The Metaverse is making a comeback, particularly for brands beginning to experiment with marketing in the Metaverse with positive results.
METAVERSE IN 2025
In February 2022, we wrote on preparing for the Metaverse. This was just as the metaverse reached the peak of hype, and Facebook had changed its name to Metaverse.
With the arrival of ChatGPT later in 2022, the metaverse bubble burst, resulting in financial losses for companies that had invested heavily in it. For example, losses at Meta’s Reality Labs unit rose to $16.1 billion in 2023, and Disney cut its metaverse division. In addition to financial losses, the backlash over the metaverse overmarketing included industry repudiation of the term itself.
Despite the burst of the 2022 bubble, the metaverse's reality and potential remain intact. The technologies that make the metaverse possible, such as virtual, augmented, and mixed reality, continue to evolve and grow. These technologies are creating convergences between physical and virtual spaces in ways that were not thought of previously.
While the Metaverse may not have fulfilled some of the fanciful claims of 2021/22, it has not gone away. If anything, the Metaverse is making a comeback, particularly for brands beginning to experiment with marketing in the Metaverse with positive results.
The technologies of the Metaverse
As more people adopt virtual, augmented, or mixed technologies, they are influencing and changing how they communicate and interact with each other.
This presents both a challenge and an opportunity for businesses who wish to market to and engage with their customers using these new technologies.
A quick summary of these three technologies.
What are virtual, augmented and mixed technologies, and how are they influencing how people communicate?
Virtual Reality (VR)
With virtual realities, the person is completely immersed in a computer-generated simulation of an environment or a three-dimensional image using special equipment such as a helmet with a screen.
Virtual reality places the user inside the experience rather than the experience or environment being projected in front of the person.
Augmented Reality (AR)
This technology overlays digital information on top of the user’s environment to enhance that environment with virtual elements. For example, augmented reality is often used in apps that add digital objects to the camera feed on people’s phones or in games such as Pokemon Go.
Mixed Reality (MR)
Mixed Reality combines elements of Augmented and Virtual Reality, allowing users to see and interact with virtual objects that appear to coexist in their immediate space. While Augmented Reality adds to a person’s reality, Mixed Reality blends with it, allowing for interactions that can change how real and virtual elements behave.
Growth and impact of these technologies on communication
The use of these technologies is growing, and with the growth, they significantly impact how people and businesses communicate.
Some of the reasons driving the growth include:
● The ongoing impact of the pandemic. During the pandemic, there was a demand for digital tools that reduced the need for physical interaction. Post-pandemic, the technologies used to keep people safe are still being utilised and adapted in new ways, particularly when remote engagement is required.
● Diverse applications. Initially, these technologies were used primarily in gaming and entertainment. Now, they are being used across industries such as education, healthcare, retail, and real estate to provide enhanced consumer experiences.
● Technological advances. Improvements in VR and AR, combined with more affordable equipment, have made these technologies more accessible and appealing. By 2025, it is anticipated that 43.87 million VR devices will be purchased, which represents a sevenfold increase from 2020.
● Adoption by businesses. Companies increasingly embrace VR and AR to improve processes from staff induction and training to customer service and marketing.
Metaverse marketing
Metaverse marketing is digital marketing that promotes and advertises a brand’s services or products using Metaverse technologies to provide customers with a range of immersive experiences.
Metaverse marketing is not without its challenges; perhaps the main challenge for businesses wanting to invest and take metaverse marketing seriously is the negative impact and financial loss that resulted in 2022 when the initial bubble burst.
However, brands and businesses must reconsider their hesitancy to marketing in the metaverse.
The untapped opportunities of the metaverse
Some statistics that indicate the growth in the metaverse market include:
● Growth in the Metaverse market of 37.73%, resulting in a projected market volume of US$507.8bn by 2030.
● By 2030, the number of users in the Metaverse market is expected to reach 2,633.0m users.
● The average value per user (ARPU) is projected to be US $79.5.
● The Metaverse market is booming worldwide, with countries like the US, China and Japan leading the way in technological advancements and user adoption.
To quote the title of a McKinsey article, marketing in the Metaverse is an opportunity for brands and companies to consider innovative and creative ways to advertise and market their products and services. Now is the time to learn from the excesses and failures of the past, adopt a test-and-learn mindset, begin experimenting, and capitalise on the successes that are occurring.
Marketing in the Metaverse is an opportunity for brands and companies to consider innovative and creative ways to advertise and market their products and services.
