Best of the Week: Black holes in the metaverse
Welcome to Best of the Week on Unmade, coming to you from the sunny northern suburbs of Sydney. Not Cannes, or the UK.
Good to be back in your inbox while my colleague Tim Burrowes is on leave. It’s been a while since I have had the pleasure. Hopefully it’s like riding a bike.
I’ve been penning the Tuesdata pieces on Unmade recently which are available to our paying members.
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Moving on. There are always big stories in the media and marketing industry, but three in particular have caught mine, and most of your attention if the headlines are anything to go by. The first two will substantially affect the last one, I believe.
First is the ongoing pain being felt on markets the world over, not least the ASX and NASDAQ. At the time of writing, the ASX 200 had dropped 13.32% since the start of the year. The NASDAQ Composite had fallen a rather staggering 26.69% in the same period.
Our own Unmade Index recently dropped below 600 for the first time, after we started it at 1,000 near the beginning of the year. Thankfully it has climbed slightly over the last few days.
Second are the predictions that the buoyant advertising market we have witnessed recently is done. It seems like only a matter of time before the usual SMI updates aren’t lighting up all green.
Both of these situations will have a significant effect on the media and marketing industry in various ways, not least marketing experimentation. And there is no more rampant experimentation going on at the moment than in the third big story of late,, which is the subject for today.
It’s the metaverse. Surprise. Here I’ll focus less on the metaverse itself and more on the effect it has had on marketing on a global scale, before looking at what the current economic situation may do to the metaverse.
Would you trust a lion to advise your metaverse strategy?
“It’s a crock of shit.” Not my words. The words of someone wiser than me from agency land speaking about the metaverse, sensibly on the condition of anonymity.
At the time of writing, Meta is down 53.61% this year alone on Wall St. Roblox has registered an even bigger tumble, down 70%. Consider that Roblox was at a high of US$134.72 on November 19 2021 and now sits at $29.64 and it's evident that even hyped stock can’t escape the global tumble we’ve seen.
Microsoft, another big investor in the metaverse, has dropped 24.2% this year.
Despite the carnage on the stock market, it didn’t stop the metaverse from being one of the most heavily talked about topics at Cannes this week. Meta recreated Cannes in the metaverse as it attempted to distract, I mean appease, advertisers in what has been a difficult 12 months both locally and globally for the platform.
Meanwhile, Wunderman Thompson released WT Inspiration Beach in the metaverse to celebrate the start of the first Cannes festival in real life since the pandemic put a halt to in-person events.
Forgive me for being slightly cynical but it feels like these executions may have been more successful when the industry couldn’t physically attend Cannes.
I’ll move on. The winner of metaverse announcements at Cannes wasn’t either of those two. In my humble opinion it must go to Publicis. The global heavyweight has hired a chief metaverse officer. Who is virtual. And a lion. A French lion. At least the hiring process wouldn’t have been as difficult. I’m not sure virtual lions are in high demand in the industry right now.
Say what you want about Leon the lion, but some things he said in his introduction video, which has almost 10,000 views when this piece was written, are on point. For example, “Initially, I pretended to understand. I know how to pretend. We all do, right? The truth is, nobody had a single clue. But then one night, I woke up, and I told myself, the best way to learn is to do stuff. And so, I studied and did a lot of cool projects.”
Of the industry executives I spoke to prior to pushing the ‘send’ button on this post, the majority of them were well and truly behind the notion that the media and marketing industry, in general (I’ll emphasise the ‘in general’ part), didn’t have a single clue about the metaverse, to use the words of Leon.
That’s not down to ignorance. How can you have a clue when the entire concept is still defining itself? And that is part of the issue currently. Despite the industry grappling with the foundational question, “what is the metaverse?”, it has been quick to throw money at it.
The more things change, the more marketers spend on the metaverse
Things change quickly in media and marketing. This is the same industry that took its sweet time to get onboard Web 2.0 in the early naughties. There are now a whole bunch of new senior executives driving the industry forward. Executives who are not scared of investment in new concepts.
The result has been somewhat unbelievable investment from brands in the metaverse at a very early stage. According to statistics from Sprout Social, covered by Campaign, “67% of marketers plan to invest at least a quarter of their budget into metaverse-related efforts over the next year, [although] interest in the metaverse among consumers is low, at 24%. Just 17% of consumers say the same about non-fungible tokens, while interest in augmented reality and virtual reality is higher, at 39%.”
From being too slow to act to possibly acting too fast. I’m no numbers expert, but to me it’s clear those investment figures don’t add up to wise investment.
Perhaps marketers all took note of Donna Hoffman’s piece for McKinsey Digital in 2009 when she said that Web 2.0 had let consumers do exactly what marketers didn’t want them to do, essentially exercise greater online freedom. Has the result of the tardiness to adapt to Web 2.0 meant there is an over eagerness to jump on components of Web 3.0?
The metaverse is only a component of Web 3.0, but it’s worth going into it a bit here as they are intertwined.
Web 3.0 takes the idea of liberating the online consumer experience and breaks down the barriers even further. The crux of it decentralisation. One of the better explanations I have found so far, that doesn’t dumb it down completely, is from The Conversation.
