Don’t get us wrong, we’re excited about the metaverse. But, what is it exactly? The metaverse might have become a much buzzed about topic since Facebook’s rebrand last year, but it’s still unclear exactly how it will affect the business of app growth and how developments of the metaverse will impact advertising overall. We teamed up with GameRefinery and Vungle to go beyond the hype. Below, we envision the implications, opportunities and challenges of the metaverse for marketers. We also imagine how the metaverse will change the business of advertising as a whole.
What is the metaverse?
On a basic level “the metaverse” is a shared, interoperable virtual world where people interact according to the rules set by the developer. These rules might include using in-game currency to trade virtual goods which take the form of cryptocurrencies.
Long before Facebook rebranded to “Meta” catapulting the concept of the metaverse to the front and center of the public’s consciousness, game apps have capitalized on aspects of the metaverse concept.
In the context of advertising in the metaverse, it is a virtual space where users can spend their time and, therefore, where brands can harness targeting and sales enablement tactics to market their products and services.
What the metaverse is like today
While we are more than a decade away from a single metaverse that connects all other metaverses into one cohesive whole, investments in the realization of this interoperable cyberspace are rapidly accelerating. In the next ten years, the metaverse is expected to engage a billion users and drive over $1 trillion in revenues.
To date, Facebook has invested the most in its metaverse, spending $10 billion in 2021 alone. Even prior to this investment, it’s clear the company was making a play for the metaverse when it acquired VR headset developer, Oculus, for $2.3 billion back in 2014.
But, Facebook isn’t the only tech giant making moves into the metaverse. Apple, Snapchat, Samsung, and Microsoft all have AR or VR devices and developer tools in development. Emarketer projects by 2025, VR device shipments will have increased by over 262%, from 8 million in 2021 to 29 million in 2025. This surge will be even greater for AR devices. By 2025, there will be 21 million AR devices shipped worldwide. That’s a 2000% increase from the 1 million devices delivered in 2021.
Metaverse gains in gaming
Major gaming players like Roblox, Nvidia, Unity, and Epic are also investing in the metaverse. In particular, both Roblox and Epic Games have built metaverses where millions of people socialize, play and spend via digital economies. Both have seen massive success with special events hosted in these worlds. In 2020, Roblox launched a weekend-long performance by rapper Lil Nas X, driving 33 million total views. Before that, Fortnite hosted a similarly high-engaging performance by Travis Scott. It drew 27.7 million unique attendees and 45.8 million viewers across five shows.
Participation in the metaverse is already growing at a phenomenal pace thanks to innovations in the gaming space. The gaming environment is an excellent testing ground for the development of metaverse-related technology, including AR and VR mechanics and content moderation, cryptocurrency and so on.
"Virtual experiences are the most prominent metaverse element that we see in games today. Some good examples are virtual concerts by artists such as Travis Scott and Lil Nas X in Fortnite and Roblox. These experiences provide games with opportunities to attract new audiences and open the door for new forms of in-game ad placements that are currently in their infancy." - Wilhelm Voutilainen, Chief Game Analyst - US at GameRefinery.
According to the Wall Street Journal, to date, 65% of people have engaged in a metaverse media experience like watching an in-game TV show, movie or live concert. Furthermore, 69% of people have taken part in social activities in a digital gaming environment; and 72% of people have taken part in a metaverse economic activity like purchasing in-game items, shopping at virtual marketplaces, or trading with other players in a gaming metaverse; making the opportunities for advertising in the metaverse seemingly endless.
What will the metaverse of tomorrow look like?
What will the metaverse look like in the future and how can brands harness it to expand their reach and revenue? In its fully realized form, the metaverse will blur the real with the imaginary. Using physical and behavioral biometrics, emotion recognition, sentiment analysis, and personal data, the metaverse will create a customized and enhanced reality for each person. AR wearables and VR headsets could become as pervasive as smart phones are today as people engage with the metaverse on their own terms through avatars, explore faraway lands without leaving their living rooms and interact with others using smart clothing and tactile-responsive haptic gloves.
