What Does the Metaverse Mean for the CP Industry?
How should consumer products (CP) companies create an authentic engagement strategy for this next-generation commerce channel?
How should consumer products (CP) companies create an authentic engagement strategy for this next-generation commerce channel?
Several years ago, consumer products brands questioned whether they should engage with consumers on social media. Today, it’s not up for debate: Social platforms are a key part of a brand’s overall marketing strategy—through organic social posts, social media ads and sponsorships through influencers. In 2023, eMarketer predicts that CPG digital ad spend will reach $41.69 billion, higher than every industry except retail. But what about engaging with consumers on the metaverse?
It’s a difficult question for CP companies to answer. Some firms, like Unilever, have already developed many metaverse experiences for different brands, like their Magnum ice cream brand’s virtual museum, as well as their Closeup dental care brand’s “City Hall of Love” for couples who aren’t legally allowed to marry in the physical world.
Other companies have devoted consumer engagement resources elsewhere, given that 60% of people are still unfamiliar with the metaverse, according to Publicis Sapient research. On top of that, Web 3.0 (the next era of the internet, based on virtual reality and decentralization) is rapidly evolving. Is there a rationale for being one of the trailblazers of this nebulous, not-widely-adopted space? Not for obvious reasons.
“Do CPs need to create a Roblox game experience, or mimic what has already been done in the metaverse? No,” said AJ Dalal, Managing Director, Data & Web3 Strategy at Publicis Sapient. At least not yet.
In 2023, CP brands will have the opportunity to meet consumers where they are and plan out a strategy for where they’ll be soon. The key component to success on the digital channels of the present and future? Authenticity, powered by data analytics and internal knowledge building.
While companies should certainly be planning for the metaverse, social media platforms currently provide a better ROI for consumer engagement. According to recent Publicis Sapient research, less than 10% of U.S. respondents use Sandbox, Roblox or Decentraland, compared to 25% of respondents that use TikTok, 42% of respondents that use Instagram and 67% of respondents that use Facebook.
Before investing in consumer engagement in the metaverse, CP companies should re-evaluate their current social media strategy to build connections, express their core values and be more authentic. Consumers will still be looking to connect and transact with brands on these familiar social media for years to come.
“A CP brand shouldn’t invest in the metaverse, or even TikTok, just because it’s in the news or because other companies are doing it. You should invest because you understand who your consumer is, and because you know your consumer is on that platform or going to be on that platform.”
However, the key is not to reinvent the wheel every time a new piece of tech or platform is introduced. It’s important to build out a consumer engagement strategy with enough flexibility that it can be applied to different networks, including TikTok or the metaverse. Rather than redefine a strategy to match a new platform, brands should evaluate how new networks will fit into their current strategy. If your current brand voice on social media isn’t coming across as authentic to consumers, it won’t translate in the metaverse, either.
A large part of the challenge when it comes to building authenticity through consumer engagement is a loss of creativity or a lack of risk-taking. “The most successful ads are the ones that feel the most natural,” said Elizabeth Papasakelariou, Group Vice President of Consumer Products at Publicis Sapient. “A brand will say they didn’t get engagement on the content they planned. And it’s like, ‘This is the brief you gave your creator, and it feels canned.’ You have to give power and freedom back to the creatives.” When brands attempt to mold influencers or creators into traditional advertising spokespeople, consumers will keep scrolling.
Another key aspect to authenticity online is making sure the message, technology and data are working together. The right customers need to hear the right message at the right time through efficient targeting. As CP firms create and manage their customer data platforms (CDPs), it’s essential that marketing teams can take ownership over the data and use it—so that each target demographic is receiving a message that is authentic and relevant to them.
When the metaverse does eventually overtake social platforms as the primary hub for social connection, CPs will still need to let creative teams and influencers guide authentic content, with the proper data management and marketing across channels to back it up. As for right now, CPs can focus on connecting with younger demographics on platforms that are already popular.
Consequently, 2023 is a year for brands to build metaverse and Web 3.0 knowledge and strategy. The first step to preparing for widescale adoption of technology like AR/VR and non-fungible tokens (NFTs) is upskilling employees. Because Web 3.0 adoption remains somewhat low, brands that are investing in knowledge now get the chance to be proactive—rather than reactive—as consumer expectations around the metaverse evolve.
Being prepared for Web 3.0 doesn’t necessarily mean investing heavily in a specific technology company or metaverse platform. In fact, because the space is changing so rapidly, focusing solely on any one application may prove inefficient.
