Harnessing the potential of the Metaverse for revolutionizing marketing

By Deeksha Khatwani, MBA student and Arunabha Mukhopadhyay, Faculty, IIM Lucknow

In 2023, the market size of metaverse advertising reached US$1.5 billion. Moreover, metaverse is expected to grow significantly at a CAGR of 24.82% between 2023 and 2030 creating a market volume of $7.5 billion by 2030. Organisations across industries in India as well as globally are increasingly using Metaverse to market their brand and provide unique experiences to users.

In 2022, Tata Tea hosted a Holi party in Metaverse in 2022 where the users played Holi and enjoyed a live performance by the famous composer duo Sachet-Parampara. Joining the bandwagon was Gujarat Titans, the IPL team that launched its new logo in Metaverse. In the banking sector Kotak Mahindra and ICICI bank have invested in metaverse application like Konaverse and Decentraland. Lately, the number of brands leveraging metaverse for various use cases specifically advertising and publicity has increased. Among the companies setting foot in Metaverse are some big established brands including Gucci, Nike, Samsung as well as growing brands like Farzi Cafe. H&M, a renowned name in the fashion industry opened a virtual showroom in Metaverse where one can explore their virtual collection and dress their avatars in the trendiest of outfits making a fashion statement. Indian companies also exhibited excitement and faith in the opportunity presented by technology. Tanishq, an aspirational fine jewelry brand from India launched its wedding collection ‘Romance of Polki’ in Metaverse which enables users to try on the new collection on their avatar.

Metaverse is a largely scaled and interoperable network of 3D virtual worlds in the real time. It can be experienced simultaneously and constantly by users while supporting continuity of data. In most cases the users can their avatars of choice to carry out the transactions. The most important aspect of metaverse is interoperability which refers to the ability of different applications like Whatsapp, Facebook and systems like mobile, laptop, and tablet to connect and communicate. In the era of Web3 the metaverse platform have also incorporated Blockchain as an underlying support technology and facilitate monetary transactions too. Robulux is a popular metaverse platform. Tech giant Facebook has rebranded itself as Meta. It has over 400 million monthly active users and the brands are not shying away from leveraging it for various use cases including learning and development for employees, organizing events, and onboarding new employees.

Metaverse based advertising are designed like a massive online multiplayer role playing games (MMOPRPG) to create an engaging and immersive experience for the consumers. 60% consumers prefer participating in at least one activity in immersive world including shopping of virtual goods, and attending social events created by the marketing campaign. Around 80% consumers who are active on metaverse made at least one purchase with the intent of improving in-game experience. With the immense growth of smart phone, and internet penetration globally and also in India, metaverse based advertising as a channel of marketing to acquire new customers.

As of now, maximum number of metaverse marketing initiatives are in Fast Moving Consumer Goods (FMCG), retail, fashion, and automobile. As these industries place a high emphasis on visual appeal, and consumer experience to attract and acquire new customers. Marketers can use metaverse platforms to effectively target and acquire tech savy young consumers (i.e., Internet natives) to their products and services.

Organisations using metaverse for marketing initiatives witnessed a positive impact on their short-term stock performance, specifically Fashion and Automobile. This can be attributed to the fact that consumers in automobile sector want to get a 3D look of the vehicles and iget an in-depth understanding of the parts in a virtual environment. In fashion, consumers like exploring and interacting with different designs and are most attracted by visual appeal. Consumers also have their avatar’s try expensive and luxury products on the metaverse platform. For example, an avatar can try out a Gucci bag or a cap in the metaverse platform.

The metaverse platform also helps the marketer gather a lot of high velocity, high volume, and high variety of the interactions that the avatar (consumer) has on the platform. This can help in carrying out more targeted marketing aimed at the right customer segment. Nike distributed free caps on the metaverse platform as a promotional activity. Consumers could then create a non-fungible tokens (NFT) of the same and sell it in the secondary market. This 3D real time, synchronous, persistent and massively scalable environment of metaverse promises the marketers to effectively transform the process of acquiring, retaining and carrying out up sell and cross sell activities to consumers using engaging and immersive experience.