Metaverse 101 for the CPG Industry
Do you have your metaverse strategy in place? Before we know it, the metaverse will be the real world. Even Mark Zuckerberg believes “the metaverse is the next chapter for the internet.”
Did reading that just give you a slight bit of heart palpitations?
Do you hear the buzzwords web3, crypto, blockchain, NFTs, and/or metaverse and instantly think how far behind you are?
Don’t worry, I’m right with you at times.
- I hear people are getting married in the metaverse.
- I hear people are holding business meetings in the metaverse.
- I hear people are spending millions to acquire virtual real estate in the metaverse.
- I hear people are collecting digital art to I assume hang on the walls of their virtual real estate in the metaverse.
Even the biggest technology company in the world (aka Walmart) is quietly preparing to enter the metaverse. No…it’s not that 2017 Walmart virtual reality shopping video which has been circulating around the Internet lately!
And last but not least (because it was likely the most eye opening for the mainstream public), Facebook changed its official business name to Meta. That announcement almost instantaneously made the word metaverse shoot up the Google search rankings, thus making it one of the biggest topics in business today.
But does the metaverse actually even exist right now?
Metaverse Basics
So, I guess I should take a few giant leaps backwards and start with defining what a metaverse even is…
While definitions of the metaverse are changing constantly, I’ll utilize maybe the most widely cited definition by the venture capitalist Matthew Ball.
“The Metaverse is a massively scaled and inter-operable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”
The word itself was coined by author Neal Stephenson in the 1992 science-fiction novel “Snow Crash”. In the book, he implies that it’s not just one app, device or experience, but an overarching system of apps, devices and experiences.
Don’t Worry Metaverse Beginners
Regardless of what definition you accept, they both hold a key distinction into why I’m saying the metaverse is coming and not that it’s already here, despite almost everything virtual suddenly being called the metaverse.
These virtual experiences are actually just complex virtual walled gardens. Let me explain…
Say you’re in the Nike fitness experience within Roblox. While that’s happening, you get motivated to physically take your workout up a notch. Right now, you wouldn’t be able to seamlessly start using your Peloton in Roblox while also having a “gym meetup” with your friend that’s using a Oculus VR headset to enjoy a gamified boxing workout.
To make this happen, you’d need interoperability (or the working-together) of many virtual worlds. This is the missing piece that might be tough to overcome. Getting rival companies to merge their products into a single metaverse would require a level of cooperation unseen by today’s technology gatekeepers.
To get around the insane thought that the likes of Facebook (I mean Meta), Google (I mean Alphabet) and Amazon (I mean yeah they are still Amazon only right?) must work together on the future of the internet, many futurists have pointed to the blockchain as being the answer. That might work out in the long run, but that idea has its limitations right now.
What I do know right now is that this idea of the metaverse is still very early and a constantly moving target. I can also say (in early-February 2022) that we collectively know very little about the metaverse compared to what we don’t know yet.
Metaverse Conditioned
What you shouldn’t do though while reading this is quickly dismiss these current metaverse concepts as novelties. You might be thinking your target consumers are not interested or even ready for the metaverse. I think that’s a bit shortsighted because through endless work meetings on Zoom or family chats on FaceTime, the “COVID-19 Effect” gave everyone a taste of a blended reality future.
Yes, all these technologies existed well before the pandemic, but not with widespread adoption. Whether everyone realizes it or not, virtual worlds have become part our daily lives.
Metaverse & the CPG Industry
While going all-in on virtual worlds might not be the best use of today’s company resources, there are a number of areas that provide emerging opportunities for CPG brands.
1/ Attention
This one is pretty easy to understand because I think everyone agrees now that we live in the attention economy. Attention is a resource, and a person has only so much of it. In the competition for attention, wouldn’t a CPG brand want to engage where its target consumers spend time, physically and digitally? If users are leaving web2 platforms like Instagram or Snapchat to instead converge within a virtual platform, it only makes sense that CPG brands should follow.
The fact is, standing out is never easy. It’s become even more difficult recently in our world of media abundance. The metaverse can be a dreamland for those who need to differentiate or stand out in their consumer category. Options are endless, and the CPG brands that think and act the most creatively will find themselves earning the attention and admiration of consumers in the metaverse.
2/ Digital Goods
Consider the physical world social construct that your clothing, appearance, what you eat/drink, what you buy, what car you drive, and what type of house you bought matters. Like it or not, all these things quickly give others an idea of what they should expect from you. That doesn’t stop in the virtual worlds. I argue that social currency will matter more in the metaverse. That’s why luxury fashion brands have been one of the biggest adopters of creating digital goods. They know that an avatar wearing a Gucci whatever still matters.
The good news is that anything designed for the real world, can relatively easily and with limited cost be transitioned to the metaverse and infinitely reused and iterated upon quickly. Blockchain-based experiences continue to show the economic potential of resellable, truly ownable, and interoperable digital goods. The impact here is a bit mind blowing.
This is already playing out in the CPG industry in various ways.
- When General Mills brought back the 90s snack Dunkaroos, it also released virtual streetwear as part of the launch, leveraging NFT technology
- Coca-Cola created a custom-designed bubble jacket wearable that can be worn in the Decentraland 3D virtual reality platform
3/ Digital Experiences
Where brands, content, creativity, and consumerism meet, civilization forms. If history has a lesson to share, it’s that in the world of network effects, timing is an essential ingredient. The “COVID-19 Effect” accelerated the need for the third place. No, I’m not talking about another physical Starbucks location but a social and immersive virtual ground separate from work and home. This makes metaverse real estate arguably some of the most valuable commercial real estate for retail right now.
If you’re struggling to understand digital experiences, think about it as a way for a brand to find new and surprising ways for target consumers to connect with its products and values. As an example, it’s like hosting a SXSW brand activation, that would normally require a stamp on the hand, a wristband, or ticket to enter, but now completely created in a virtual world and requiring a NFT.
- The Beauty segment of Procter & Gamble just recently launched BeautySphere at the consumer electronics show to experiment with this idea.
This digital experience concept can also be seen through like-for-like digital advertising.
- Stella Artois has been the official sponsor of premium horse racing tracks for many years. That has translated to the metaverse with a deal to sponsor Zed Run, the blockchain-based online horse racing platform.
4/ Community Building
These digital experiences could be extremely valuable to legacy CPG brands that have recently struggled to reach and connect with certain audiences. The metaverse gives these legacy CPG brands the opportunity to create new brand narratives through an original virtual worlds and characters. Audiences that are engaged in metaverse-based platforms are among the most loyal and passionate of audiences. By effectively and authentically becoming a part of the metaverse, CPG brands can execute strategies to not only become noticed by younger audiences, but to change the perception of their brand among this much-valued consumer subset. Whether it’s growing an existing audience or starting a new customer cohort relationship, every CPG brand will have an opportunity to foster long-lasting relationships in the metaverse.
Final Thoughts
While all this talk about the metaverse is probably early, consider the impact of generational change. Generation Alpha (those born between 2011 and 2025) express themselves, often learn, and constantly socialize through virtual worlds they can touch, change, and collaborate in. That’s not going to stop. Rather, the capabilities of these virtual worlds will expand, their ease of use will improve, and their significance will grow. As Generation Alpha starts turning of working age in a handful of years, their frames of reference will lead to transformative change.
Expect the discussion of metaverse concepts to be an ongoing topic in my content within the next decade or more. This is volume one of many to come, so hopefully you’ll embrace this metamorphosis with me.