Opportunities for advertisers in the metaverse
For advertisers, the metaverse promises more opportunities to foster immersive, real-time interactions with customers.
The opportunities for brands to harness this virtual world abound. Ecommerce brands could offer their products virtually to be worn by avatars. Metaverse advertisements and promotions are already a growing trend that major apparel brands are picking up on. In 2021, Nike bought virtual shoe company, RTFKT Studios, a developer that makes and sells NFTs for virtual footwear for the metaverse. Beyond just virtual products, the metaverse will also have virtual “stores” where you can not only view ads but also try on and purchase products.
Virtual reality billboards
Where the people go, the ad dollars flow. As more people frequent metaverses, so too will advertisers. In this vein, virtual billboards will become a common sight. Decentraland is a metaverse where users can exchange cryptocurrencies for parcels of virtual land. It’s gained so much popularity recently that brands have started buying billboards in its metaverse. For example, Cloud Nine, which launched a billboard metaverse advertising campaign in the Decentreland Metaverse to promote its new Limitless VPN.
Immersive ad formats
The metaverse will have its own unique ad formats, complete with full marketing attribution so advertisers can track traffic and allocate ad spend intelligently. While we can’t know exactly what these new formats will be, it’s certain they’ll be more immersive than traditional ad formats. Rather than a video that pops up on your screen when you open an app, these ads will create full-scale experiences that weave a story, allow users to interact with products, and eventually make a purchase — all, without leaving the metaverse. One early example of this is Nikeland on the metaverse gaming platform, Roblox. In Nikeland, you can engage in gameplay and shop the company’s range of shoes, apparel, and accessories, all in VR.
In the metaverse, playable ad formats will evolve into even richer brand experiences that both entertain users and create an immersive world in a game-like format. An early example of this type of “advergame” is Balenciaga’s “Afterworld: The Age of Tomorrow,” a video game where users create their own avatars to walk the catwalk, experiencing Balenciaga’s fall collection in the process.
Key Challenges of Advertising in the Metaverse
For publishers, infrastructure and technology will need to adapt to realize the advertising opportunities of the metaverse on the supply side.
Improved connectivity and enhanced digital bandwidth will be essential to providing ad solutions in the metaverse. This will include building out 5G connectivity to eliminate the lag between digital and physical worlds; as well as innovating efficient ways of managing huge amounts of data.
Ad spots and ad worlds
Both options for placing ads in certain ad spots, whether manually or programmatically, will likely be available in the metaverse. As the majority of advertising today is undertaken programmatically, the majority of advertising in the metaverse could also be largely programmatic. Along with placing ads in specific ad spots (like VR billboards), marketers will also build ad worlds. To do this they’ll have to think of themselves not just as advertisers but as virtual world creators; dissolving distinctions between ad placements to create immersive — fully branded — virtual spaces.
Gaming companies have been the trailblazers of the metaverse, building and utilizing many early, forerunning technologies. But, to scale up these individual innovations to a single, interoperable cyberspace, game companies will need to take a collaborative approach. Wilhelm Voutilainen, Chief Game Analyst - US from GameRefinery said,
“Games have leveraged sophisticated virtual economies that meaningfully intersect with real world ones for decades. With the emergence of blockchain and NFTs, these are becoming further intertwined. Scaling these up to create a single metaverse that intersects with not just the IRL economy but how we experience games and services, will require sophisticated advancements in VR and haptic technology. As we get closer to making this a reality, we will see increased participation from gaming and technology companies and all stakeholders in the metaverse. While we are still in the early stages, this has already started as we see investments from brands such as Adidas in virtual land and NFTs.”
Takeaways on Advertising in the Metaverse
The metaverse isn’t here… but, it’s near. While gaming companies have leveraged aspects of this technology for years — creating metaverses of their own in the process — we are still more than a decade away from realizing a single metaverse where divisions between the real and the virtual are blurred. For advertisers, the metaverse offers opportunities to explore new and immersive ad formats that don’t just create ads but fully-branded virtual worlds. For both metaverse advertisers and publishers, this will require sophisticated and collaborative advancements in virtual reality technology, data processing and beyond.