How can brands succeed in the metaverse? What are the opportunities of Web3? In this interview, recorded for PHD’s Media Weekly podcast, we chat with Louis Schulze, business development manager of Bertelsmann Foundation–backed Accelerator Founders Foundation, and B2B tech conference Hinterland of Things, to find out.
Chris Stephenson, CMO, PHD: Tell us about Web3 and the metaverse opportunity as you see it for brands.
Louis Schulze: The metaverse and Web3 is a huge opportunity for brands, but maybe not in the sense of what most people think of the metaverse and WEB3 – because most people think “oh, we can buy avatars in the metaverse”, “I can buy a leather jacket in the metaverse”, or “I can use my digital sneakers in the metaverse”.
For me, that’s not what Web3 is about, because the beginning of the Web3 development was about creating an Internet that is democratised, decentralised, and gives ownership to the people using it.
That’s what the Web3 debate should be about. By doing that, by giving ownership to people, you really can start creating an incentive alignment between users in a network (for example, on the Internet). That can be a huge opportunity to start co-creating in the digital space, on the internet, and in general at organisations or corporates.
Gianluca Baroni, Planning Associate Director, PHD: Could you break down what you mean by co-creating real-world experiences?
LS: I think there are three core values or core beliefs in terms of WEB3. These are, co-creation, core ownership, and core responsibility or active participation.
Let’s start with co-creation. Maybe you’ve heard of some sneaker collections where you can design sneakers. That’s a form of co-creation through NFTs. But, five years from now, we can do sustainability roadmaps of corporates together and co-create them. For example, through a DAO (Decentralised Autonomous Organisation). So, that’s like the first value I believe, in terms of WEB3.
The second is ownership. So, giving people ownership of digital goods; for example, an NFT of an artwork. So, for the first time, you can give ownership to other people on the internet and that radically changes how we as consumers of the Internet can interact and can benefit from it.
The third value is co-responsibility or active participation by really designing a sneaker, ‘your own sneaker’, through an NFT. You have the responsibility to start co-creating and help brands understand what you need as a customer. By having, for example, an NFT be part of a DAO, you can start having an impact in marketing for organisations and so on.
GB: How can large, established businesses make the most out of WEB3? How can they set themselves up for success? Does it require a radical transformation?
LS: I would start with smaller use cases, maybe for certain target groups, because in the mid and long term, I think what WEB3 does is radically reduce customer acquisition cost and, through building a community, increase customer lifetime value. You cannot do that for your whole customer base, but maybe for certain groups that want to learn about the technology, for example.
CS: Do you see WEB3 staying anchored in business solutions, and business opportunities?
LS: Middle and long term, yes. In the short term, you should think like a brand, try as many things as possible to learn, and educate yourself about what’s happening right now. It’s a fast-moving space. It’s easier to start right now to not lose ‘the chain’ in five to ten years; but in the mid and long term, it has to have an effect and has to increase efficiency in marketing by either reducing customer acquisition costs or increasing customer life.
Right now, in terms of adoption, it’s okay to try use cases, and different use cases, but in the mid and long term, you have to think of a core level of your business. Then ask, can it be a business case for me?
CS: One of the things you’ve spoken about is not just the opportunity for brands to create real-world utility, but that they must do. Web3 offers them effective ways of doing that and becoming part of the communities that are tackling these issues. I get the impression that goes to the heart of what you talk about.
LS: What we are talking about most of the time in terms of WEB3 and metaverse is marketing use cases, but in the mid- and long-term it really will change business models dramatically, because [it hands] ownership to your stakeholders, and your customers and so on. So, you have to think on a business level about the implications of Web3.
One example is to become more sustainable through blockchain and Web3 solutions in the economy. What’s currently a problem in the whole sustainability debate is that no companies are open to sharing their data, or insights on how they are acting in terms of sustainability. But [we need to collaborate] to face global warming together… and maybe you can create trustworthy mechanisms to share data through the blockchain.
Maybe the blockchain and web3 can have an impact on that, but also for many unbanked people (without a bank account) in other parts of the world. That’s one of the core ideas of Bitcoin. Maybe we can integrate those people into our value chain.
Recently, I read a lot about farmers in the coffee market who are having a hard time because of climate change. They have to change their business model and go organic, but they don’t know how and don’t have any financial incentives to do so. So, maybe we can create a direct mechanism through Bitcoin, through cryptocurrency, to give them money to make the shift.