Almost one-third (29%) of consumers expect that brands will instead embed metaverse experiences directly on their owned websites and social platforms, according to Publicis Sapient research. This could include anything from 3D product demos, virtual showrooms and stores or brand experiences created for avatars as part of the typical e-commerce experience. Therefore, a safe Web 3.0 investment for CP companies can be internal—rather than external—to prepare for this change.
“We know in the next five years, a large percentage of graduates will have some type of Web 3.0 training as part of their curriculum,” Dalal said. “If we aren’t creating a culture of innovation around this, then we could lose talented folks to a company that invests in Web 3.0.”
To get employees engaged and learning about future technologies, companies can implement internal Web 3.0 training programs through learning management software. This training can include anything from metaverse to blockchain to cryptocurrency topics that will be standard parts of business strategy in the next decade. The goal is not to create a strenuous or difficult program, but one that employees find interesting and useful. Providing meaningful and ongoing training is a known factor in retaining talent, as well as creating a consistent presence in Web 3.0 itself. This training can cultivate “Early Adapters,” or employees that lead the charge in developing prototypes of Web 3.0 or metaverse experiences—and who will also help guide their peers in learning new skills.
As the space advances and changes, so will the training, and key internal stakeholders can lead the movement. Not only does this opportunity show current employees that your organization cares about innovation, but it also helps attract new employees as well.
Another way that CP companies can be proactive in the metaverse space is by redefining their brand values and purpose in the context of Web 3.0.
While brand values and strategy should show continuity across all forms of media, CP brands need to expand their thinking to accommodate the attitudes of future generations: younger generations. Generation Alpha and Generation Z are growing up spending time on TikTok, Instagram and Roblox, and they don’t necessarily see these platforms as modern or advanced.
“The newest generation of consumers looks at the world differently,” Dalal said. “Older generations see companies like Apple, Google or Meta as innovators. Younger people have seen these companies in control for a long time, gaining record profits. And they don’t see how their life is any better, or see any growth for themselves. So they’re saying: Let’s fix what’s broken.”
Understanding how to develop a strategy for the forthcoming metaverse involves understanding what’s broken about the user experience in Web 2.0—from the perspective of younger generations. Rather than making bets on which metaverse technology company or platform will take off in the next three to five years, CP brands should identify unique Web 2.0 pain points that could be solved with Web 3.0 technology and/or ideas, like VR/AR, NFTs, blockchains or decentralized, autonomous organizations (DAOs).
According to Publicis Sapient research, more than half of consumers (57%) are concerned about their safety and protection—including sexual harassment—on the metaverse. A similar majority (58%) agree that there needs to be a way to verify identity in virtual worlds. Harassment and anonymity are two issues that have been difficult for social media platforms and young users themselves to manage on Web 2.0, and CPG brands should be proactive in their solutions to these problems with their metaverse strategy before they emerge again.
Another key frustration for CP brands and users alike is transparency around customer data. Younger generations are beginning to realize just how valuable their data is to brands, and CP companies are searching for ways to get first-party data themselves without the obstacle of tech conglomerates. More than half (59%) of U.S. consumers worry that their data and information will be collected on the metaverse. While first-party data is a key draw for CP companies creating digital and metaverse experiences, consumers expect brands to do better on Web 3.0.
In response, some companies are looking into a “zero-party” data exchange as part of their Web 3.0 strategy (i.e., an exchange that asks consumers permission for any relevant information and allows consumers to proactively share data). In return, consumers receive some sort of benefit or value for giving brands their information—potentially in the form of an NFT.
Zero-party data can come from surveys, games, questionnaires or loyalty profiles, which could be stored through blockchain technology. Customers could earn rewards by providing their information to brands—all within an interactive online environment.
“You can provide rewards and utility for engaging in metaverse experiences,” Dalal said. “Not just for a limited time. Make the experiences decentralized, available and open for anyone.”
It’s important to recognize the shift in audience demographics for the metaverse when determining what type of experiences to invest in. The average age of a metaverse user is anywhere from 16-27, and while experts predict this pool of users to increase drastically, adoption will be much higher among Generation Z and below.
This age group is incredibly values-driven, persuaded by social proof and looking for personalization. Hence the reason why many consumer products brands are looking at gamification as a foot in the door to these virtual worlds. According to research from Publicis Sapient, 29% of U.S. respondents between ages 18 and 34 are interested in playing video games in a metaverse space.
Before designing a Web 3.0 experience, like a virtual game, CP companies should decide on their brand values, how they fit into their metaverse and Web 3.0 strategy and how they play into expectations and attitudes from younger demographics. Then, they can use that strategy to inform the experiences they create.
“Values in the metaverse should be a lot more organic, you will already see inclusivity built in from the start. Right now, a social page is only for this group, or only for that group. The metaverse going to be open to all, and I think that’s the biggest difference.”
