In 1994, AT&T Purchased a little rectangle at the site HotWired.com. This has been called the first-ever banner ad (see the image below). Although some marketing initiatives on the web started earlier than 1994, this moment can reasonably be called the true start of online advertising — an industry that is now measured in trillions of USD.
But that first banner ad revealed something every marketing manager needs to understand — that people get used to different types of advertising. The click-through rate on that AT&T banner ad was 44%. Now, let’s compare this to the click-through rate of banner ads in 2021. On Facebook, anything above 0.05% to 0.1% is considered good. Facebook employees have stated that a click-through rate below 0.02% is considered poor-performing.
The unfortunate reality for marketers is that we constantly need to pay attention to what is new and innovative unless they want to end up selling banner ads in 2023. Occasionally, a new marketing trend emerges, and users love it. Once every brand gets on board, users are overwhelmed, and they move on.
The current big marketing trend is influencer marketing. A multitude of articles has been written praising the concept due to the trust that audiences feel towards influencers. However, as more and more influencers are promoting various products, the audience has adapted and this trust that they used to feel is dropping rapidly. In 2018, research showed that 92% of people trusted influencers more than traditional celebrities. By 2022, this number shrunk to 62%, where the traditional advertising with celebrities has almost balanced out with influencers.
Why have people stopped trusting influencers as much as they used to? There are 2 reasons for this.
The first one is that in 2018 (and before) social media influencers were just regular people who started YouTube channels, Twitch streams, or Instagram profiles to talk about the things they loved. They felt like a friend because they were “regular people”. Now, celebrities like Cristiano Ronaldo started heavily relying on social media and have entire PR teams in charge of managing their profiles. This shifts the public perception of what an influencer is and erases the boundary between traditional celebrities (who, as we saw people trusted less) and an “authentic” social media influencer. On the other side, the mainstream media has adopted social media influencers as celebrities of their own. Just think how many times you have heard the names PewDiePie or Logan Paul. The ostentatious displays of wealth by some of these influencers don’t help with the public perception of them being “regular people”.
The second big reason is the various scandals that showed people that influencers are not as authentic as they seem. One of the funniest examples is when Gal Gadot promoted Huawei’s Mate 10 Pro phone through a tweet that was sent from an iPhone. In fact, there have been so many influencer marketing “fails” that impacted influencers’ credibility that Kubbco.com created an entire list of influencer marketing fails.
So, now that we have established that influencers are losing trust because they are also losing the authenticity and relatability we need to ask ourselves what’s next? What is the new trend that marketers will embrace in the 2020’s. One very strong contender is the Metaverse.
Traditional marketing as well as newer forms of marketing (such as influencer marketing) have one big drawback. They are all experiences where someone is trying to communicate a message to a potential customer. Whether it is a celebrity promoting a soft drink through a TV advertisement or an influencer promoting face cream on a sponsored Instagram post, the customer still feels like they are being told what they should do. I like to call this style of marketing third-person marketing. Because the recipient of the message is just a passive listener and not an active participant in the message.
Metaverse marketing enables a whole new marketing avenue which I like to call first-person advertising. Instead of a celebrity or influencer sending a message to a passive potential customer. The customer becomes the one that is discovering the message in subtler ways.
We have tested this “on the ground” multiple times already and the results are striking. What tends to happen is something similar to the IKEA effect. The IKEA effect has been well documented and is a term for customers disproportionately valuing something they created themselves (like assembling a piece of furniture from IKEA).
When placed inside of a 3D metaverse marketing space that is furnished with assets that carry the marketing message and/or the brand identity in addition to various games and mini-games that they can play, the experience to the customer seems much more authentic and organic. Instead of the customer passively listening to (sometimes preachy) messages that tell them what they need to do, they are free to explore the space in any order they see fit. This, when coupled with the social proof that comes from other users doing the same thing and interacting in the brand environment has been proven as one of the most potent marketing strategies.
Let’s take an example of a major sports team we have worked with. Most of their promotions had the issue that they attracted a lot of fans who had a strong emotional connection with the club, but they didn’t want to buy merchandise. When they advertised their merchandise through traditional channels, the feedback they had from their customers was that it was too direct and they felt their love for the club was just trying to be used for them to spend money. What we did was that we created a space for them in Decentraland where fans from all across the world could come in and join for discussions after matches. Our metaverse spatial designers at Takeaway Reality created a space that was all in the club colours and also had the club logos and pictures of club legends on the walls. The space included a social space where players can discuss the match as well as various links to buy showcased merchandise. We also created some shirts featuring the team logo that were given out and sold in Decentraland. We are now expanding this and also creating a simple game that users can play as well as a social dance floor where the team’s songs can be heard.
As established earlier, the modern customer is getting more and more sophisticated in understanding when they are being marketed to. At Takeaway Reality, we have created various metaverse marketing spaces for major international brands. We believe that the biggest challenge is creating a space that conveys the message clearly but is also subtle enough for the customer not to feel like they are being lectured on what to do. Once this balance between clarity and subtlety in spatial design is exactly right, then adding social spaces and games to the space can create one of the biggest brand loyalty boosts your brand has ever seen.
The Metaverse right now is still in its infancy and getting in early and getting the learnings on how your customers react to your brand being more social and spatial gives any brand a very big advantage going forward. As customers’ taste and receptiveness for various forms of advertisement keep growing, it is our duty as marketers to offer them more value and treat them with a bit more respect than selling them products through influencers who often don’t even use the product themselves. The metaverse (if done right) is truly a hidden goldmine for achieving high levels of brand loyalty through community building and with the current growth it doesn’t seem like it will be hidden for long.
The main growth driver that lead influencer marketing to become a 10 billion USD industry was the trust that customers felt towards the influencers. With that eroding, we can see a need to at least start thinking about what marketing will look like in 3, 5, and 10 years. Our strong belief at TAR is that it will become a more social and gamified experience with a lot more individual autonomy given to the customer.
