Study Warns Brands to Exercise Caution with the Metaverse

According to new research from the University of Stirling, utilizing the increasingly popular metaverse does not always lead to increased sales for brands.

The study indicates that launching digital versions of a brand simultaneously with their physical counterparts can dilute brand identity and reduce overall sales. It suggests that prioritizing online activity can enhance success.

As brands explore new revenue streams, many are venturing into the metaverse, a virtual realm where users, via avatars, can enjoy immersive experiences.

Brand owners and retailers are introducing Unique Digital Assets (UDAs) in forms such as digital clothing, accessories, collectible cards, and art that consumers can engage with through virtual and augmented reality.

Brands like Nike, Disney, and Christie’s have effectively connected with consumers in the metaverse, utilizing games, limited-edition collections, and virtual auctions.

However, the study reveals that if there is a physical version of a brand present, consumers are less inclined to buy the UDA. The research suggests that the existence of a physical product alongside a digital one diminishes the perceived value of the digital asset.

The researchers conducted six online experiments with 1,523 consumers in China, creating fictitious products and shopping scenarios, and analyzing purchasing behaviors and interactions.

Discouraging insights

This study presents discouraging insights for brand owners and retailers looking to experiment with the metaverse as a strategy to enhance business, according to the authors. It also re-evaluates the significance of physical products.

Prior studies have shown that consumers generally value physical products more highly because of their tangible nature. These new findings indicate that the simple coexistence of a physical product with a digital counterpart reduces the value assigned to the digital asset.

Rob Angell, Professor of Marketing at the University of Stirling Management School and co-author of the study, stated: “When brands adopt a dual-format strategy—pairing UDAs with physical products—consumer attitudes toward the UDA diminish. For instance, if a Gucci handbag is available both in the metaverse and in retail stores, shoppers may perceive the digital version as less unique. They recognize that others might own the physical item, reducing their sense of ownership.”

“This has significant implications for how brand owners and retailers manage their offerings. For many, cautiously entering the metaverse usually means extending products from the physical realm into the digital space. Our findings suggest that such an approach may have limited success, as the UDA will likely be undermined by its physical equivalent. We recommend providing a digital-only asset or, if a physical version is also planned, that marketers and retailers proceed with caution.”

This study is a collaboration between the University of Stirling Management School, University of Edinburgh Business School, Zhongnan University of Economics and Law in China, and Léonard de Vinci Pôle Universitaire in France.

While the study offers what it describes as a “practical playbook” for marketers and retailers, the authors recommend that future research replicate this study across different international markets. UDA adoption rates and familiarity with digital ownership differ considerably worldwide, according to the findings.

The paper, Let’s (NOT) get physical: Cross-format dilution when launching physical counterparts with unique digital assets, is published in the Journal of Retailing.