The shape of things to come
The first questions CMOs should ask are: what is the metaverse and what does it mean in business terms?
Broadly, the metaverse is an evolving configuration of virtual worlds that allows people and businesses to connect in real time, forming a new economy that spans the digital and physical. Rather than simply accessing it via laptop screens, it is easy to imagine that, soon, we will be strapping on virtual-reality headsets to engage with this new environment.
Within these loose parameters, however, people are building very different visions of the metaverse future. Today’s disparate platforms – such as Roblox, Decentraland, or The Sandbox, to name just three – may remain discrete within the metaverse or, equally, they could soon converge into one inter-operable open world. Technologies that can transition between these worlds are already emerging, such as non-fungible tokens (NFTs), which allow users to transfer digital clothing or other purchases from one digital realm to another.
However, although such a range of possible futures lends itself to a non-committal, exploratory approach, value for some could lie in the potential benefits of a more active strategy.
Taking an active approach
For CMOs taking a more active strategy, there are three key opportunities.
First is the opportunity to experiment, with purpose. In this way, organizations can quickly build knowledge of what works and what doesn’t, and focus capabilities on the former. Those may be built in house, or by partnering with – or acquiring – digital natives and startups. The German sportswear giant adidas announced its entry into the metaverse by partnering with NFT leaders such as Gmoney and Bored Ape Yacht Club, while Nike acquired digital startup RTFKT, a digital sneaker collectibles site, in December 2021, bolstering its NFT presence.
Second is the impact on brand. The emergent metaverse culture prizes the role of creators, such as artists and designers. For highly innovative brands, an early association with the free-flowing creativity of the metaverse could have long-term value. This is the driver of the fashion sector’s early move into the metaverse, creating NFT-based digital versions of their clothes. March 2022 saw the first ever Metaverse Fashion Week, offering NFT versions of designer wear – and for those nostalgic for more traditional garments, a “physical twin” that can be worn in the real world.
Third, there are opportunities to realize value now, seizing first-mover advantage, which could include elevating the brand or snapping up virtual real estate before the metaverse market booms (one virtual plot in Decentraland sold for the equivalent of $2.4m in late 2021 [Source: Reuters]). Likewise, there are commercial opportunities already available: in late 2021, Dolce & Gabbana sold a collection of nine NFTs for $5.7m, while a digital-only Gucci bag sold for over $4,000.
But are these eye-catching examples of NFT sales scalable or one-offs? And are such hefty price tags for digital goods real evidence of a sustainable shift in business models? When it comes to the digital future, companies should not try to run before they can walk.
Many companies are likely to benefit most from approaching the metaverse not solely as a showcase for extravagantly priced limited-edition items, but as one strand of a coherent brand strategy that can deliver a holistic experience across online and offline spaces.
Consider Nike’s approach. It has already built a significant presence in the metaverse: Nikeland, its site in the gaming-oriented Roblox world, offers a changing menu of free games and the chance for users to equip their avatars with Nike apparel. Since it launched in November 2021, it has welcomed more than seven million visitors (source).
These activities are best seen in the context of Nike’s market-leading omnichannel and e-commerce capability and its world-class digital supply chain: it ranks number two for fashion brands in the Future Readiness Indicator rankings developed by the IMD Centre for Future Readiness.