Airship

Metaverse 101

David Murphy

The metaverse is upon us and attracting more interest and investment with every passing day. So what’s all the fuss and excitement about? David Murphy investigates.

It’s been lauded as the next version of the internet, a place where all brands need to have a presence – and many already do – and a place where people will be able to meet, work, train, play and socialize with friends and work colleagues from all around the world, without leaving their bedroom. It is, of course, the metaverse. But what exactly is the metaverse, and is the current excitement around it justified?

Before we address those questions, it’s perhaps worth noting that the metaverse is not the new, new thing many people make it out to be. Yes, most of the current hype can be traced back to last October, when Facebook changed its name to Meta. But it’s worth mentioning that some of the major metaverse players have been around for some time. The first iteration of Decentraland launched in 2015, Roblox appeared on the scene in 2006, and Second Life made its bow almost 20 years ago in 2003. And in the immediate hype surrounding Second Life’s launch, just as now, the received wisdom was that every brand needed to take it seriously and have a presence on it – I know this, I was there – something which relatively few did, with arguably no harm to their business. So why should things be any different now?

The metaverse defined
Well, it might help to answer this question if we have a better understanding of what the metaverse is, so let’s start with an attempt to define it. Adipat Virdi, a Partner at Harbour Immersive, describes the metaverse as: “an evolving network of immersive environments, which can be experienced IRL (in real life) digitally, or virtually. Imagine a 3D website that your ‘digital twin’ will get to walk around and experience. But if you take away the tech element of it, the metaverse is, essentially, an ecosystem to bring content, consumer and brand closer together.”

Csaba Szabo, MD EMEA, at Integral Ad Science (IAS), believes there will be many iterations of the metaverse as it develops over time, but that what will unite them is a blend of cutting edge visual and audio technologies to build immersive worlds for its users to create and interact with other users and brands.

“While at the moment its most utilised environments are games such as Roblox and Fortnite, with the more widespread adoption of VR (virtual reality) and AR (augmented reality) these spaces will become a far more integrated part of our everyday life,” he says. “Speculating what exact shape it will take is tough, but it is already clear that this is going to be an incredibly important ecosystem as we move from Web2 to Web3.

For Andreas Soupliotis, CEO of Hivestack, the metaverse is a simulated universe that runs parallel to our real, physical universe. “In the physical universe, our five senses experience the world through our bodies. Instead, in the metaverse, consumers experience a virtual, parallel universe via their avatar entity that is your counterpart representation in the metaverse,” he says. “Just as we shop in physical and online spaces, attend live music concerts in physical venues or watch them streaming live online, and buy or rent finite-supply real estate, our avatars will shop in carbon copy versions of retail stores, attend concerts in the metaverse alongside other avatars and even buy or rent finite supply land in meta verses that are being built.”

Other commentators, however, believe it is still very much a work in progress. “Today's metaverse is an idea that's still being tinkered with, with the vision of a network of interoperable 3D worlds where netizens will go from surfing the web to being immersed and traversing the web with newly minted metazens,” says Nirish Parsad, Head of Emerging Tech at Tinuiti. “Fully realized, the metaverse is a combination of several technological innovations that all operate seamlessly together. Some of these technologies include blockchain, cryptocurrency, NFTs, virtual reality, augmented reality, and mixed reality (VR, AR and MR).

And Brian Bowman, CEO of Consumer Acquisition, has serious doubts about the metaverse being truly open for business anytime soon. He says: "The metaverse is 10-20 years away due to challenges with access (e.g. poor 5G wireless across the country), and mediocre computing power in mobile devices (eg, devices that aren't capable of real-time volumetric 3D rendering). For Snow Crash or Ready Player One worlds to be a reality, we're years and years away from achieving the tech innovation necessary, along with massive investments needed for both tech companies and consumers to access and adopt.

“Additionally, 3D poses key challenges to navigation and usability – think back to the hype around VRML and why that failed to gain traction. The metaverse sounds great as the future of consumer experiences, but like virtual reality, it is going nowhere fast."