Advantages of Metaverse marketing
There are several critical advantages for brands and companies to consider ways they can begin marketing in the Metaverse.
Greater Customer Engagement
Metaverse marketing allows brands to provide consumers with an immersive environment that enables them to interact with the brand more personally and engagingly. Linked to this greater customer engagement is the ability for brands to deliver highly personalised consumer experiences based on the data collected and consumer preferences.
Always Active and provides extended reach
The Metaverse is an ‘always-on’ environment that exists in real-time. In many ways, it is an extension of online commerce, which is now mainstream.
It also enables brands to have a global reach.
Brand Differentiation and showing casing innovation.
The Metaverse allows early adopters to differentiate themselves and showcase cutting-edge ideas and techniques in ways that are often challenging in the traditional market space.
Examples of brands who are exploring how to use the Metaverse.
Brands are exploring this new digital frontier and experimenting with how to use it effectively. For example:
● Companies like Coca-Cola have created branded non-fungible tokens (NFTs) for collection or use within the metaverse.
● Virtual Storefronts. Nike launched its ACG H20 collection in a digitally interactive environment that allowed customers to interact with a digital AR model of the Nike ACG hiker mascot, providing an immersive outdoor experience within the store's confines. This demonstrated brand innovation and the priority of the customer's experience.
● Gucci partnered with Zepeto, allowing fashion enthusiasts to dress their avatars in Gucci’s latest collections, reflecting their real-life style in the game's virtual world. Online identities are as crucial in the metaverse as actual identities in real life because they represent the players’ tastes, identities, and personalities. Gucci capitalised on people's desire for their avatars to reflect their personalities.
● Samsung is among the first brands to use virtual influencers to promote its latest products. Samsung partnered with virtual influencers Shudu and Miquela to promote the Samsung Galaxy Z Flip and the Samsung Galaxy Series.
Shudu is a digital supermodel sought after by brands such as Cosmopolitan, Vogue, and Balmain. Miquela has been featured as one of Time Magazine's “25 most influential people of the internet.”
The popularity of virtual influencers is increasing. A recent report indicated that 77% of Southeast Asians are very or somewhat interested in following virtual influencers, with the most significant interest being in Indonesia, the Philippines and Vietnam.
Currently, the virtual influencer market is valued at $4.6 billion and is expected to see a 26% increase by 2025.
● Pepsi unveiled the Pepsi Smart Can at the Cannes Lions International Festival of Creativity. The can uses a digital screen, movement sensors, and state-of-the-art sound technology to create a “CANvas” for self-expression. Pepsi hopes the ad will foster its fans' passions and be a vehicle for self-expression.
These examples illustrate some of the ways brands are exploring using the metaverse to engage with consumers in new and innovative ways that enable consumers to be involved with their products in ways not possible in traditional marketing. As the metaverse continues to evolve and impact how people use technology, we can expect to see more creative marketing strategies emerge.
Challenges with marketing in the Metaverse
While there are opportunities for brands and companies to market in the Metaverse, there remain challenges that must be thought through and considered. We mentioned above that one of these challenges is overcoming the negative perceptions that remain after the 2022 bubble burst. Some of the other challenges are:
● Technical and accessibility barriers: The Metaverse relies on technologies like VR, AR and MR, which require high-speed internet and sophisticated devices. This can prevent accessibility for people who do not have the necessary technology or connectivity. As the 5G network becomes more accessible, this will assist in overcoming the issue of accessibility to high-speed Internet.
● Privacy and Security Concerns: As with any digital platform, the Metaverse raises data privacy and security issues. Ensuring security in virtual spaces remains a significant challenge, particularly with cybersecurity, data breaches, and identity theft.
● Establishing and maintaining customer trust. While preserving consumer trust and confidence in the traditional market space can be challenging for brands, keeping it in the Metaverse can be even more difficult. Metaverse users need to feel confident in the virtual experience's authenticity and transactions.
● In line with establishing and maintaining consumer trust, there is also the need to overcome consumer scepticism. Consumers need to be convinced of the value and longevity of the Metaverse.
The challenges should not preclude brands and companies from considering marketing in the Metaverse. Many of the initial challenges will be resolved as technologies evolve and develop. Instead, the challenges highlight the need for a test-and-learn mindset, where brands are open to experimenting in the Metaverse, learning from these experiences, and adapting to the evolving landscape.
The Metaverse is here to stay because different industries continue to develop and use its technologies innovatively. Given this, it makes sense for brands to think about and experiment with creative ways to market their products or services using the Metaverse.
