was sufficient. Now, brands have to match their NFTs with utilities offering fans monetary, idealistic or other intrinsic values. Otherwise, you attract a community not loyal to your brand but in it for the short-term return.
In addition, brands like Starbucks more and more move away from the term “NFT” but instead call it e.g., collectables. The first reason is that consumers are becoming annoyed by the hype around the term and connect it to scams, fast money making by brands and environmental concerns. The second reason: consumers don’t understand what NFTs are and hence don’t grasp why NFTs are innovative. Brands instead should again focus on offering convincing products over explaining the technology. Most people don’t understand how the internet works either and still use it as it offers many advantages.
How to enter web3 as a brand
Lastly a step-by-step guide on how to enter web3 was shared by Diego Borgo.
Connect brand strategy with project: What is your long-term vision and how does this project help your vision?
Find you why and think big while leveraging the current Zeitgeist (diversity, climate change, …): For example, a toothpaste brand by Unilever offered to get married in the metaverse and track that on the blockchain enabling people from countries where it is illegal for same sex couples.
How do we execute the idea, and do we really need blockchain for it?
Execute: define utility, build tech and platform, connect to community.
Set KPI and metrics.
Challenges keeping the web3 space busy
Apart from the presentations and panels there was one topic the attendees prominently discussed: how to drive mass adoption? Onboarding (setting up a wallet, buying crypto, collecting NFTs, …) is still too difficult so we need to build the infrastructure. Some companies like POAP were highlighted as positive examples for offering suitable solutions. Moreover, local web3 communities play a vital role in onboarding people. For instance, the Hamburg web3 community realized a NFT treasure hunt called MoinWeb3 around the harbor’s birthday (a big celebration in Hamburg) creating a fun and easy to understand experience. This initiative was led by our ASY colleague Anna Graf.
All in all, the DMEXCO was an amazing opportunity to connect with the web3 space and learn about current developments. Hit me up if you would like to chat about the points made in this article. Find a list of the speakers here.
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