A bit of a messyverse
And Ben Richards, Chief Experience Officer at VMLY&R, says: “The vision for the metaverse is pretty amazing – it’s an expanse of persistent virtual and semi-virtual worlds interoperable with each other and accessible to everyone. However, currently, it’s a bit of a messyverse. At the moment it’s multiple corporations and start-ups fighting for ownership across different platforms. For us to move in the direction of reaching the vision promised we need these players to align their languages and experiences so they are seamless for the consumer. If the metaverse truly is for everyone, brands need to make it so.”

In this respect, Richards may be encouraged by last week’s announcement of the formation of the Open Metaverse Alliance for Web3 – OMA3 – to jointly address the industry’s interoperability challenges.

OMA3 is a consortium of leading blockchain-based platforms for the metaverse and Web3, including Alien Worlds, Animoca Brands, Dapper Labs, Decentraland, Decentral Games, SPACE, Superworld, The Sandbox, Upland, Voxels, and Wivity.

At launch, OMA3 said its mission is to empower a metaverse without restraining walls, where individual platforms are interconnected and interoperable. Its core principles are based on transparency, inclusiveness, decentralization, and democratization. It also said that it would be established as a Decentralized Autonomous Organization (DAO) to ensure a governance system that is transparent and user-centric.

The organisation will focus its efforts on opportunities and challenges that arise specifically from metaverse blockchain-related topics such as standards for Non-Fungible-Tokens (NFTs); protocols; transferable identity; portals between virtual worlds; mapping; and indexing. It said it intends to join the recently announced Metaverse Standards Forum to participate and contribute to the general standardization work of this broader group, as well as other standards groups that are working on relevant topics for the metaverse.

Hype or hope?
With any new tech that comes seemingly from nowhere, there is usually a disproportionate amount of excitement and hype. What Gartner, in its ‘Hype Cycle’ terms the ‘Peak of Inflated Expectations’ followed almost inevitably by the ‘Trough of Disillusionment’. So is the hype around the metaverse justified?

For David Ripert, CEO at Poplar Studio, the answer is clear. “Definitely,” he says. “Metaverse-related technology including VR, AR, MR and Blockchain/Crypto, among others, are already disrupting several major industries, including on the enterprise side, with wide adoption beyond what seems to be limited to gaming on the consumer side: Aerospace and Defense, Automotive and Transportation, Healthcare, Energy and Utilities, Oil and Gas, Agriculture, Residential and Commercial, Retail and Consumer Goods, Telecommunication, etc.

“Use cases include training, simulation, planning, industrial design, automation, etc. which already make corporates using the technology more efficient and ROI positive, (while) on the consumer side, metaverse gaming platforms like Roblox are seeing 190m average monthly players, particularly on the younger user side, and a large number of top international brands are experimenting with presence on these platforms. The financial impact for these brands is not comparable to their real world counterparts, but there is clear recognition that it is critical to start building their metaverse capabilities now.”

Ripert adds that IMARC Group expects the ‘digital twin’ market to be worth $54.6bn (£45.6bn) by 2027, exhibiting a CAGR of 31.7 per cent between now and then.

Rolf Illenberger, Founder and CEO of VRdirect, accepts that the media buzz around the metaverse is in part hype, but adds that it is clearly not hype in terms of actual technology development, adoption and investments flowing in to metaverse-related technologies such as VR, AR, XR, Voice, Cloud, Edge and Blockchain. “In fact, there has probably never been a time, where such an amount of investment by the biggest (tech) companies of this globe were poured in the advancement of one technology vision,” he says. “To downplay the metaverse as hype would be the same as asking if the ‘Smartphone hype’ is justified just after Steve Jobs has presented the first iPhone. The metaverse will be the future of technology and ultimately disrupt the way we are commonly using technology today.”

For Ken Weiner, CTO at GumGum, whatever the level of hype, brands should approach the metaverse just as they would any other channel. “Brands should always be looking for ways to reach consumers, so they should be experimenting as the metaverse evolves to stay ahead of the curve,” he says. “I wouldn't worry about being perceived as jumping on the bandwagon. I would focus on whether there are consumers to reach, how much it will cost to reach them, and whether or not ROI can be measured.”