That’s what I mean by co-creating road utility; to see those values of cooperation, collaboration, co-creation, and ownership, and use them to think in terms of your business model and not just in marketing.
GB: Are there any practical steps that marketers can start taking to make the most out of Web3?
LS: What’s most important right now is to educate yourself about Web3, NFT, the metaverse, and so on, become part of communities, buy your first NFT, and so on. That will help you get a feeling of what community building, for example, is about. That’s the first step. Then I would start with small steps, maybe doing an internal NFT collection for employees, then expanding to a small target group, and expanding.
I would start with NFTs because most marketers right now are talking about the metaverse, but I think the metaverse is the consequence of NFTs. [Then, maybe explore] DEFIs (Decentralised Finance Models), but that’s more of a business model thing than a marketing thing. Then last, but not least, DAOs.
CS: What is a DAO?
LS: It’s called a Decentralised Autonomous Organisation. So, you can become part of that organisation by buying a token of it. Then you can actively participate in the decision-making of the organisation. WEB3 believers think that in 20 to 30 years we won’t have traditional centralised corporates but DAOs, and they are building our economy.
I don’t think that traditional corporates will switch their models from traditional centralised corporates to decentralised models. But start-ups and new businesses [might ask themselves] “should I start my company as a DAO?” because it applies the values of co-creation, collaboration, and co-ownership.
CS: So, 10 years down the line, we might see three kinds of organisations: organisations born of Web3 that are DAO by default; traditional, corporate, centrally controlled top-down pyramid structures; and, maybe, corporates looking to make the change. We could be entering into it into an interesting period economically where you’ve got different types of organisations doing business, working together.
LS: Definitely. I have a picture in mind regarding this. I imagine walking through a city and seeing on the left side a Starbucks, and on the right side, a coffee DAO. [I imagine] I’m part of the coffee DAO, own a token of it, know where the coffee is coming from, and know how much the people in the stores earn. And I can decide how much they should earn.
Which coffee shop would I go to? I would decide to go into the coffee DAO, of course, because I’m the owner of it. So, I think this is powerful for start-ups, for new organisations, but also for big organisations. A few weeks ago, for example, Starbucks announced they would go hard into WEB3.
CS: I think that sense of co-ownership and having investment into a brand or business has an interesting web to parallel around loyalty schemes. I think that sense of co-ownership and co-responsibility will create, not just incredibly interesting and successful businesses, but incredibly sticky ones too.
LS: I saw a list a few weeks ago about business models. I don’t know who posted it. It’s a famous entrepreneur from Silicon Valley. He said, those business models will be the next Google, Amazon, and Facebooks, and one of them was a data DAO.
So, when I explain the use case, for example, sharing your sustainability data between all stakeholders of a supply chain through the blockchain and organised in a DAO. I think that idea of a DAO, in this case, a data DAO, can be extremely powerful to drive economic value.
CS: A data DAO could be fascinating in terms of the advertising model. At the moment, as consumers, our data tends to be hoovered up by big tech platforms that then sell that data. But a data DAO could be the tech that puts individuals’ media data back into their hands so they can profit from it and choose how that data is used in co-creative, co-owned, and cooperative ways with brands.
LS: Let’s imagine that the next Facebook will be a DAO in which you own a token and earn real money through that token, and you can decide as a user which data should be used for advertisements, which data should be open for others, and which data should be closed just for you. And you, as an individual, as a consumer of the platform, as the user of the platform, can decide that through being part of that DAO and be a co-owner of that DAO through your NFT token.
CS: Of course, community is at the heart of everything WEB3, right?
LS: Definitely. Building a community can be the most impactful step you can make as a brand to step into Web3, and the most difficult because it takes a lot of effort to acquire members of a community and then engage with them daily.
People, especially decision makers in traditional corporates, are fascinated by what it costs to orchestrate and engage with communities. I think many people do not see what impact this will have on their business.
We spoke about reducing customer acquisition costs and increasing customer value. That’s all only possible through building strong communities, and that’s what marketers should focus on in the first place. All the technologies – NFTs, DAOs, Cryptocurrencies, and Gaming – are there for building effective communities.
To learn more about Web3, and all related technologies, listen to Futur3, Louis’s podcast, or explore his Web3 project, Grapes on Chain.
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