Table of Contents
Appendix
🗺️ Infographic PDF
Credit
Student: Sophia Fairbairn (Master of Management and Technology)
Supervisor: Prof. Dr. Isabell M. Welpe (Chair for Strategy and Organization)
Introduction
- This exploratory multiple-case study analyzes six semi-structured interviews with both brand and agency side marketing experts to identify the marketing strategies being used with web3 technologies by mid-large B2C firms, and how web3 is influencing them. Focusing on NFTs and the metaverse because those are the technologies they have experience using
- The research in this area has been largely conceptual and predominantly focused on use-cases and applications around BCT, the implications of it on consumer-brand relationships, the benefit and value of it from the brands perspective and from the consumers perspective, and more broadly the implications of BCT on marketing. The emphasis has been predominantly been on BCT in marketing in general rather than on specific element such as NFTs, and only one study covered marketing in the metaverse
- No research has yet addressed the strategies being used in web3, and if mentioned they were used as arguments to support specific web3 use-cases in marketing
Research Questions
- What web3 marketing strategies are B2C companies using?
- How is web3 influencing marketing strategies?
Definitions
Web3 denotes the third iteration of the internet operating through decentralization. It is a combination of BCT based assets including cryptocurrencies, tokens, and NFTs, and it is important to note that web3 makes up the infrastructure of the fast-emerging metaverse
The concept of the metaverse is the vision to reimagine the internet and its services as a physical three-dimensional space for us to navigate through our avatars
Blockchain technology (BCT) is a cryptographic, append-only decentralized ledger in which interconnected timestamped blocks of data are stored by maintaining integrity in a distributed peer-to-peer system that consists of an unknown number of peers with unknown reliability and trustworthiness
Non-fungible tokens (NFTs) are inherently unique, and their properties can vary vastly. They can represent digital, unique, and scarce assets, such as art and other collectibles or real estate
For this paper we use Varadarajans’ definition where “marketing strategy refers to an organization’s integrated pattern of decisions that specify its crucial choices concerning products, markets, marketing activities and marketing resources in the creation, communication and/or delivery of products that offer value to customers in exchanges with the organization and thereby enables the organization to achieve specific objectives.”.
There has been much debate in the literature around what marketing tactics are; for this paper marketing tactics are in general less strategic in nature, and are defined as being more on the operational level. According to the Oxford Dictionary, tactics describe a set of actions to achieve a specific outcome in order to achieve the strategy which is overall action plan.
Key Findings
Motivations to use web3 in Marketing
Brands are mostly motivated to use web3 technology in marketing because it is cool, hyped and a major trend – it has become the place brands want to be. Web3 gets a lot of press coverage because of the first point, so by using web3 in marketing brands can become a part of that conversation.
This provides important context for where we are in the adoption phase of web3, and explains why it is used in so many campaigns right now which is another key motivation.
Strategy
Campaign Driven vs. Long-term & Ongoing
A dichotomy emerged showing marketers are taking one of the two following approaches:
Campaign Driven
They use web3 technology in a time limited campaign and:
- Usually do not have any plans for continual engagement with their NFTs or the holders after the campaign
- The technology is used as a tactic to support, for example, a branding strategy
- They’re leveraging the medium, because they want to be associated with what is currently a new, innovative and modern channel or to get PR exposure
- Want to put their products in a novel space such as the metaverse
Longer-term & Ongoing
They look at ways web3 technology can:
- Add value to the business through a web3 technology use case, and create business transformation opportunities
- Think about how it could impact business continuity and longevity in the long term
- Strive to understand the behavior of the web3 community to inform their longer term web3 projects
- Undertake a more strategic and integrated thought process around their purpose, and what the project will mean for their brand, as well as sanity checking it to make sure that their approach makes sense, instead of rushing into doing something that isn’t underpinned by a wider strategy
Important web3 Marketing Techniques
☑️ Authenticity Brands need to engage with web3 in an authentic way which makes sense for the brand thinking about fans and experiences, rather than just consumers
👥 Community Brands must respect the communities in these spaces, ensure their messaging is resonant, and manage their web3 community of the space they are joining
🔄 Two-way value exchange Give value back to the community, and to fans of the brand in return for engaging with the brand in these spaces
🛠️ Utility Is a useful mechanism to give a token or NFT a clear purpose and value e.g., memento, grant special access, freebies
🎮 Gamification Creates repeatable, continuous scenarios where brands can reward fans
🗨️ Engagement web3 technologies are providing new ways for brands to engage, communicate, and incentivize their consumers
Brands face a range challenges using NFTs and the metaverse
NFTs
- NFTs raise legal issues because they are a new unfamiliar topic and can be complex when multiple jurisdictions are involved. The smart contract behind it also needs to be configured in such a way to protect the IP of the company
- They present financial risks because cryptocurrency is often needed to buy them, they can be volatile, they are targeted by scams, and if a brand wants to trade in a cryptocurrency, they will need to hold this on their balance sheet
- The wallet user experience, required for NFTs, can be complex
Metaverse
- Technical limitations can result in the space crashing or lagging. These worlds are not interoperable and don’t follow a uniform set of standards, it can be challenging to make aesthetically pleasing experiences, and measurement lacks granularity
- For the user experience, there is a trade-off between the aesthetic and the level of control of the experience – it is dictated by the platform
Brand Risks were present for both technologies
- For the Metaverse, some platforms experience poor performance and lag, you need to consider if you want to associate your brand with certain platforms from a branding perspective, and mass communication in these worlds can be challenging
- For NFTs, you need to think about how eco-friendly the chain is from a branding standpoint NFTs have negative perceptions around being volatile, scams, and overpriced thus making some consumers nervous
Common legal risks
- You need to think about how you mitigate the risk of fraud, and ensure your firms IT and data is secure
Onboarding your Brand into web3
- Brands are already onboarding consumers into a wallet experience using web2 signup methods with email, and enabling payment via credit card
- The method of direct communication in Web3 will likely exist between wallets
- Agencies are also onboarding brands by providing full agency services around a closed NFT marketplace that eases marketers' fears around scams, and provides an easy way to onboard their consumers
- Agencies sometimes have a dedicated team of web3 experts / natives allowing them to harness their knowledge of web3 communities
- Entering web3 requires requires multiple stakeholders to be involved, especially legal, thus it is important to bring them in early
Web3s’ Influence on Marketing Strategies
As of now, because we are still in a phase of experimentation it is not yet possible to determine how web3 technologies are influencing marketing strategies:
We're not at a place where when you talk to marketers, they're really looking at it strategically and objectively across a broad range of, you know, how does this influence my strategy overall. This is an experiment for them, right now, they'll figure it out [and] we'll help them.
Agency Professional
Contribution to the Practice and Theory
📚 👩🏫 Theory
this research makes a first step into expanding the empirical research in both the web3 and marketing field by highlighting important techniques being used, the two main approaches brands are taking to marketing in web3, brands motivations, and challenges
💼 👩💼 Practice
For the practice, it presents professionals in marketing and advertising with an overview or important techniques and challenges they should consider in their web3 marketing planning, as well as an understanding on the motivations driving brands to use web3 to help inform their campaign objectives