For Gen Z, inclusivity is important, and that doesn’t end with diversity in marketing campaigns or events for marginalized groups—it even extends to ownership and inclusion within brands’ Web 3.0 strategies themselves.
“The current Web 3.0 community is very passionate,” Dalal said. “And Web 3.0 is being built on the principle of decentralization. Companies should be transparent in sharing their Web 3.0 roadmap with their community.”
As companies begin to build out and publicize their metaverse and Web 3.0 roadmap, two very important questions surround value generation: What new revenue opportunities can the future internet provide for CP firms, and which use cases should brands be focusing on?
An interesting and unexplored opportunity for many companies is digital asset, or NFT, sales. Younger generations are more open to acquiring digital assets—which are much cheaper to create and sell—than ever before. When it comes to ongoing supply chain challenges, digital assets don’t require the same resources that traditional physical assets do.
However, many CP companies can’t just create exact digital replicas of their physical products. While many food and beverage brands have already filed for trademarks for digital candy, chips and other snacks, it’s unclear how users will interact or whether they’ll purchase virtual items, especially food. Thus far, only 19% of U.S. consumers from age 18-34 have gone shopping in the metaverse, compared to 27% that have played games, according to Publicis Sapient research. The digital asset market is a high-growth space for brands to experiment with, but in these early stages, CP firms shouldn’t rely on revenue from direct digital asset sales.
“CPs shouldn’t think of the metaverse, or any social media, as purely a commerce channel,” said Saba Arab, Managing Director at Publicis Sapient. “It’s a marketing and buzz channel, and it’s about building the followership and the love.”
Instead of pivoting straight to commerce in the metaverse, some brands are using it to build brand engagement and awareness, similar to building engagement on traditional social media.
Heineken, for example, chose to ironically launch a new beer product in Decentraland, playing on the fact that it can’t actually be consumed in the metaverse. The brand didn’t sell digital assets, but the successful campaign generated traffic and buzz around the accompanying physical product.
Unilever experimented with a virtual “Metathon” event in Decentraland for the Rexona deodorant brand. However, rather than create digital assets of their new adaptive deodorant sticks, they designed digital wheelchairs and running blades for metaverse avatars.
This new potential for a revenue stream from digital assets presents a challenge for brands: What new digital assets can your brand provide that consumers gain value from? For example, a diamond jewelry company might not create exact replicas of diamond earrings. Instead, they could sell diamond tattoos for metaverse avatars. The exact possibilities and plans will vary depending on each brand’s values and authentic strategy.
In 2023, companies can prepare for or test digital assets while understanding that until the metaverse is widely adopted, most customers won’t be motivated to purchase virtual products. According to Publicis Sapient research, only 11% of consumers ages 18-34 are currently interested in purchasing NFTs in the metaverse. However, when asked about experiencing a vacation destination, attending events or interacting with friends and family, 20% or more of those consumers want to try these things virtually.
Brands have an opportunity to expand past the trend of virtual games to capitalize on new activities to build buzz and gain insight into what customers want in the form of digital assets.
“In 2022, we saw a gold rush of companies launching non-fungible tokens, or digital assets, and a spike in value,” Dalal said. “But now, brands are realizing that they need to offer some type of utility or value propositions within NFTs that answers the question of, ‘Why should I own this?’”
In 2023 and beyond, metaverse platforms will continue to host events like the “Metathon” and other one-off games, but they’ll also become home to larger, long-term retail shops, giving CPs a chance to create activations and partnerships within them.
According to Publicis Sapient research, 17% of U.S. consumers ages 18-34 want to visit their favorite brand’s virtual store in the metaverse. Now is the time for consumer products brands to incorporate collaboration into their Web 3.0 strategy. “How will they create their own positioning within retailer worlds? How will brands play along? These questions are really exciting,” Papasakelariou said.
For example, Carrefour and P&G collaborated to create a game in P&G’s metaverse called "LifeLab" featuring the Mr. Clean mascot. The experience allowed users to compete to clean different areas of a virtual home using P&G products to win a coupon.
While this was just the start of the companies’ experimentation together, the partnership demonstrated what a future retail experience could look like. Just as CPs and retailers connect and share data for social media campaigns or retail media networks, similar opportunities for collaboration are being built for the metaverse. However, CPs can see the metaverse as a clean slate—and an opportunity to build new ways of working from the ground up.
“How will you share data within new ecosystems and decide what the role of the CP is versus other players? You need to begin building technology to enable that.”
As CP brands create new metaverse experiences, Web 3.0 strategies and upskilling programs, they can recognize that this new world isn’t predetermined by old rules, and that authentic brand values combined with customer-centric principles can be built in from the start.