{"id":604125,"date":"2023-02-03T07:49:32","date_gmt":"2023-02-03T13:49:32","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/02\/03\/how-the-recession-could-impact-brands-metaverse-spending\/"},"modified":"2023-02-03T07:49:32","modified_gmt":"2023-02-03T13:49:32","slug":"how-the-recession-could-impact-brands-metaverse-spending","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/02\/03\/how-the-recession-could-impact-brands-metaverse-spending\/","title":{"rendered":"How the recession could impact brands\u2019 metaverse spending"},"content":{"rendered":"
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February 3, 2023\u00a0\u00a0\u2022\u00a0\u00a04 min read<\/span> | By Alexander Lee<\/a><\/p>\n<\/div>\n

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\n\t\t\t\t\tIvy Liu\t\t\t\t<\/p>\n<\/p><\/div>\n

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Over the past two years, the metaverse has been marketers\u2019 preferred wall to throw things against, with brands pumping millions of dollars into virtual events and NFT drops with little concern over the ROI of those activations. But as a recession mounts, the need to generate tangible revenue from the metaverse has become increasingly urgent.<\/p>\n

Four metaverse marketing experts shared their thoughts on how the recession might impact spending in the space with Digiday.\u00a0Here are some of the biggest takeaways.<\/p>\n

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\u2018Metaverse platforms\u2019 are out, user-generated content is in<\/strong><\/h2>\n

With crypto winter<\/a> in full effect, metaverse platforms that are rooted in blockchain technology, such as Decentraland and The Sandbox, have experienced a massive decline in traffic<\/a>. On the other hand, player counts in game-centric virtual worlds such as Roblox and Fortnite continue to rise<\/a>. Brands might not have cared about user numbers in 2021 and 2022, when they were racing to stake a claim to the metaverse \u2014 but in 2023, they\u2019re more likely to spend their marketing dollars activating inside the platforms people are actually using.<\/p>\n

In recent years, the meaning of the word \u201cmetaverse\u201d has been muddied by the rise and fall of the web3 space. Some experts believe that brands will allocate less money toward experimental metaverse marketing budgets and more to their gaming budgets, but that the outcome \u2014 virtual branded spaces, products and events \u2014\u00a0will be more or less the same.<\/p>\n

\u201cWe call it the metaverse space, but the reality is, what we\u2019re talking right now is UGC gaming<\/a>,\u201d said Margot Rodde, founder of the Fortnite Creative studio Creators Corp. \u201cFor sure, they will spend less, but not necessarily in UGC gaming, with its huge audiences and potentially new platforms that are going to pop up in that space, built by other gaming companies.\u201d<\/p>\n

Creating tangible revenue opportunities is key<\/strong><\/h2>\n

At the moment, most brand activations inside metaverse platforms have not included any direct opportunities for e-commerce or the sale of virtual goods. Brands view the metaverse as more of a marketing channel at the moment \u2014\u00a0a way to raise brand loyalty or awareness and signal their commitment to future technologies.<\/p>\n

As a recession mounts, brands will start to realize that they are leaving money on the table by not including direct commerce opportunities in their metaverse activations. Companies like Forever 21 have already sold millions of dollars<\/a> of virtual goods by partnering with companies such as Virtual Brand Group, which helps connect Roblox creators with brands hoping to digitize their products.<\/p>\n

\u201cIn a down market, you have to ask yourself, \u2018why am I doing this?\u2019 And if the answer is to build a sustainable, revenue-generating business, that\u2019s a great answer,\u201d said Virtual Brand Group CEO Justin Hochberg. \u201cAnd if it\u2019s anything else, you\u2019re probably wasting your time.\u201d<\/p>\n

Experts on the brand side fully acknowledge the necessity of direct virtual commerce opportunities in the near future.<\/p>\n

\u201cWe think the biggest monetizable opportunities in these spaces are from the sale of digital collectibles,\u201d said an executive at a major brand that recently launched in Roblox, who agreed to speak to Digiday on background. \u201cSome of those are going to be tickets, but [virtual merchandise] is a big part of it as well.\u201d\u00a0<\/p>\n

Entertainment brands will continue to spend more than consumer goods<\/strong><\/h2>\n

The types of brands that activate in metaverse platforms will change as economic headwinds pick up \u2014 and as brands slowly but surely become more educated about the benefits of the metaverse.<\/p>\n

At the moment, brands of all kinds have invested in custom metaverse experiences, from Invisalign<\/a> to Walmart. But following its launch in September 2022, \u201cWalmart Land\u201d was widely maligned<\/a> on the internet for its cavernous emptiness and apparent lack of activities. The reality is that many consumer brands simply lack the intellectual properties<\/a> needed to populate virtual worlds and make them truly worthwhile.<\/p>\n

As the potential for a recession picks up, some experts anticipate that entertainment brands will continue to invest in the metaverse, taking advantage of their wealth of homegrown IP. Warner Music Group, for example, recently opened its \u201cRhythm City\u201d experience in Roblox, which the company will use moving forward to sell digital merchandise and host virtual concerts featuring WMG artists \u2014 the sort of tangible revenue opportunities that are lacking in experiences such as \u201cWalmart Land.\u201d<\/p>\n

\u201cPanasonic batteries or whatever \u2014\u00a0they\u2019re not an entertainment brand, so why would they build their own standalone experience?\u201d said Matthew Warneford, CEO of the metaverse development studio Dubit. \u201cThat doesn\u2019t mean that they shouldn\u2019t try and achieve awareness or tell a story about how great their batteries are in these spaces, but they shouldn\u2019t be deploying hundreds of thousands of dollars to build something and then maintain it.\u201d<\/p>\n<\/div>\n

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