And Ben Putley, CEO and Co-Founder at Alkimi Exchange, notes that there is already a cohort of digital natives making these spaces their own and exploring the possibilities that they offer. “Many are even beginning to carve out careers from the skills they have attained in these virtual worlds,” he says. “As more and more people flock to metaverse worlds, build communities of their own and spend money on exclusive characters, items or areas, brands and advertisers will have to follow.”

Hivestack’s Soupliotis believes the hype is justified, given the ferocious battle brewing to own the metaverse space. “Today, the main outlet for experiencing the metaverse is through Oculus Quest glasses from Meta,” he says. “These will get smaller, lighter, and I personally believe other great hardware companies like Apple may release beautiful, lightweight VR glasses in the future. The battle will be for the App Stores. Today the Oculus App Store is how most metaverse apps are delivered. But if Apple launches glasses, they will launch with an Apple VR App Store. The fight will be on as to which ecosystem will be garnering the highly coveted App Store tax that has made fortunes on phones.

“I believe that whoever will build the most beautiful glasses with the best hardware: resolution and frame rates and audio will win – and that company will dominate the metaverse app store ecosystem. I see a world where Android, Meta, Microsoft, and Apple all have glasses with their own Metaverse App stores, ferociously competing for app developers to build apps on their APIs and stores.

“So is it worth the hype? Absolutely! If I am right that giants like Meta, Google, Apple and Microsoft will get into this business, you can expect the innovation to advance at a ferocious pace. 2023 could become the ‘war of the metaverses’. Each of these players will try to achieve ‘metaverse vendor lock-in’. May the best hardware and app store ecosystem win!”

Getting it right
So if you accept the hype is justified, how, as a brand, do you approach the metaverse, and your part in it? Danielle Gale, VP of Partnerships at AudienceX, believes that brands need to examine the different options available and understand how their current audiences are playing within these new ecosystems.

“There isn’t a single metaverse yet and all these separate ‘small-M’ metaverses aren’t cross-collaborative, meaning that efforts brands and agencies will develop for metaverse-style engagement will need to be replicated across the different ecosystems,” she says. “The metaverse is rapidly becoming a new buzz-term, and brands need to think long about their strategy and budget, before they look to immersive experiences and potential NFT plays to increase membership loyalty and engagement. What is true is that these digital worlds will be native to younger audiences as these younger audiences are less likely to purchase products and assets IRL. Everything will be digitally owned and enabled.”

Sarah Leccacorvi, Head of Content and Creative at Havas Entertainment, says the first question she asks any client who has an appetite to explore this new frontier is ‘Why? “Whilst I talk positively about its bottomless opportunity, we also have to ask those more difficult questions to make sure it’s the right decision to make,” she says. “Does it marry with your brand values? Is the CFO on board? Is it a vanity job? Did the idea come from the CEO’s teenage son or daughter? Yikes…

“For us, approaching a metaverse brief is very different from tackling a campaign brief. You need to either put a stake in the ground, think long-term and build a business proposition around that, or you simply put a toe in the water and treat it as a test bed, from which to learn from and hide in your training budget. Gaming is the most developed area, so it’s a good place to start. Either way, you must think about the financials beyond FTEs and hard costs, and consider accessibility, operability, and sustainability.”

Not forgetting brand safety. For IAS’s Szabo, this is as important in the metaverse as anywhere else online. He says: “As with all emerging spaces, brands need to consider the safety aspects of metaverse spaces before diving straight in. These hyper-visual, highly interactive spaces can pose many problems in terms of brand safety, and no company wants to start its metaverse journey off on the wrong foot.

“One way to negate this is considering the exact spaces ads are being placed in, deciding whether they are both relevant and suitable. AI-powered brand safety and suitability solutions can be a tool in achieving contextual ad placements, rapidly ingesting the nuanced signals that these hyper-visual environments present. Not only will this ensure safer placements, but they will also let advertisers better reach their target audiences and make the impact of their creative even greater.”

Emma Lacey, SVP EMEA at Zefr, agrees. “The main challenge for marketers will be establishing brand safety and suitability regulation in this widely unknown space,” she says. “The risk is that brands could enter the metaverse without considering what controls exist to protect their reputation. Marketers will need to apply the same measurement and verification rules and taxonomies to their advertising as they do in the real world, which will in turn foster a new wave of technological innovation to help them achieve this.”