“Web 3.0 is the next step. In part it will be a “semantic web” or a “web of data” that can understand, combine and automatically interpret information to provide users with a much more enhanced and interactive experience. But it could also be a decentralised web that challenges the dominance of the tech giants by moving us away from relying so heavily on a few companies, technologies and a relatively small amount of internet infrastructure.”
While it is hard to imagine a web without dominant tech giants, it stands to reason that if they could become so big so quickly, they could also shrink at an equally rapid speed in certain conditions. We’ve seen it before many times.
Maybe not so surprising that big tech is investing so much so early on. But why are the marketers? Are they just better prepared now, as Hoffman predicted they would be?
Big investments, big reasons, but big payoffs?
McKinsey lists six points on why the metaverse has staying power, which you can read here. Importantly, consumer-led brand marketing and engagement is still high on the agenda, as are major investments from big tech companies and the rapid spread of e-commerce.
Since Facebook changed its name to Meta Platforms late last year and Mark Zuckerberg announced a US$10b investment in the metaverse via Facebook Reality Labs over the coming year (which led to a significant drop in stock value), brands have been scrambling to invest in the metaverse regardless of the ROI. And brands that you would not expect.
But let’s get out of the virtual and be a little bit more real. Currently, the metaverse is, on the surface, little more than an advanced version of technology that we have already seen for at least a decade. Think Second Life (which is still alive and kicking, by the way, with a reported 60m plus active users) or Minecraft.
And that’s where the large audience numbers are. In games. Games like Roblox (which is sort of a game for game development, but I’ll move on), Fortnite as well as Minecraft. Not roaming a decentralised corner of the metaverse, as in Decentraland, which by all accounts is struggling to gain users.
According to the NASDAQ, “Decentraland has a monthly active user base of about 300,000 people and 18,000 daily users.” Statistics from SimilarWeb, for what they are worth, are not inspiring either.
Which brings me to the collision between the real and the virtual. Because it doesn’t exist in any great way currently. Want real immersion? Get ready to put on those awful heavy VR goggles. Essentially, the metaverse currently is still somewhat of a videogame. It has the potential to meld the virtual and physical worlds together, but it’s far from it at the moment and likely will be for a while. Years if not decades. Much better hardware is required. Much better integration as well. That’s when the consumers may come.
This is why it’s all the more interesting that so many brands have invested marketing spend, particularly as videogames have never been the darling of marketing.
If there is one positive to take from all of this spend, though, it’s that generally speaking, engagement tactics seem to be good. What brands are doing here is spending large amounts of their budget trying to finesse the art of engagement for a specific audience. And some of them are doing very well at it.
Take Balenciaga for example, and its campaign on Fortnite which had limited edition outfits for both the real and virtual worlds, and intertwined them. I’m unsure about any spike in sales, however.
Why the big fuss?
The metaverse hasn’t genuinely changed consumer’s lives or how we interact with technology. And it’s not likely to in the near future. So why talk about it so much?
“As with any new big technology trend, holding groups are frothing at the mouth to show how cutting edge they are,” I was told by one agency leader. “Some recent announcements are nothing more than posturing and superficial PR, rather than a tangible change in operating model. Remembering of course that these are the same groups who piled in to build divisions to take advantage of Google Glasses and Pokemon Go!.
“Most marketers are taking a measured approach given nobody really knows what ‘The Metaverse’ may become - a short term smokescreen for Facebook’s PR woes or a lasting trend that consumers will embrace.”
So let's go back to my initial point. The current economic situation we find ourselves in. While Cannes has been a hotbed of meterverse moments, or as some (three I spoke to) media executives have called them, “mediawank”, it would be surprising if there wasn’t a tightening of belts as we move towards the end of the year.
I’m going to suggest that the hype around the metaverse will calm. How long can you carry on spending money on a medium that is generally undefined with questionable ROI? Development will carry on, of course, and progress in defining exactly what it is will be made. As will truly progressing from Web 2.0 to Web 3.0.
But hopefully, the “mediawank” surrounding the metaverse will die off, before everyone starts openly calling it a “crock of shit” on the record. There is something cool about the metaverse, it’s just not obvious what it is right now.
To be open, not one of the many people I spoke to had much good to say about the current hype around the metaverse. They ranged from marketers to agency bosses, consultants and tech experts. Sorry Zuck.
SWM finds the green
It was one of the less disastrous days on the Unmade Index with solid gains for SCA, Domain and Seven West Media. It has brought the Unmade Index back above 600 points, and for SWM, sees its market cap back above $600m.
It wasn’t all good news though. The previous star during some of the heavy fall days, Enero Group, dipped slightly by 1.46%.
Time for me to leave you to enjoy your Saturday, whether it is IRL or in the metaverse.
Another quick reminder that you can become a paying member of Unmade at a never to be repeated discount of 55% off, but you only have until midnight on July 30. Smash the button below to subscribe.
I’ll be back on Monday morning with another edition of the Start the Week podcast. Pure PR’s founder and managing director Phoebe Netto will be joining me again to dissect the local and global media and marketing news from the weekend.
If you haven’t already listened to last week’s edition, no better opportunity to catch up than on the weekend. You can listen to it here or on your favourite podcast platform.
And being that it runs for less than 30 minutes, you could have time to listen to the first episode in our new series, The Unmakers, where we talk to people who are trying to remake the media and marketing world. To kick off, Tim interviews Mutiny founders Henry Innis and Matta Farrugia.
That’s it from me, enjoy your Saturday.