Tom DuBois, Chief Product Officer at Remio, meanwhile, believes that any brand targeting young adults needs to be involved in the metaverse now.

“Young adults are connecting and socializing in immersive computing environments now, whether that's Roblox or Fortnight or on the Oculus,” he points out. “But, you need to do it in an authentic way or it can seem like you're just jumping on a trend. Take the time to understand this new media environment to make sure your brand is represented in an authentic way.”

Endless possibilities
Jenny Stanley, MD at Appetite Creative, believes the possibilities for how the metaverse can be harnessed by brands are “endless”.

She says: “Decentralised finance (DeFi) is an emerging financial technology based on secure distributed ledgers similar to those used by cryptocurrencies. The system removes the control banks and institutions have on money, financial products, and financial services putting it directly into the hands of the customer and brand. It creates an economic ecosystem anchored in blockchain usage, with tokens as payments and NFTs playing the main role..

“Brands can incorporate NFTs to make their loyalty programs more interactive, engaging, and, because the ledger is built on blockchain technology, 100 per cent trackable and less open to fraud. NFTs can be just about anything. Any digital form of media including images, music, videos, a game accessory, or concert ticket. They can also be used to benefit NFT holders by giving them access into any given project or community. For example, the NFT could be a simple ‘VIP pass’ into a community.”

And in the metaverse, she says, experimentation is to be encouraged.

“There are so many options – it’s worth picking a few and trying them out,” she says. “For example, we’re seeing requests to create shopping experiences in the metaverse. Brands are looking to enter a virtual reality shop to browse items and try on clothes etc. It creates an interactive shopping experience rather than just an ecommerce site. 

“Another popular option is to create a company trade zone or a branded custom marketplace. Perhaps you want to build an exclusive club, start a loyalty club or have a company or brand reward system for so many years or service, purchasing a particular item or comparing a particular achievement.”

Tinuiti’s Parsad offers this advice for brands looking to create great metaverse experiences: “We're in the pumpkin-spice era hype cycle of the metaverse. Many efforts feel forced and tacked on. But there are good ideas brewing. If you think of the metaverse as a place where people hang out, start by examining what you can offer in the existing metaverses vs creating your own world. Talk to creators and influencers who hang out in the metaverse who have a following and know their audiences – this is where authenticity is key, and the metaverse was built for creators.”

For Ed Delfs, CMO at Adriel, brands’ approach to the metaverse should be informed by their real-world brand values. He says: “Given its newness, all metaverse strategies by definition will be experimental and risky, so more conservative brands may want to let more experimental brands take the lead and make their mistakes and then learn from those mistakes.

“Red Bull should go nuts as its customers expect innovative, forward-looking branding and any backlash over poorly-produced experiences will be limited, while Citi should hold back and take a watch and learn approach as their brand risk is much higher. Another risk is that there will be countless charlatans popping up claiming to be experts in developing metaverse experiences so brands should select their agency or development partners very carefully. Lastly, the development costs will be massive so these should be mapped, like every other form of media, against total targeted audience size. It’s hard to see the math working out in the early going.”

Thomas Bedenk, VP Extended Reality at Endava, believes it would be a mistake for brands to completely transform their entire business to accommodate the metaverse. “Rather, they should consider how implementing the metaverse can support, and augment, their current digital approach,” he says. “Given the rapid rate at which the metaverse is developing, such sweeping, ‘one-and-done’ metaverse initiatives are likely to end in a disappointing fashion, rather than success.”

And Poplar Studio’s Ripert believes bricks and mortar retailers should be thinking about how to connect the in-store and metaverse experiences. He says: “In the future, a physical retail store might have volumetric cameras that can capture the customer and create a very realistic avatar of them. Customers could then use these avatars, which will have their exact measurements, to try on clothes and other items without leaving their homes.

“I expect to see the forward-thinking physical retailers making a push to amalgamate physical and digital experiences, like adding magic mirrors or virtual rooms in-store. Otherwise, they’ll be at risk of becoming a relic of the past.”

The here and now
So much for the advice, which brands are doing good stuff in the metaverse right now? Niklas Bakos, Founder and CSO at Adverty, says he has enjoyed some great metaverse experiences. “One of the best is the Vans Skatepark in Roblox,” he says. “Vans have had an audience in skateboarding and extreme sports for decades, and they’ve built their world so well, it sees four times as many players as the Nike world does. Another fantastic example was the Charli Cohen x Pokémon collaboration from Selfridges, a digital shopping experience in a virtual world that was tied to a physical clothing collection. Those were two cool and immersive experiences where you could explore and unlock elements, where players are rewarded for interacting with the brands.” 

David Berkowitz, SVP Corporate Marketing and Comms at Mediaocean, believes entertainment brands are a natural fit for the metaverse, aiming to deliver the most immersive experience possible, while gaming brands have set a precedent for virtual experiences.

“More recently, we’ve seen the likes of Snapchat introduce even more powerful AR capabilities and Spotify enter the metaverse with its launch of Spotify Island,” he says. “But beyond this, retail brands like Nike have come to the fore, seeing great success with their metaverse excursions and collaborations. The space will see rapid innovation, as other high-profile brands and industries follow suit with their own innovative ventures but, more crucially, it will increase marketer’s awareness of the deepening gap between our old conception of marketing and how it must function in this new world.”

Poplar studio’s Ripert quotes several good examples, including Levis and Ralph Lauren, both of whom have released a line of virtual clothing for Bitmojis that people can also buy in real life; Nike’s launch of virtual stores; Harrods creation of an immersive online space to celebrate the release of Burberry’s Olympia bag; Hermes’ release of a digital NFT of a handbag to be used in the metaverse; and Balenciaga’s GTA-esque game, produced to launch its Fall 2021 collection, plus many more.
Havas Entertainment’s Leccacorvi references Elvis On Chain, a multi-metaverse NFT project commissioned by Elvis Presley Enterprises. It enables like-minded Elvis fans from across the globe to meet and hang out, and experience rare concerts and generative collections. Next in line will be access to play-to-earn games, Elvis avatars, wearables and iconic collections.

And Appetite Creative’s Stanley points to the island resort of Sentosa in Singapore, which reacted to the pandemic and lockdown by creating a virtual version of the island in the game, Animal Crossing, giving consumers a feel for what the island has to offer in order to encourage visitors post-lockdown.

But Adriel’s Delfs is not convinced everyone – the fashion brands in particular – are getting it right. He says: “I see most current branded metaverse experiences as reflections of the visions of creators in the gaming and animation spaces rather than true reflections of a brand’s ethos. In my personal opinion, luxury brands like Gucci and Louis Vuitton aren’t doing themselves any favours by creating cute little animated worlds into which they are awkwardly embedding their highly esteemed brands. On the other hand, Vans or Lego launching a virtual skatepark on Roblox makes much more sense than Gucci doing the same.

“It all comes back to audience size and engagement, and with attention spans shortening there will also be a disconnect between these deep, immersive experiences and consumers interest and ability to sustain interest in them. That said, if a deeply immersive experience connects with some segment of a brand’s target market and they are able to capture data to retarget those potential customers, move them through a brand journey and convert them to customers then I say go for it!”

Despite Delf’s concerns, there does seem to be a great deal of enthusiasm among businesses for the metaverse. For a recent study on Disruptive Technologies commissioned by Wunderman Thompson Commerce & Technology, Censuswide surveyed 600 senior decision-makers and leaders in digital commerce, marketing and IT, equally split across the UK, US and China. 85 per cent of respondents said that cutting-edge technology like the metaverse would be essential to their businesses in the next two years, helping to unlock new revenue streams and future-proof their companies.

And back to that question of hype, in conclusion, Adverty’s Bakos believes it’s not about whether the metaverse is worth the hype now, but whether it will ultimately be. “The more hype that gets drummed up, the faster the metaverse will evolve,” he says. “The excitement we’re seeing and the money that is being invested from companies such as Meta, Google and Apple facilitates more development to reach the full potential of what the metaverse can be. The emerging metaverses we’re seeing today all have dreams of being the grand concept we want in future, and we’re getting a taste of what that might look like. That’s the real excitement.”

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